Both the federal government and private institutions offer Student Loans.
Both of these loan types are different and they offer different interest rates and loan terms. Here we inspect these differences, and we present
the results to you, so you can make a wiser choice when shopping for student loans.
The most important student loan is the one with lowest interest rate.
Student Loans Quick Link List:
Student Loans Parent Loans Federal Student Loans Private Student Loans Loans For Graduates Federal Graduate Loans Private Graduates Loans Loans By Profession Federal Parent Loans Private Parent Loans Other Parent Loans Federal Programs Peer to Peer Loans Personal Loans Student Loans Repayment Apply For Student Loans Student Loans In Default Interest Rates
Students Parents Undergraduate Students Graduate Students Professionals MBA Students Business Students Law Students Medical Students Nursing Students Dental Students Military and Veterans International Students Disadvantaged Students
Obama Student Loans Student Loan Taxes Federal vs. Private Loans Private Loan Benefits Loans Repayment Protection Interest Rates Explained How To Choose a Lender Highly Rated Student Loans International Student Loans Best Student Loan For Me How To Choose a Student Loan Student Loan Lenders Bad Credit History Loans Student Loans Eligibility Loan Process Federal Direct Loans Program Federal FFEL Loans Program Compare Loan Types Before You Get a Loan After You Get a Loan Interest Rates Compare Student Loans Build Perfect Credit History
Federal Stafford Loan(Sub) Federal Parent PLUS Loan Federal Stafford Loan(UnSub) Federal Perkins Loan Private Student Loan
Federal Stafford Loan (Sub)
Financial Aid WIZARD Student Loan Calculator
Loans Discussion Loans Facts Loans FAQ Loans Glossary Loan News and Articles Loans Questions Loans Tips |
Federal vs Private Student Loans Overview
Federal Student Loans are cheaper than Private Student Loans and it is much
easier to Apply for them. However, private student loans offer more flexible repayment options, and
Students can borrow much more.
In the beginning let's take a look at some of the key differences between federal and private college loans:
Private Student Loans  Not Awarded Based On Financial Need And Anybody Can Apply No Financial Aid Deadlines. Students Can Apply All Year Long Allow To Borrow Up To The Full Cost of Attendance Helpful When Other Forms Of Financial Aid Are Not Available, or Aren't Enough Higher Interest Rates Some Have Variable Interest Rates Interest Rates and Fees Are Determined by The Lender And Often Depend on Your Credit Rating May Require the Borrower to Have a Co-signer May Not Have Deferment And Forbearance Options May Offer Borrower Benefits in The Form Of Interest Rates Discounts May Require School Certification Require Completion of a Self-Certification Form
Eligibility
Eligibility requiremetns for both federal and private student loans are very similar except for private education loans
good Credit History is required. This is a very important requirement and if your credit history is not perfect
follow our Build Perfect Credit History page to make it so.
How To Apply
In case of Federal College Loans students must start the applying by submitting
their FAFSA Application. It is required to start there.
Loan Amount
Private student loans are much more flexible when it comes to how much can be borrowed. They allow to take out loans up to but cannot exceed the student's cost of attendance. It includes items
like: tuition, fees, health insurance, etc.
Interest Rates
As we already listed below the Interest Rates on federal loans are much better than on
private education loans. In the Federal Programs the rates are fixed giving students the same rate from the beginning to the end
of the loan. On top of that the rates are much lower, sometimes half of the rates used by private student loans.
Private Student Loans have much higher rates and that is their biggest disadvantage. Private lenders offer
discounts and rebates, but still this is nothing to some of the 5% federal loans. The worst part about private loan rates is the fact the rate does not have to be constent. Very
often private student loans come with variables rates that can increase the cost of the loan as time goes on.
Loan Repayment
How you repay the loan is another important difference between federal and private loans. When you take out federal loans you are eligible to stretch out repayment plans and lower monthly payments.
New federal legislation taking effect in July will cap monthly payments based on a percentage of the borrower's income.
|
 |
Student Loan Tips |
Q: Take Out Student Loans As The Last Resort
When you try to get all types of Financial Aid and you do not receive anything or if the amount of money is not enough try borrowing money by taking out loans.
Q: Use Your Grandparents
Everyone talks about parents, but very rarely do we hear Grandparents. They can take out a Loans and help you store some of the assets.
Q: Apply For Student Loans On the Same Day
We are not sure if this tip is valid, but if you have to apply for more than one student loan (different banks) do it on the same day. This will prevent the second bank to see your first loan on the credit history and it will be easier to get qualified.
View All Tips
 |
Important Questions |
Q: What is the best private loan?
One with the lowest fixed interest rate and no fees comparing to other loans.
Q: Do Student Loans Cover Off-Campus Housing?
Yes, in general student loans can be used for anything you want related to college. That's why it's a loan. Grants and scholarships on the other hand have to be used for tuition and books only.
Q: Which loan offers the most amount of money?
Private student loans allow you to borrow up to the full cost of attendance.
View All Questions
Federal student loans are much better than private student loans, but their biggest problem is they are small and can not cover the high cost of college.
That is why students have to borrow using Private Student Loans, which come with higher
Interest Rates, but allow students and parents to borrow up to the full cost of
attendance.
Back Home
