Federal student loans include many benefits (such as fixed interest rates and income-based repayment plans) not typically offered with private loans. In contrast, private loans are generally more expensive than federal student loans.
The chart below provides a summary of the differences.
Federal Student Loans
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Private Student Loans
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You will not have to start repaying your federal student loans until you graduate, leave school, or change your enrollment status to less than half-time.
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Many private student loans require payments while you are still in school.
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The interest rate is fixed and is often lower than private loans—and much lower than some credit card interest rates. View thecurrent interest rates on federal student loans.
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Private student loans can have variable interest rates, some greater than 18%. A variable rate may substantially increase the total amount you repay.
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Undergraduate students with financial needwill 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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Private student loans are not subsidized. No one pays the interest on your loan but you.
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You don’t need to get a credit check for most federal student loans (except for PLUS loans). Federal student loans can help you establish a good credit record.
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Private student loans may require an established credit record. The cost of a private student loan will depend on your credit score and other factors.
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You won’t need a cosigner to get a federal student loan in most cases.
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You may need a cosigner.
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Interest may be tax deductible.
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Interest may not be tax deductible.
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Loans can be consolidated into a Direct Consolidation Loan. Learn about yourconsolidation options.
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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.
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Private student loans may not offerforbearance or deferment options.
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There are several repayment plans, including an option to tie your monthly payment to your income.
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You should check with your lender to find out about your repayment options.
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There is no prepayment penalty fee.
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You need to make sure there are no prepayment penalty fees.
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You may be eligible to have some portion of your loans forgiven if you work in public service. Learn about our loan forgiveness programs.
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It is unlikely that your lender will offer a loan forgiveness program.
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Free help is available at 1-800-4-FED-AID and on our websites.
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The Consumer Financial Protection Bureau'sprivate student loan ombudsman may be able to assist you if you have concerns about your private student loan.
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