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%. 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.
|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 1-833-932-3439 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.