Federal loans are offered by the government and come with protections like fixed interest rates and income-driven repayment (IDR) plans.
Private loans are from banks, credit unions, or state lenders. They tend to have higher costs and fewer protections.
Common Federal Loan Types:
Direct Subsidized Loan: For undergrads with financial need. The loan amount depends on the number of years in school, starting at $3,500 for freshmen, with a fixed interest rate of 4.53% APR.
Direct Unsubsidized Loan: Available to all undergrads, grads, and professional students regardless of financial need. The loan amount increases each year of college, starting at $5,500. (Interest starts right away)
Direct PLUS Loans: Loans offered to graduate or professional students and parents of dependent undergraduate students to cover education expenses not covered by other financial aid. Credit check is required, and additional requirements apply for borrowers with adverse credit history. Repayment begins immediately without a grace period.
Direct Consolidation Loan: Loans that allow you to combine eligible federal student loans into a single loan with one loan servicer.