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A common question among students planning to attend college is whether private or federal loans are better. The answer is not as simple as that, however. They are different types of loans and must often be used in some combination to pay for a student's college education.
Federal loans have more restrictions placed on them. There are specific deadlines for applying for federal student loans. If you miss the deadline you miss out on the loan. There are also specific guidelines associated with these loans that determine which academic term they can be applied to.
Then there is the fact that they are often capped, meaning there is a set maximum that you are allowed to borrow over the course of your college career. Once you reach that point you must seek other sources of aid.
Private school loans are different in several ways. They are most often used to bridge the gap between what the federal loans cover and the actual cost of attendance. You can apply for a private education loan whenever you need to, before or during a semester.
Federal loans generally have lower interest rates, but there are ways of getting rates on your private student loan lowered too. Unless you are fortunate enough to be able to write a check for the entire tuition amount, private loans are a way of paying for what you or your federal ones cannot cover right away.
|Jennifer Mathes, Ph.D.|