Private Student Loans vs Direct Loans

college student in the library who needs to compare loans resized

Topics: Student Loans

Direct Loans, sometimes called Stafford Loans, are federally-funded, fixed-rate student loans available to undergraduate and graduate students. Direct Loans, which can have subsidized or unsubsidized interest, are among the least expensive loans available to students who need to borrow money for college.

When your financial aid package falls short of your needs, you may want to consider supplementing your federal student loans with a private student loan.

  Private Student Loans Direct Subsidized and Unsubsidized Loans
Lender Bank, credit union, financial institution, state agency, or college/university U.S. Department of Education
FAFSA Required? No Yes
Loan Limits Full cost of attendance minus other financial aid received Subject to annual and lifetime loan limits
Interest Rates
  • Fixed and variable options available
  • Rate based on credit-worthiness of borrower and cosigner
  • Undergraduate: Fixed at 4.53% (applicable on or after 7/1/2019 and before 7/1/2020)
  • Graduate/Professional: Fixed at 6.08% (applicable on or after 7/1/2019 and before 7/1/2020)
Cosigner Required? Yes, unless borrower has a strong credit history No
Loan Fees Typically 0% to 5%, depending on lender and borrower credit 1.059% (October 1, 2019 - September 30, 2020)
Repayment Plans Vary by lender Many options available, including plans based on income
Suspending Repayment Typically 1 year of forbearance, depending on lender 3 years of deferment and 3 years of forbearance available, if eligibility requirements are met
Cancelling Repayment Very limited options Multiple forgiveness and discharge options available

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