Differentiating A Private Student Loan From A Federal Student Loan
There are two main types of student loans that you have the option of taking out: a private student loan and a federal student loan. A federal student loan is disbursed through the US federal government and is the easiest to obtain. On the other hand, a private student loan is obtained from private lenders and companies. You can use both types of student loans to fund your education, but keep in mind that you cannot consolidate the two types of loans together.
When it comes to consolidating your student loans, you should first consolidate any federal student loan first. There are many benefits with this type of consolidation like a lower interest rate, reduced monthly payments, and reducing the term of your loan repayments. You are able to get a student loan consolidation once you graduate from college. If you have a private student loan, you will have to consolidate it separate from your federal loans. You should never mix payments of a federal student loan and private student loan while you have a student loan consolidation, because you will not receive the benefits of either if they are combined. The interest on a federal student loan is tax deductible, you can defer payments when you go back to school, and the loan is forgiven for certain types of service. A private student loan does not have these advantages as they are treated just as normal loans. Mixing up your federal and private student loan payments during student loan consolidation can make you lose all the benefits of the consolidation.
Back To Articles
|
|
