Private Student Loan Vs Federal Student Loan
With the rising costs of college, it is more common for students to turn to financial aid, either with a federal student loan or a private student loan. With student loans, almost anyone can attend college without having to worry about paying their way through. Of course, this means that they will have to pay their way once they graduate. Before you consider the options of student loans, it is important to differentiate between a federal student loan and a private student loan. There are advantages and disadvantages to both of these; knowing the differences will help you to make the best decision based on your situation.
A federal student loan is a loan given out by a federally funded company. The interest rates on these loans are fairly low. However, one of the drawbacks is that the process to get a federal student loan is quite drawn out and has to be renewed each year. A federal student loan has to be applied for through the FAFSA application process. Each year you fill this application out and receive a disbursement amount. Another drawback of the federal student loan is that you do not have an option of where the loans are coming from. A private student loan, on the other hand, is given out through a private loan company. Instead of going through the whole process like a federal student loan, you deal directly with a company that will disburse the loan. This is advantageous because it allows you to choose the companies that you work with. In addition, you can use the private student loan to cover other college expenses besides tuition. The drawback to the private student loan is that there are higher interest rates because they are not guaranteed by the government.
Back To Articles
|
|
