Paying for College When Your Parents Have Bad Credit

How do you pay for college when your parents have bad credit, and their weak financial standing means they cannot afford to help?

Young adults in this situation have three places to turn.

First, students from households with little income or assets are more likely to qualify for financial aid. Plus, a compelling story about hardships overcome helps with scholarships.

Then, the federal government makes it easy to qualify to borrow money without a cosigner – even when your parents have weak borrowing credentials.

Finally, working part-time for student-friendly employers or joining the military can help you fund education expenses without taking out loans.

College Financial Aid without Parental Support

Young adults are more likely to qualify for college financial aid when their parents have bad credit and cannot offer any support. Most dependent students are ineligible because mom and dad make too much money. However, in this case, their poor finances work in your favor.

The Free Application for Federal Student Aid (FAFSA) form looks kindly on families with low incomes, and few resources, who might be struggling to pay bills on time. A small “expected family contribution” leads to bigger grants and better work-study opportunities, which reduces the cost of attendance.


Completing the FAFSA form is the first step in qualifying for financial aid without monetary help from your parents. FAFSA does not check credit, consider a score, or affect your consumer report in any way.

However, the FAFSA form does ask questions that can correlate with lousy credit scores. The applicants with the smallest “expected family contribution” have low incomes and few assets – and might also have trouble paying bills on time.

Having a small expected family contribution helps you qualify for need-based financial aid, which includes specific grants, work-study programs, and loan subsidies.[1]

Pell Grants

Federal grants are the first form of need-based financial aid where your parent’s poor financial standing (per FAFSA) helps you qualify. Grants are free money that you do not have to repay.

  • Federal Pell Grants go to undergraduate students who display exceptional financial need. The US Department of Education runs the Pell program.
  • Federal Supplemental Educational Opportunity Grant (FSEOG) serve the same population. Participating colleges administer the FSEOG program.

For example, Pell grants often go to students whose parents are disabled, divorced, incarcerated, or unemployed. Each of these difficult circumstances leads to poor finances – and a low expected family contribution.


Federal work-study programs are another FAFSA-enabled form of need-based financial aid available to students whose parents have poor finances. The program encourages community service and works related to the attendee’s course of study.

The on-campus jobs enable you to earn money to help pay educational expenses.

Loan Subsidies

Federal Direct Subsidized Loans are the final type of need-based financial aid where the weak financial standing (per FAFSA) of your parents helps your cause.

Direct Subsidized Loans have slightly better terms to help out students with financial needs. The U.S. Department of Education pays the interest:

  • While you are in college at least part-time
  • For the first six months after graduation (grace period)
  • During a period of deferment (postpone of payments)


College scholarships are a merit-based form of financial aid more readily available when your parents are unable to offer any help. Schools, private foundations, and charitable organizations provide scholarships to exceptional students who have a great story – because they overcame significant obstacles in life.

  • Scholarships go to young adults with elite talents in athletics (football, basketball, baseball, soccer, volleyball, rowing, gymnastics, wrestling, etc.), music (piano, singing, guitar, violin, etc.), or academics.
  • Scholarship awards also target teens who overcame adversity such as the death, disability, incarceration, or divorce of their parents because stories sell. Write a great narrative.

Borrowing Money Without Parents

Getting student loans is another way to pay for college when your parents have bad credit and cannot afford to help. Take this step only when the other forms of financial aid do not cover your cost of attendance.

Remember, FAFSA does not check credit, or consider risk scores when making an underwriting decision for specific applications. However, this courtesy does not extend to Parent Plus and private lenders.

No Cosigner

The federal government routinely issues bad credit student loans with guaranteed approval – without requiring that your parents cosign the contract – or pulling a consumer report. Complete the FAFSA form to get this college funding.

  • Lousy credit does not matter because the Department of Education does not check consumer reports or scores
  • Guaranteed approval pertains to every applicant who needs the money based on the cost of attendance
  • Parents do not need to cosign as every person qualifies without a second individual adding an endorsement promise to pay

However, the lax underwriting comes with borrowing limits that vary based on your undergraduate academic year, and whether you are live dependent or independent of parental support.


Private Lenders

Most teens will find it very difficult to qualify for private student loans when their parents have bad credit. Most private lenders will want your mother and or father to cosign the application. However, the additional signature promise to pay has little value when accompanied by a low FICO score.

