Federal student loans and private student loans are different in a few ways:
Where they come from:
Federal student loans are offered by the United States federal government.
Private student loans come from private entities such as banks and financial institutions.
Forbearance, Deferment, and Forgiveness:
Federal student loans come with borrower protections such as deferment, forbearance, and loan forgiveness.
Private student loans do not have loan forgiveness options, but sometimes have deferment or forbearance options.
Repayment Plans:
Federal student loans are generally more flexible when it comes to repayment. For example, federal student loans offer Income-Based Repayment, which isn’t always an option with private student loans.
Private student loan repayment plans depend on whether you're taking out a new student loan or refinancing an existing loan.
In-School Private Student Loans*
Immediate: Full payments begin shortly after the loan is disbursed.
Interest Only: Pay only the interest while you are in school.
Fixed In-School: Make a fixed payment of both interest and principal, lower than a full payment, while you are in school.
Fully Deferred: Payment is completely deferred until after you graduate, typically for a period of six months. But, interest starts accruing as soon as funds are disbursed.
Student Loan Refinance:
If you're refinancing your student loan (federal or private), you'll likely need to begin full payments shortly after the loan is disbursed. Look out for a note from your lender/servicer for more detailed information.
*Note: not all of the in-school private student loan repayment plans are available for all loan products or from all partner lenders.
Application Process:
In order to access federal student loans, you must complete the Free Application for Federal Student Aid (FAFSA). Learn more about federal student loans by visiting the U.S. Department of Education’s website.
You do not need to complete the FAFSA in order to apply for private student loans. Complete our 2-minute application to search and compare rates from over 15 lenders.
Borrowing Limits:
Both federal and private student loans have borrowing limits.
For federal student loans, undergraduates can borrow up to $12,500 annually and $57,500 total, while graduate students can borrow up to $20,500 annually and $138,500 total.
Private student loan limits vary by lender. Most private lenders will cover up to the total cost of attendance.
In general, you should exhaust all your federal funding options before taking out any private student loans.