What are the differences and advantages in Federal Student Loans vs. Private Student Loans?

If you apply for financial aid, your school will likely include student loans as part of your financial aid package. It’s important to understand what types of loans you are offered. Generally, there are two types of student loans:

Federal student loans: These loans are funded by the federal government.
Private student loans: These loans are nonfederal loans, made by a lender such as a bank, credit union, state agency, or a school.

Federal student loans are:

Direct Subsidized Loans and Direct Unsubsidized Loans; https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized
Direct PLUS Loans (for graduate and professional students or parents); https://studentaid.gov/plus-app/
 

Federal student loans include many benefits (such as fixed interest rates and income-driven repayment plans) not typically offered with private loans. In contrast, private loans are generally more expensive than federal student loans.  A detailed comparison chart can be found at:

https://studentaid.gov/understand-aid/types/loans/federal-vs-private

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Details

Article ID: 21201
Created
Wed 12/7/16 2:57 PM
Modified
Tue 10/31/23 3:24 PM