Student Loans: Federal vs Private

When you need student loans to pay for college, you may have to evaluate all of the options that are available to you. In most cases, you will need to look at both federal and private student loans. Here are a few things to consider about these two types of student loans.

Eligibility

One of the main differences between these two types of loans is eligibility. With a federal student loan, nearly everyone that is a United States citizen can qualify. As long as you do not have any outstanding debt with the federal government, you should be able to get a loan. With private loans, they are going to depend on your credit-worthiness. This means that they are going to look at your credit score, your income, and other factors when determining your eligibility for the loan.

Interest Rates

Another area that these two types of loans differ in is the interest rates. With a private loan, you are dealing with individual investors that want to earn a nice return on their investment. With the federal government, they typically charge some of the lowest interest rates around because they are concerned with the betterment of the country as a whole.


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