Federal vs. Private Student and Parent Loans

Details of federal and private student loans depend on whether the borrower is an undergraduate student or a graduate and professional student. These tables highlight the differences between federal and private student and parent loans for each type of student.

Comparison of Loan Options for Undergraduate Students

Adobe Acrobat PDF Download the PDF: Loan Options for Undergraduate Students
Characteristic Federal Perkins Loans Subsidized Federal Stafford Loans Unsubsidized Federal Stafford Loans Federal Parent PLUS Loans Private Student Loans
Annual Limits $5,500 $3,500 to $5,500 $5,500 to $7,500 (dependent student)
$9,500 to $12,500 (independent student)
Cost of Attendance minus Student Aid Cost of Attendance minus Student Aid
Cumulative Limits $27,500 $23,000 $31,000 (dependent student)
$57,500 (independent student)
None Varies by Lender, Degree and Academic Major
Cosigner Required? No No No Endorser if Adverse Credit History; Student cannot be endorser Cosigner required for 90% of new loans, if student borrower does not satisfy credit criteria
Cosigner Release Option N/A  N/A N/A No Varies by Lender and Borrower Credit.
Typically requires 12-48 months of initial on-time payments.
Credit Criteria None None None Borrower may not have an Adverse Credit History Credit Scores, Debt-to-Income Ratios, Minimum Income, No Adverse Credit History
Interest Rates Based on Credit Criteria No No No No Yes
Interest Rate Type Fixed Fixed Fixed Fixed Fixed and Variable Options
Interest Rate Fixed at 5.0% Fixed at 4.66% for the 2014-2015 academic year Fixed at 4.66% for the 2014-2015 
academic year
Fixed at 7.21% for the 2014-2015
academic year
Depends on the borrower and cosigner credit
Subsidized Interest Yes Yes No No No
Interest Capitalization N/A N/A Once at Repayment Once at Repayment Monthly, Quarterly, Annually or Once at Repayment
Rate Reduction for Automatic Debit 0.25% 0.25% 0.25% 0.25% Varies by Lender
Loan Fees None 1.073% 1.073% 4.292% Varies by Lender and Borrower Credit
Typically, 0% to 5%
Requires School Certification Yes Yes Yes Yes Yes
Requires FAFSA  Yes Yes Yes Yes No
Requires Half-Time Enrollment  Yes Yes Yes Yes Varies by Lender
Available for Unpaid Prior School Year Charges  No No No No Varies by Lender
Available for Continuing Education  No No No No Varies by Lender
Bar Study, Residency and Relocation Loans  No No No No Yes
Borrower  Undergraduate Students Undergraduate Students Undergraduate Students Parents of Undergraduate Students Students and Parents
Lender  Colleges and Universities U.S. Department of Education U.S. Department of Education  U.S. Department of Education Banks, Credit Unions, Financial Institutions, State Agencies, Colleges and Universities
Secured?  No No No No No
Student Loan Interest Deduction Yes Yes Yes Yes Yes
Interest Rate Reduction for In-School Interest Payments No No No No Varies by Lender
In-School and Grace Period Deferment Options Full Deferment Full Deferment Immediate Repayment, Full Deferment Immediate Repayment, Full Deferment Immediate Repayment, Interest-Only Payments, Fixed In-School Payments, Full Deferment
Grace Period Length 9 months 6 months 6 months 6 months Generally 6 months for most loans, but terms may vary by lender
Forbearance Options 3 years 3 years 3 years 3 years 1 year
Repayment Term 10 years, Longer if Consolidated Varies by Repayment Plan and Loan Balance, 10 to 30 years Varies by Repayment Plan and Loan Balance, 10 to 30 years Varies by Repayment Plan and Loan Balance, 10 to 30 years Varies by Lender, 5 to 25 years
Repayment Plans Standard, Other Options if Consolidated Standard, Extended, Graduated, ICR, IBR, PAYER Standard, Extended, Graduated, ICR, IBR, PAYER
Standard, Extended, Graduated
 Varies by Lender
Public Service Loan Forgiveness  Only if Consolidated Yes Yes No No
Death Discharge Yes Yes Yes Yes, if borrower or student dies Varies by Lender
Total and Permanent Disability Discharge Yes Yes Yes Yes Varies by Lender
Prepayment Penalties None None None None None
Can be Consolidated? Yes, Loses Some Benefits if Consolidated Yes, Does Not Relock Rate Yes, Does Not Relock Rate Yes, Does Not Relock Rate Varies by Lender, Rate Based on Current Credit
Dischargeable in Bankruptcy Generally no, unless borrower demonstrates undue hardship petition in an adversarial proceeding
Consequences of Default Administrative Wage Garnishment, Intercept Income Tax Refunds and Lottery Winnings, Collection Charges, Ineligible for Federal Student Aid, Blocked Renewal of Professional License, No FHA/VA Mortgages, May be Sued, Negative Credit Reports Wage Garnishment with Court Order, Collection Charges, May be Sued, Negative Credit Reports
Subject to Statutes of Limitations No No No No Yes
Subject to Defense of Infancy No No No No Yes
Truth-in-Lending Act (TILA) Disclosures Required No No No No Yes
Oversight FSA Ombudsman FSA Ombudsman FSA Ombudsman FSA Ombudsman CFPB

