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Student Loan Comparison: Federal Loans vs Private Loans

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

Compare Undergraduate Student Loan Options 2021-2022

Compare Undergraduate Student Loan Options
Characteristic Direct Subsidized Loans Direct Unsubsidized Loans Parent PLUS Loans Private Student Loans
Annual Limits $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 $23,000 $31,000 (dependent student)
$57,500 (independent student)
None Varies by Lender, Degree, and Academic Major
Cosigner Required? No No Endorser if Adverse Credit History; Student cannot be endorser Cosigner required 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 consecutive 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 3.73% for the 2021-2022 academic year Fixed at 3.73% for the 2021-2022 
academic year
Fixed at 6.28% for the 2021-2022
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 

1.057% * 1.057% * 4.228% * 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 Unpaid Prior School Year Charges 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 Undergraduate Students Undergraduate Students Parents of Dependent Undergraduate Students Students and Parents
Lender 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
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 Immediate Repayment, Full Deferment Immediate Repayment, Full Deferment Immediate Repayment, Interest-Only Payments, Fixed In-School Payments, Full Deferment
Grace Period Length 6 months 6 months 6 months Generally 6 months for most loans, but terms may vary by lender
Forbearance Options Up to 3 years Up to 3 years Up to 3 years 1 year
Repayment Term 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, Extended, Graduated, ICR, IBR, PAYE, REPAYE Standard, Extended, Graduated, ICR, IBR, PAYE, REPAYE
Standard, Extended, Graduated
 Varies by Lender
Public Service Loan Forgiveness Yes Yes No 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, 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 Yes
Subject to Defense of Infancy No No No Yes
Truth-in-Lending Act (TILA) Disclosures Required No No No Yes
Oversight U.S. Department of Education U.S. Department of Education U.S. Department of Education CFPB

* For loans borrowed Oct. 1, 2021 through Sept. 30, 2022.

Compare Featured  Private Student Loan Lenders

Recommendation
Best for Private Loans
Interest Rates

Variable Rates: 1.13% APR - 11.23% APR1

Fixed Rates: 3.50% APR - 12.60% APR1

Repayment Terms

N/A

Recommendation
Best for Private Loans
Interest Rates

Variable rates as low as: 0.99% APR1

Fixed rates as low as: 2.99% APR1

Repayment Terms

5, 8, 10 or 15 years2

Recommendation
Best for Private Loans
Interest Rates

Variable rates as low as: 1.50% APR1

Fixed rates as low as: 2.97% APR1

Repayment Terms

5, 7, 10, 12 and 15 years

Recommendation
Best for Private Loans
Interest Rates

Variable rates as low as: 1.96% APR1

Fixed rates as low as: 3.69% APR1

Repayment Terms

5, 10, 15 years1

Recommendation
Best for Private Loans
Interest Rates

Variable rates as low as: 0.99% APR1

Fixed rates as low as: 2.99% APR1

Repayment Terms

5, 7, 10, 12 or 15 years

Funding U Merit-Based, No-Cosigner Student Loan

Recommendation
Best for Private Funding
Interest Rates

Fixed: 7.49% APR - 12.99% APR (not including 0.5% ACH discount)*

Repayment Terms

10 years

$20 minimum/month OR interest-only payments while in school

compare student loan interest rates

Compare Graduate Student Loan Options

Compare Graduate Student Loans
Characteristic Direct Unsubsidized Loans Grad PLUS Loans Private Student Loans
Annual Limits $20,500 Cost of Attendance minus Student Aid Cost of Attendance minus Student Aid
Cumulative Limits $138,500 (grad + undergrad combined), Increased to $224,000 for medical school students None Varies by Lender, Degree, and Academic Major
Cosigner Required? 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 No Varies by Lender and Borrower Credit.
Typically requires 12-48 months of consecutive on-time payments.
Credit Criteria 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 Yes
Interest Rate Type Fixed Fixed Fixed and Variable Options
Interest Rate Fixed at 5.28% for the 2021-2022 academic year
Fixed at 6.28% for the 2021-2022 academic year
Depends on the borrower and cosigner credit
Subsidized Interest No No No
Interest Capitalization Once at Repayment Once at Repayment Monthly, Quarterly, Annually, or Once at Repayment
Rate Reduction for Automatic Debit 0.25% 0.25% Varies by Lender
Loan Fees 1.057% * 4.228% * Varies by Lender and Borrower Credit
Typically, 0% to 5%
Requires School Certification Yes Yes Yes
Requires FAFSA Yes Yes No
Requires Half-Time Enrollment Yes Yes Varies by Lender
Available for Prior School Years No No Varies by Lender
Available for Continuing Education No No Varies by Lender
Bar Study, Residency and Relocation Loans No No Yes
Borrower Graduate Students Graduate Students Graduate Students
Lender U.S. Department of Education U.S. Department of Education Banks, Credit Unions, Financial Institutions, State Agencies, Colleges and Universities
Secured? No No No
Student Loan Interest Deduction Yes Yes Yes
Interest Rate Reduction for In-School Interest Payments No No Varies by Lender
In-School and Grace Period Deferment Options 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 6 months 6 months Generally 6 months for most loans, but terms may vary by lender
Forbearance Options Up to 3 years Up to 3 years 1 year
Repayment Term 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, Extended, Graduated, ICR, IBR, PAYE, REPAYE
Standard, Extended, Graduated, ICR, IBR, PAYE, REPAYE
Varies by Lender
Public Service Loan Forgiveness Yes Yes No
Death Discharge Yes Yes, if borrower or student dies Varies by Lender
Total and Permanent Disability Discharge Yes Yes Varies by Lender
Prepayment Penalties None None None
Can be 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 Yes
Subject to Defense of Infancy No No Yes
Truth-in-Lending Act (TILA) Disclosures Required No No Yes
Oversight U.S. Department of Education U.S. Department of Education CFPB

* For loans borrowed Oct. 1, 2021 through Sept. 30, 2022.

Recommendation
Best for Private Loans
Interest Rates

Variable Rates: 1.13% APR - 11.23% APR1

Fixed Rates: 3.50% APR - 12.60% APR1

Repayment Terms

N/A

Recommendation
Best for Private Loans
Interest Rates

Variable rates as low as: 0.99% APR1

Fixed rates as low as: 2.99% APR1

Repayment Terms

5, 8, 10 or 15 years2

Learn More About Student Loans for College

Best Private Student Loans for October 2021

Private Parent Student Loans

Introduction to Parent PLUS Loans

Financial Aid for Graduate School

Filing the FAFSA

Subsidized Student Loans

Unsubsidized Student Loans

Student Loans Without a Cosigner

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