Q: What’s the Difference Between Federal and Private Student Loans? I am getting ready to apply for college, and want to know why federal student loans should be favored over private student loans?
A: In short, the biggest difference between federal student loans and private student loans are interest rates, repayment options, and deferment options.
1. Federal student loans, through a bank, lender or the Department of Education, are funded and regulated by the federal government, and can offer lower interest rates, fixed interest rates, better repayment options and more flexible deferment options (in comparison to private student loans).
2. Private student loans on the other hand, are NOT subsidized by the federal government, and therefore are not regulated as closely as federal student loan programs. Private student loans are based on your credit score, interest rates are variable, and (as of the current date) it is difficult to get a consolidation loan for private student loans since many lender are not offering this option anymore (this may not be a big deal to you now, but could be when it’s time to repay your student loans).
Private student loans should only be sought after you have exhausted ALL of your federal student loan options.
To learn all about federal student loans for college, please visit our Federal Student Loans section. To learn all about private student loans for college, please visit our Private Student Loans section.
TheStudentLoanShark:
Answering all of your student loan and college financial aid questions. Read all of my posts by clicking here or ask me your student loan and/or college financial aid questions.
Tags: federal student loans, Private student loans
Now What? Share this Student Loan Information or Comment!
| Share |
