What is the difference between a federal loan and a private loan?
Student loan funding is split between federal and private loans. Federal loans are those that are regulated and supported by the US Government through its various agencies. Most federal loans have limitations as to how much a student or the student’s parents can borrow; however, they also have the most flexible repayment options after graduation.
Private loans are provided directly from lending companies like banks. These typically offer higher borrowing limits based on a cosigner’s financials; however, they have much more stringent repayment terms once you graduate.
What is the difference between a subsidized loan and an unsubsidized loan?
You will see these terms when you come across federal loans and the difference is when the interest rate clock starts running. With a subsidized loan, the federal government pays the interest for you while you are still in school, so all of the loans that you borrowed while in school were not accruing interest over that period of time.
If you have an unsubsidized loan, then the interest that you will be charged on your borrowings starts to accrue the day you borrow the money. You do not have to pay this interest while you are in school; however, when you graduate, you will see that the number of loans that you borrowed will be higher than you thought and the difference is the accrued interest on the unsubsidized loans.
Student Financial Aid Recap
By now you should have a clearer understanding of the resources and sites available to you as a student. When you explore your options and make proper use of all discounts, plans, and deals available, earning that degree doesn’t seem like such a major undertaking.