Federal vs. Private Student Loans

Do you know the difference between federal loans and private loans? Federal and private student loans are not necessarily better or worse, but there are differences you should know between the two types of student loans.
Federal Student Loans
There are three types of federal student loans – direct subsidized loans, direct unsubsidized loans, and direct PLUS loans.
Through federal student loans:

• Borrowers do not need a credit check to be considered (except for Federal PLUS Loans for parents and graduate students)
• Income-driven repayment plans are offered by some federal student loans.
• Borrowers are allowed to change their repayment plans even after they’ve taken out the loan.

Fill out the Free Application for Federal Student Aid (FAFSA) as the first step in applying for federal student loans. The FAFSA must be submitted to receive federal student aid. Your eligibility for other federal student aid like grants and work-study are also determined by the FAFSA.
Private Student Loans
Private student loans can be obtained by applying directly at a bank or financial institution. Your credit history is taken into consideration by the private lender. A fixed or variable interest rate are offered as choices. In addition, private student loans offer different repayment plans such as to make interest-only or fixed payments while in school. Private student loans are also more flexible due to the fact that it can be taken out by a student, parent, or creditworthy individual.

	Federal Student Loans	Private Student Loans
How do you get a federal loan vs. a private loan?	Submit the FAFSA.	Apply directly with the bank or financial institution that issues the loan.
Is your credit history considered?	No, except for PLUS loans.	Yes, along with other factors.
Is there a limit to how much you can borrow?	Yes, it is determined by the FAFSA.	It varies by lender.
Will my student loan application have a better chance of getting approved with the help of a cosigner?	No. You don’t apply with a cosigner for any federal student loans.	Yes.
Does financial need count?	Yes, you may qualify for a subsidized loan.	No.
Can you change your repayment plan after you taken out a loan?	Yes.	No.

GDP was founded with the sole purpose of providing the essential services needed in order to navigate, prepare and follow through with the Federal Student Loan documentation process. Contact us to learn more about programs you may qualify for.
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