Most young adults have little or no work record, a short credit history, and meager income if any at all. Therefore, it is unlikely that a private lender will approve an application for a student loan without a cosigner.

If your parents have an adverse payment history, perhaps an aunt, uncle, or family friend will be better qualified and willing to cosign.

Parents Plus

You may still have viable next steps if the Department of Education denies a Parent Plus Loan. To receive a Direct Plus loan, your mother or father must meet three criteria.

  • Be the biological or adoptive parent of an undergraduate
  • Not have an adverse credit history
  • Meet the general eligibility rules for financial aid

Adverse payment history is the most frequent denial reason. If so, your next steps might include all of the following.

  1. Obtain an endorser (cosigner)
  2. Document extenuating circumstances
  3. Complete credit counseling

If the department still denies a Parent Plus loan, the student could be eligible to borrow larger sums each academic year. Also, you can look into ways to pay for college without borrowing money.

Paying for College without Loans

Finding ways to pay for college without loans is another avenue for teens whose parents have bad credit and cannot afford to help. Sometimes, total expenses exceed the level of financial aid you are eligible to receive, plus the amount you qualify to borrow.

The best way to fill the remaining gap is to find an employer that offers tuition-reimbursement benefits or join the military for help with your education.

Work at Companies

Finding work at companies that pay for college is a great way to pay for an education without taking out private loans cosigned by your parents. You can attend classes at night or part-time and take advantage of tuition-reimbursement employee benefit programs. Or, you can find employment with a company that staffs university students.

For example, each of these companies offers ways for students to further their education while continuing to work.


The AppleCare College Advisor position allows students to work in off-campus settings at times convenient to school schedules.[2] You earn extra money that can help you afford books and living expenses.

The AppleCare position is available to students regardless of which institution they attend – as long as they have a quiet, distraction-free work area.


Starbucks pays a portion of college tuition costs for benefits-eligible employees who choose to enroll at Arizona State University’s (ASU) online program. ASU offers eighty undergraduate majors.[3]

Starbucks reimburses 100% of tuition charges after financial aid and scholarship at the end of each passing semester. Plus, they have thousands of stores across the country, making it easy to take advantage.


The Walmart Live Better U employee benefit subsidizes college costs for associates pursuing degrees in business, supply chain, transportation, or logistics management through its $1 a Day Education program.[4]

Walmart also has thousands of big-box stores throughout the country, making access to employment viable for many.


Amazon will pay 95% of junior college tuition, fees, and textbooks fees for associates employed for twelve consecutive months or longer.

The Amazon Career Choice Program helps employees earn certificates and associate degrees in high-demand occupations. With logistics warehouses located near major highways across the country, many people can take advantage.

Government Support

The federal government already helps many students pay for college expenses without private loans cosigned by parents. Learn about these programs and decide whether you want to dedicate years of your life in service to your country in exchange for support with tuition, books, rent, and other educational expenses.

Join the Military

Joining the military is the primary government-sponsored path to pay for college without loans. Recruits who enlist in our armed forces can tap into four universal programs.[5]

  1. Montgomery GI Bill helps pay for many educational expenses
  2. Post 9/11 Gill for service members active after September 11, 2001
  3. College Fund Programs (GI Kicker) for service members with critical occupational skills
  4. Loan Repayment Programs offer incentives to enlist for non-prior service military member

Also, each military branch can provide unique opportunities to reduce what you must spend on tuition, lab fees, textbooks, rent, and living expenses. Speak to a recruiter for details.

  • Army
  • Navy
  • Airforce
  • Marines
  • National Guard
  • ROTC (Reserve Officers Training Corp)
  • Coast Guard

Social Security Disability

Social Security Disability is one federal government support program that does not pay higher education expenses that help you graduate with a degree. The qualifying criteria (unable to perform any work for at least one year) for SSDI and SSI means that you also cannot handle college-level courses.

However, there are minor exceptions to this rule. Disability recipients may qualify for extra assistance with skills training, resume writing, and other job preparation supports to help people return to the workforce.

  • Vocational Rehabilitation helps disabled military veterans and civilian workers to return to full employment
  • The Ticket to Work programs helps disabled workers to return to jobs while receiving SSI or SSDI

[1] Federal Student Aid

[2] AppleCare

[3] Starbucks

[4] Walmart

[5] School Guides Military Help