Private and Federal Loan
If you are thinking of opting for Private Student Loan, here is a comparative chart to help you understand the difference between federal student loan and private student loan.
| Federal Student Loans|| Private Student Loans|
|You need not repay your federal student loans before you graduate or change your enrollment status to less than half-time.||You might have to start your repayment while still in school|
|The interest rate is fixed and is often lower than private loans. It is also lower than loans taken on credit card.||Interest rates of private student loans are as high as 18%.|
|Undergraduate students with financial need will likely qualify for a subsidized loan where the government pays the interest while you are in school on at least a half-time basis.||You have to pay your own interest. Neither the government nor any other agency will pay for your loan.|
|Credit check is not important for most federal student loans (except for PLUS loans). Your credit record will improve with student loans.||A good credit record is important for private student loans. The cost of a private student loan will depend on your credit score and other factors.|
|You won’t need a cosigner to get a federal student loan in most cases.||You may need a cosigner.|
|Tax deductible interest||Interest may not be tax deductible.|
| Loans can be consolidated into a Direct Consolidation Loan.|| Private student loans cannot be consolidated into a Direct Consolidation Loan. |
| If you are having trouble repaying your loan, you may be able to temporarily postpone or lower your payments.|| |
Private student loans may not offer forbearance or deferment options.
|There are several repayment plans like adjusting your monthly payment to your income.||You should check with your lender to find out about your repayment options.|
|There is no prepayment penalty fee.||Some private student loans have prepayment charges. Check with your private loan provider about repayment charges.|
|You may be eligible to have some portion of your loans forgiven if you work in public service.||It is unlikely that your lender will offer a loan forgiveness program.|
|You can seek assistance at 1-800-4-FED-AID and on our websites.||The Consumer Financial Protection Bureau's private student loan ombudsman may be able to assist you if you have concerns about your private student loan.|