Federal Student Loans Versus Private Student Loans - Which Is
By Vanessa McHooley, Thu Dec 8th

Federal Student versus Private Student – which isbest for me?

You have gotten all the grants and scholarships you can, but youstill need money for your education. It’s time to look at loans.But which is better – federal or private loans?

Federal If you need to take out a loan to help pay foryour education, you should always look at federal first.The largest source of education around, federal arelong-term with low interest rates designed for studentswho need money for their educations. They have several benefitswhen compared to other borrowing options, including

-Lower interest rates -Options to postpone payments -Longerrepayment terms -Easier credit requirements

Eligibility for some of these loans, such as the Federal PerkinsLoan and the Subsidized Federal Stafford Loan, are needs-based,while others are not. You will need to complete a FAFSA to applyfor these loans.

The most common federal student are listed below:

Federal Perkins Loan The Federal Perkins Loan is a low-interestloan available to students who have exceptional financial need,based on the information provided on their FAFSA. Undergraduatescan borrow up to $4,000 per year, while graduate students canborrow up to $6,000 per year.

Federal Stafford Loan The Federal Stafford Loan is available toundergraduates and graduate students. Loan amounts depend on astudent’s year in school and whether they are financiallydependent or independent. Your college’s financial aid officedetermines your eligibility. Stafford can be subsidized orunsubsidized. Financial need determines which type a student iseligible for. Subsidized are based on financial need. Thegovernment pays the interest while the student is in school, indeferment, and in their grace period.

Unsubsidized are available to all students, regardless ofincome. The student is responsible for all interest.

Federal PLUS Loan The Federal PLUS Loan (Parent Loan forUndergraduate Students) is a low-interest education loan forparents. Each year, parents can borrow up to the cost ofattendance, minus other financial aid received (scholarships,grants, student loans, etc.). The PLUS loan is not based onfinancial need. Qualified applicants must pass a credit check.Private Private are designed to supplement federalloan programs and are available from schools, banks, andeducation loan organizations. They are usually used to covereducation costs that cannot be met by federal aid.

Terms for these vary according to the lender

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and yourcredit history. Keep these things in mind as you consider takingout a private loan:

-Private have credit requirements, and you may need aco-signer -The lender determines the interest rates and fees,which may be affected by your credit score -Private maynot offer deferment options -Private loan programs may offerborrower benefits, such as interest rate discounts or rebates

No matter what type of loan you take out, be conservative andborrow wisely! All have to be repaid, whether federal orprivate.

This article is distributed by NextStudent. At NextStudent, webelieve that getting an education is the best investment you canmake, and we're dedicated to helping you pursue your educationdreams by making college funding as easy as possible. We inviteyou to learn more about Federal Student or Private StudentLoans at http://www.NextStudent.com .

About the author:My goal is to help every student succeed - education is one ofthe most important things a person can have, so I have made itmy personal mission to help every student pay for theireducation. Aside from that, I am just a pretty average girl fromSD.