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.
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Interest rates of private student loans are as high as 18%. Check exact rate of interest with your giver. |
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.
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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.
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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
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Interest may not be tax deductible. |
Loans can be consolidated into a Direct Consolidation Loan.
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Private student loans cannot be consolidated into a Direct Consolidation Loan.
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| 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.
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| 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.
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| You can seek assistance at 1-833-932-3439 and on official website https://studentaid.gov/ |
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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