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.

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