• Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • College Financial Aid
    • Financial Aid for College
    • Student Financial Aid Eligibility
    • Student Financial Aid
      • Student Loans for College
      • College Financial Aid 101
      • Need Based Student Loans
      • Financial Aid Forms (FAFSA & College Board’s Profile)
      • Military Student Financial Aid
        • College Benefits for Active Duty Military
        • National Guard Education Benefits
        • College Aid for Military Reservists
        • College Aid for Military Veterans
        • Military Dependent Financial Aid
    • Financial Aid Programs
    • Paying for College
  • Scholarships 101
    • College Scholarships (Overview)
    • College Scholarship Applications
    • College Scholarship Essay Writing Tips
    • Unusual Scholarships
    • Unclaimed Scholarships
    • Free College Scholarship Searches
  • Find a Scholarship
    • Latest Scholarship Postings
    • Student Scholarships by College Major
    • Scholarships for Hobbies and Interests
    • Sports Scholarships
    • Community Service Scholarships
    • Association Sponsored Scholarships
  • Find a Student Loan
    • Private Student Loans
      • Sallie Mae Student Loans
      • PNC Student Loans
      • Charter One Student Loan
      • Wells Fargo College Loan Programs
      • Texas Dow Employees Credit Union Loans
      • SunTrust Education Loans
    • How Do Student Loans Work?
    • Types of Private Student Loans
    • Student Loans to Cover Living Expenses
    • Private Student Loan Interest Rates
    • Graduate Student Loans from Private Lenders
  • Saving for College
  • Site Map

Financial Aid Finder

Your Guide to Maximizing your College Financial Aid

Financial Aid Finder HomePage
You are here: Home / Federal Aid / Why Not All Student Loans Are Created Equal

Why Not All Student Loans Are Created Equal

July 15, 2012 By mara

by Mara Strom

Some of you may be wondering whether qualifying for a federal loan is really that big of a deal. You figure money is money, and debt is debt. Plus, you’ve heard that applying for and getting accepted for a private loan is easier and faster.

While it’s true that any green will pay the bills, not all loans are equally emerald. Here’s a look at the major differences between federal and private student loans.

Federal Student Loans
Backed by the U.S. government, federal student loans are available through your school (Perkins loans) or through lenders and banks (Stafford and PLUS loans). To qualify for a Federal Student Loan, you must complete a FAFSA, the Free Application for Federal Student Aid. Benefits of federal loans include:

• Lower, fixed interest rates
• Multiple repayment options with longer loan terms
• Less stringent credit requirements than for private loans

There are three kinds of federal student loans: Perkins Loans (for students with extreme financial aid), PLUS Parent Loans (for parents of undergraduate and graduate students) and Stafford Loans (for undergraduate and graduate students).

Private Loans
When federal student aid is insufficient to cover the cost of college, many students turn to private loans. Despite the “credit crunch”, the market for private loans has grown rapidly in recent years, helping to fill the gap between federal aid and skyrocketing college costs. While private loans are widely available, it’s wise to weigh your options carefully before signing up for one.

Pros:
• You can borrow up to the total cost of your education
• You don’t have to complete a FAFSA
• Funds may be use for any education-related expense
• Up to 1% reduction on interest rate for loans pay directly to your school

Cons:
• Subject to credit check
• Lower credit score will raise your interest rate on the loan
• Higher interest rate (relative to Federal loans)
• Interest rate is variable and may increase over the life of your loan
• Less amenable terms, may not allow for deferment while in school or for subsequent graduate study

In short: Private student loans undoubtedly fill a real and growing need for many students. The terms and interest rates on private loans, however, make them a less attractive option than Federal student loans. Therefore, be sure to complete your FAFSA on time so that you can qualify for Federal assistance. Only once you’ve exhausted your financial aid award from Uncle Sam should you consider a private student loan.

Sallie Mae Student Loans Ad

Filed Under: Federal Aid, Financial Aid News, Student Loans Info Tagged With: FAFSA, federal student loans, Perkins, PLUS, private student loans, Stafford

Primary Sidebar

FinancialAidFinder Logo
Sallie Mae Student Loans Ad

Latest Scholarship Postings

Systems Consultants Scholarship (Deadline: March 31, 2023)

March 18, 2023 By The FinancialAidFinder Scholarship Team

Reno and Gloria Quilici Scholarship (Deadline: April 1, 2023)

March 18, 2023 By The FinancialAidFinder Scholarship Team

Nevada Air National Guard Scholarship (Deadline: April 1, 2023)

March 21, 2023 By The FinancialAidFinder Scholarship Team

General Fred Michel Memorial Scholarship (Deadline: March 31, 2023)

March 18, 2023 By The FinancialAidFinder Scholarship Team

More Scholarship Listings

Sallie Mae Student Loans Ad

Explore Financial Aid Finder

  • College Financial Aid
  • Saving for College
  • Military Financial Aid
  • Grants for College
  • Student Scholarships
  • Student Scholarship Search
  • Find Student Loans
  • Financial Aid Info
  • Register to Receive College Financial Aid Updates
  • About FinancialAidFinder
  • Contact Us

Tags

529 plans applying for scholarships college college financial aid college savings plan college savings plans college scholarship college scholarships college student loans college tuition community college debt distance learning education engineering scholarship essay scholarships expected family contribution FAFSA federal student loans financial aid financial aid application financial aid eligibility free money for college GI Bill grant Grants hispanic scholarships minority scholarships Pell Grant Pell Grants private student loans reduce cost of college saving for college scholarship scholarship applications scholarship essays Scholarships scholarships for college student financial aid student loan student loan consolidation student loan debt Student Loans Info tuition work study

Footer

About FinancialAidFinder
Contact Us
Privacy Policy
Cookie Policy

Scholarship Submissions

If you offer a college scholarship, you can submit it to us through this form:

Scholarship Submission Form

Copyright © 2023 · FinancialAidFinder - All rights reserved.