Comparison of Loan Options for Graduate and Professional Students

Adobe Acrobat PDF Download the PDF: Loan Options for Graduate and Professional Students
Characteristic Federal Perkins Loans Unsubsidized Federal Stafford Loans Federal Grad PLUS Loans Private Student Loans
Annual Limits $8,000 $20,500 Cost of Attendance minus Student Aid Cost of Attendance minus Student Aid
Cumulative Limits $60,000 (grad + undergrad combined) $138,500 (grad + undergrad combined), Increased to $224,000 for medical school students None Varies by Lender, Degree and Academic Major
Cosigner Required? No No Endorser if Adverse Credit History; Student cannot be endorser Cosigner required for 90% of new loans, if student borrower does not satisfy credit criteria
Cosigner Release Option N/A N/A No Varies by Lender and Borrower Credit.
Typically requires 12-48 months of initial on-time payments.
Credit Criteria None None Borrower may not have an Adverse Credit History Credit Scores, Debt-to-Income Ratios, Minimum Income, No Adverse Credit History
Interest Rates Based on Credit Criteria No No No Yes
Interest Rate Type Fixed Fixed Fixed Fixed and Variable Options
Interest Rate Fixed at 5.0% Fixed at 6.21% for the 2014-2015 academic year
Fixed at 7.21% for the 2014-2015 academic year
Depends on the borrower and cosigner credit
Subsidized Interest Yes No No No
Interest Capitalization N/A Once at Repayment Once at Repayment Monthly, Quarterly, Annually or Once at Repayment
Rate Reduction for Automatic Debit 0.25% 0.25% 0.25% Varies by Lender
Loan Fees None 1.073% 4.292% Varies by Lender and Borrower Credit
Typically, 0% to 5%
Requires School Certification Yes Yes Yes Yes
Requires FAFSA  Yes Yes Yes No
Requires Half-Time Enrollment  Yes Yes Yes Varies by Lender
Available for Prior School Years No No No Varies by Lender
Available for Continuing Education  No No No Varies by Lender
Bar Study, Residency and Relocation Loans  No No No Yes
Borrower  Graduate Students Graduate Students Graduate Students Graduate Students
Lender  Colleges and Universities U.S. Department of Education  U.S. Department of Education Banks, Credit Unions, Financial Institutions, State Agencies, Colleges and Universities
Secured?  No No No No
Student Loan Interest Deduction Yes Yes Yes Yes
Interest Rate Reduction for In-School Interest Payments No No No Varies by Lender
In-School and Grace Period Deferment Options Full Deferment Interest Only Payments, Immediate Repayment, Full Deferment Immediate Repayment, Full Deferment Immediate Repayment, Interest-Only Payments, Fixed In-School Payments, Full Deferment
Grace Period Length 9 months 6 months 6 months Generally 6 months for most loans, but terms may vary by lender
Forbearance Options 3 years 3 years 3 years 1 year
Repayment Term 10 years, Longer if Consolidated Varies by Repayment Plan and Loan Balance, 10 to 30 years Varies by Repayment Plan and Loan Balance, 10 to 30 years Varies by Lender, 5 to 25 years
Repayment Plans Standard, Other Options if Consolidated Standard, Extended, Graduated, ICR, IBR, PAYER
Standard, Extended, Graduated, ICR, IBR, PAYER
 Varies by Lender
Public Service Loan Forgiveness  Only if Consolidated Yes Yes No
Death Discharge Yes Yes Yes, if borrower or student dies Varies by Lender
Total and Permanent Disability Discharge Yes Yes Yes Varies by Lender
Prepayment Penalties None None None None
Can be Consolidated? Yes, Loses Some Benefits if Consolidated Yes, Does Not Relock Rate Yes, Does Not Relock Rate Varies by Lender, Rate Based on Current Credit
Dischargeable in Bankruptcy Generally no, unless borrower demonstrates undue hardship petition in an adversarial proceeding
Consequences of Default Administrative Wage Garnishment, Intercept Income Tax Refunds and Lottery Winnings, Collection Charges, Ineligible for Federal Student Aid, Blocked Renewal of Professional License, No FHA/VA Mortgages, May be Sued, Negative Credit Reports Wage Garnishment with Court Order, Collection Charges, May be Sued, Negative Credit Reports
Subject to Statutes of Limitation No No No Yes
Subject to Defense of Infancy No No No Yes
Truth-in-Lending Act (TILA) Disclosures Required No No No Yes
Oversight FSA Ombudsman FSA Ombudsman FSA Ombudsman CFPB