2 Charts That Compare Federal and Private Student Loan Options

 April 21, 2020
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Private Student Loan rates starting at 0.99% APR

0.99% to 11.98% 1
VARIABLE APR

Visit Lender

1.13% to 11.23% 2
VARIABLE APR

Visit Lender

0.99% to 11.44% 3
VARIABLE APR

Visit Lender

  • Variable APR

Student loan comparisons can guide you in picking the right type of financing for school. A handy loan comparison chart can also help you understand the basics of education debt, which is much needed. According to our survey of borrowers, about 53% of respondents were only “somewhat confident” they knew how student loans worked.

To ensure you get the best out of borrowing, consider our student loan comparison charts below.

Student loan comparison chart for undergraduate borrowers

Undergraduates have three options for borrowing: Direct Subsidized and Unsubsidized Loans, Parent PLUS Loans and private loans. Keep in mind that these loans could be used in conjunction. You might rely on a federal loan and either a Parent PLUS Loan (borrowed in your mom or dad’s name) or a private loan to fund your next semester.

Direct Loan (Federal) Parent PLUS Loan (Federal) Private Loan
Borrower Students Parents Students, parents
Credit check requirement No, but considers information from the Free Application for Federal Student Aid (FAFSA) Yes Yes
Cosigner option None Uses a guarantor, in the case of adverse credit history Varies by lender
Annual borrowing limit $5,500 to $12,500 Up to the cost of attendance Varies
Aggregate loan limit $31,000 to $57,500 None Varies
Interest rate Fixed: 5.05% Fixed: 7.08% Fixed and variable rates vary
Origination fee 1.062% of total loan amount 4.236% of total loan amount Varies
Repayment lengths 10 to 30 years 10 to 30 years 5 to 15 years
Repayment options 7, including income-driven repayment (IDR) plans 3 Varies
Payment deferment options Yes Yes Varies
Months of payment forbearance available No cumulative limit No cumulative limit 12 at most
Path to student loan forgiveness Yes Yes No
Contact for support Federal Student Aid (FSA) Ombudsman FSA Ombudsman Consumer Financial Protection Bureau (CFPB)
Key borrower criteria Minimum half-time enrollment in an eligible program, plus proven financial need (for subsidized loans) Borrow on behalf of a child enrolled at least half-time in an eligible program Have a strong credit score and debt-to-income ratio or have a cosigner who does
Key borrower benefits Your interest is covered while you’re in school (subsidized loans), plus you have access to flexible repayment plans and protections You can request a deferment that delays repayment until six months after the student leaves school You could score a lower interest rate with a creditworthy cosigner

Student loan information and rates as of April 3, 2020

Student loan comparison chart for graduate borrowers

Graduate and professional students have three options for borrowing: Direct Unsubsidized Loans, Graduate PLUS Loans, and private student loans. Don’t forget that these loans could be combined for your next year of schooling. You might supplement an unsubsidized loan with a PLUS Loan or a private loan, for example.

Direct Unsubsidized Loan (Federal) Graduate PLUS Loan (Federal) Private Loan
Borrower Students Students Students, parents
Credit check requirement No, but considers information from the FAFSA Yes Yes
Cosigner option No Guarantor, in the case of adverse credit history Varies by lender
Annual borrowing limit $20,500 Up to the cost of attendance Varies
Aggregate loan limit $138,500, including undergraduate loans None Varies
Interest rate Fixed: 6.60% Fixed: 7.08% Fixed and variable rates vary
Origination fee 1.062% of total loan amount 4.236% of total loan amount Varies
Repayment terms 10 to 30 years 10 to 30 years 5 to more than 20 years
Repayment options 7, including IDR plans 7, including IDR Varies
Payment deferment options Yes Yes Varies
Months of payment forbearance available No cumulative limit No cumulative limit Typically 12
Path to student loan forgiveness Yes Yes No
Contact for support FSA Ombudsman FSA Ombudsman CFPB
Key borrower criteria Be enrolled at least half-time in an eligible program Be enrolled at least half-time in an eligible program Have a strong credit score and debt-to-income ratio or have a cosigner who does
Key borrower benefits You have access to flexible repayment plans and protections You have access to more federal loans after maxing out your Direct Unsubsidized Loan allotment Loans for special cases, such as for medical school residency, and your borrowing limits could be higher

Student loan information and rates as of April 3, 2020

Compare student loans and key similarities

The charts above highlight the distinctions between federal and private loans, and there are many. Be aware, however, that all student loans have this fact in common: They’re a debt you borrow for your education — and agree to repay, with interest, long after you leave school.

Federal loans and private loans are also similar in other, smaller ways, including:

  • No prepayment penalties
  • A six-month grace period when you leave school
  • A 0.25% interest rate reduction for enrolling in autopay
  • Serious consequences for defaulting, such as wage garnishment
  • Difficult to discharge loans via bankruptcy
  • Eligibility for refinancing

Unfortunately, not all private student loan companies provide 100% of these perks. If borrowing a private loan makes sense for your situation, shop around and compare lenders to ensure they offer as many federal loan-like features as possible. Less reputable banks, credit unions and online companies might charge you for repaying your loan ahead of schedule, for example, or not honor a full, postgraduate grace period.

Compare student loans and key differences

Private student loans might come with lower interest rates and fewer fees compared to federal student loans. But that’s only if you have a strong credit score and debt-to-income ratio or find a cosigner who does.

Although private lenders might offer you the ability to press pause on your repayment, their deferment or forbearance options likely pale in comparison to the federal government’s. That’s why it usually makes sense to prioritize federal loans over private alternatives if you have to borrow for school.

CommonBond, for example, is one private lender that offers up to 24 months of forbearance for economic hardship over the life of your loan. But the Department of Education lets you halt your monthly payments for 12 months at a time if you can’t find work. And you can apply for additional forbearances if you face continued hardship.

Similarly, federal loans come with numerous repayment plans, plus the ability to switch your plan at any time and no cost. Even the most reputable private lenders don’t typically offer more than four repayment plans, and those include in-school payment options.

It’s also worth noting that although federal and private loans are eligible for student loan refinancing, only federal loans are eligible for a Direct Consolidation Loan. A Direct Consolidation Loan could simplify your repayment and give you access to IDR even if it wouldn’t lower your interest rate the way that refinancing could.

When you compare student loans, remember that the best loan isn’t necessarily the one that sounds good right now. Consider how the loan will serve you when you’re in school and when you enter repayment.

Need a student loan?

Check out our top picks below or learn more about other ways to pay for college.
Variable APRDegrees That QualifyMore Info
0.99% – 11.98%1 Undergraduate
Graduate

Visit College Ave

1.13% – 11.23%2 Undergraduate
Graduate

Visit SallieMae

0.99% – 11.44%3 Undergraduate
Graduate

Visit Earnest

1.85% – 11.35%4 Undergraduate
Graduate

Visit Ascent

2.20% – 6.17%5 Undergraduate
Graduate

Visit EdvestinU

1.12% – 11.23%6 Undergraduate
Graduate

Visit SoFi