Comparing Federal and Private Student Loans Text-only | Federal Student Aid

Comparing Federal and Private Student Loans Text-only

Comparing Federal and Private Student Loans

Need a loan to help pay for college? Consider a federal loan first!


Federal Loans

Private Loans


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.

Many private student loans require payments while you are still in school.

Interest Rates

The interest rate is fixed and is often lower than private loans—and much lower than some credit card interest rates.

Private student loans can have variable interest rates, some greater than 18%. A variable rate may substantially increase the total amount you repay.

Subsidized Loans

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.

Private student loans are not subsidized. No one pays the interest on your loan but you.


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.

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.


You won’t need a cosigner to get a federal student loan in most cases.

You may need a cosigner.

Tax Deduction

Interest may be tax deductible.

Interest may not be tax deductible.

Payment Options

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.

Repayment Plans

There are several repayment plans, including options to tie your monthly payment to your income.

You should check with your lender to find out about your repayment options.

Penalty Fee

There is no prepayment penalty fee.

You need to make sure there are no prepayment penalty fees.

Loan Forgiveness

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.


Free help is available at 1-800-4-FED-AID and on

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.

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