<p>No, that is a load of rubbish. Any student that is eligible to file FAFSA can get federal student loans. Even if they have no financial need whatsoever, they can still get unsubsidized loans of $5500 as a freshman, then $6,500 sophomore year and $7,500 for third year and up. The student does not even need a credit check to get these. About the only thing that wold make a student not eligible would be a drug conviction. They don’t have to take the loans of course, but they are certainly eligible (assuming they don’t have a drug conviction).</p>
<p>And as long as the parents have a reasonable credit score, they are eligible to take PLUS loans. If a parent is denies a PLUS loan because of really bad credit, the student is eligible for an additional $4,000 a year in unsubsidized loans.</p>
<p>As to how to handle it. Well I’d probably be a bit snarky and ask if they aren’t able to get student loans because of a drug conviction as that is the only reason why they they wouldn’t be able to. Or very kindly point out that if their parent has been turned down for a PLUS loan because of bad credit, the student is eligible for an additional $4,000 in direct loans as long, of course, as there are no drug convictions. But that is just me. (and I wold also avoid them like the plague - they sound quite awful).</p>