Private vs. Federal College Loans:

Private Loans

Private college loans can come from many sources, including banks, credit unions, and other financial institutions.

You can apply for a private loan at any time and use the money for whichever expenses you wish, including tuition, room and board, books, computers, transportation, and living expenses.

Unlike some federal loans, private loans are not based on financial need. In fact, you may have to pass a credit check to prove your creditworthiness.

If you have little or no credit history, or a poor one, you might need a cosigner on the loan.

Federal Loans

Federal student loans are administered by the U.S. Department of Education. They tend to have lower interest rates and more flexible repayment plans than private loans.

Payments and interest on these loans was suspended in 2020 during the economic crisis, with payments and interest resuming in mid-2022.

To qualify for a federal loan, you will need to complete and submit the government's Free Application for Federal Student Aid (FAFSA).

The FAFSA asks a series of questions about the student's and parents' income and investments, as well as other relevant matters, such as whether the family has other children in college.

Using that information, the FAFSA determines your Expected Family Contribution (EFC). That figure is used to calculate how much assistance you're eligible to receive.


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