Financial organizations such as banks and other private lending firms rarely entertain customers who do not have a good credit history. The same principle applies for students who are not prompt with their monthly payments and those who have defaulted with their loans.
Students with bad credit history often find it difficult to get sources that can finance their education.
However, there are certain student loan programs that provide financial assistance for college education and do not require any credit history of the student. One such program is the federal government sponsored Federal Student Aid (FSA) program, through which the U.S. federal government annually disburses around $60 billion in the form of grants, loans and work-study opportunities.
Some of the loans under the FSA program include the Stafford Loans and the Perkins Loans. Both these student loan programs are federally-insured loans that are widely popular among student community as these loans do not require any kind of credit history or credit scores. Although, both the loans are offered to students at competitive interest rates, there are certain subtle differences between both these programs. While Stafford loans are disbursed through a federally-authorized private lender, Perkins Loans are disbursed through the college itself. While the federal government provides the guarantee for Stafford Loans, the college itself acts as a money lender in case of Perkins Loans.
In case of Stafford Loans, students are provided with a grace period of 6-months after completion of graduation after which loan repayment starts. Till then, the government pays the interest charges on the loan on behalf of the student. Perkins Loans are offered at an interest rate of 5 percent. The loan amount is determined based on the tuition fees and other personal expenses.