High-level studies in the USA are definitely expensive and every year many students take loans to ensure that their dreams of higher studies are fulfilled. Considering the fact that when you take the loan you have to repay it too, most people wonder which type of loan to opt for. Federal loans are issued by the US government, while the private students loans come from banks, credit unions and other types of lenders. Let us have a look at the difference between the two.
The government gives you two types of student loans i.e. direct subsidized and unsubsidized. While the former is a need-based loan the latter is not. However, if you are not selected for subsidized you might be chosen for unsubsidized. On the other private lenders have a detailed check on your credit score, debt and financial details to decide if you can get a loan.
For a government loan, the benefits given are many. In fact, at times the government waives off the interest especially if you have been given the direct subsidized loan. For the subsidized loan though you might have to pay the interest the rate would be less. However, in the case of a private loan, the interest rate would be high and also dependent on many other factors.
Paying The Loan Back
In case of a federal loan, the repayment is not due until the entire education tenure is not over keeping you in a safe zone. On the other hand, the private lender might start asking for repayment in between the session itself. In case you are unable to pay the loan the private lender may take you to task immediately while government can do so only after 270 days of non-payment are over.