Compare Federal and Private Education Loans
As you determine the best way to finance your education, you should consider the full range of student financial aid options available to you. Private loans are often used to supplement federal student loans, when federal loans are not sufficient to cover the full cost of education.
Federal student loans are based largely on demonstrated financial need while private student loans, funded by banks and non-profit organizations, are credit-based loans, relying on the credit score of the student or co-signer if applicable.
Private Education Loans vs. Stafford Loan
| Private Education Loan | Federal Stafford Loan | |
|---|---|---|
| Funds Disbursement | Sent directly to you | Sent to school |
|
Annual Borrowing Amount
Stafford Loan amounts listed are for dependant undergraduate students. For complete Stafford Loan borrowing amounts please visit StaffordLoan.com. |
Cost of attendance or $45,000, whichever is less |
First year: $5,500 ($3,500 subsidized/$2,000 unsubsidized);
Second Year: $6,500 ($4,500 subsidized/$2,000 unsubsidized); Third Year and Beyond: $7,500 ($5,500 subsidized/$2,000 unsubsidized); Graduate or Professional: $20,500 ($8,500 subsidized/$12,000 unsubsidized) |
| Aggregate Lifetime Borrowing Amount | Undergrads: $75,000; graduate students: $150,000 | $31,000 ($57,500 for independent student) |
| Deferment | No payments until after graduation | Full deferment while enrolled in school at least half time, retain full deferment/forbearance options. |
| Loan Eligibility | Enrolled at least half time at an eligible school; Must be a U.S. citizen or permanent resident or have a cosigner who is; Additional loan eligibility criteria. | Must be a U.S. citizen or national, a U.S. permanent resident, or an eligible non-citizen; Must be enrolled at least half time in a non direct lending program that accepts Stafford loans. |
| FAFSA Required? | No FAFSa required | Must file the FAFSA |
| Interest Rate | One-Month LIBOR + 2.5% to One-Month LIBOR + 8%. Applying with a credit worthy qualified cosigner may help you qualify for a lower rate. | 6.8% Unsubsidized/Graduate rate; 6.0% Subsidized rate. |
| Repayment Term | Up to 25 years | 10 years unless consolidated |
| Borrower Benefits |
$300 principal reduction upon graduation1 ; 0.25% interest rate reduction with ACH2 |
NA |
1 Proof of graduation is required.
2 The 0.25% rate reduction is available to borrowers who arrange with their servicer to automatically deduct monthly payments from their personal bank account. Savings programs are effective for all loans disbursed on or after October 13, 2006.
2 The 0.25% rate reduction is available to borrowers who arrange with their servicer to automatically deduct monthly payments from their personal bank account. Savings programs are effective for all loans disbursed on or after October 13, 2006.
