Funding college can be difficult with tuition in the tens of thousands of dollars per year at most private institutions. There are many options for loans, but how can you know which one is right for you? Here are a few differences between private and federal loans.
- Private lenders are going to want to know your credit score. In fact, if you don’t have an established history of credit, you will need a cosigner. On the other hand, the majority of federal loans for college students will not require a credit check, so you are more likely to be able to get these loans on your own.
- Federal student loans generally have a lower interest rate. Even last year, private institutions were charging about 8% on student loans. However, earlier this year, federal loans were still in the 4-7% range. That can make a big difference if you are borrowing $50,000 or 100,000.
- Federal loans offer programs to help you make your payments depending on your income. You are unlikely to get that kind of a deal on the repayment of a private loan regardless of which bank you are working with.
College Funding and Applications Planning Assistance
College Planning Source in San Diego offers college admissions and financial planning advice to students and families. To learn more about what we can do to help, give us a call today at 858.676.0700, or you can contact us directly via our website.