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Difference Between Private and Federal Student Loans

Difference Between Private and Federal Student Loans

thinking about taking out a student loan well it's important to know that there are two types of student loans federal and private and they each have their own role to play in helping students and Families pay for college.

federal student loans

in a nutshell federal student loans are funded by the government they are awarded based on set criteria including financial need and a fixed interest rate set each year they also offer special benefits such as public service forgiveness and an income-driven repayment option that are not typically available on private loans you'll need to fill out the FAFSA to see if you qualify for any of the four types of federal loans the most common are Stafford loans which make up 66 percent of annual student loans across the u.s.

private student loans

there are limits to how much a student can borrow through the federal program that's when private student loans may be one option to consider private loans are funded by banks and financial companies with private student loans students will most likely need a cosigner because they have limited credit history and income if you're considering private loans look for lenders that offer flexible repayment options and no application or origination fees in addition to low rates.

there's no right way to pay for college but it's important to consider all your options a combination of savings scholarships grants and student loans often work together to make college possible for families at all income levels.