Info for Parents Counselors

Private Loans vs Federal Loans

Private educational loans may have significant disadvantages when compared with federal educational loans. We encourage you to complete the FAFSA (Free Application for Federal Student Aid) and borrow any federal loans for which you are eligible before borrowing through private loans. Homeowners may also want to consider a home equity loan.


Federal Loans

Private Loans

Co-Signer Required

Perkins/Stafford/DL: No
PLUS: Usually no

Usually Yes

Credit Check Required

Perkins/Stafford/DL: No


Deferment Options

Several options
guaranteed by law

Depends on program

Grace Period

Perkins: 9 months
Stafford/DL/PLUS: 6 months

Depends on program

Interest Rate



Loan Fees

Perkins: No fees
Stafford: up to 1.5%
PLUS: up to 4%

Depends on program

Loan Forgiveness Options

Several options
guaranteed by law
for Perkins and Stafford/DL

Generally none

Penalties for Early Repayment


Depends on program


Points to consider when choosing a private educational loan

  • What is the interest rate; is it fixed or variable; is the rate capped?
  • What fees must be paid for this loan and when are they due?
  • How will I receive my loan funds?
  • When does repayment begin and is there a grace period?
  • What will my monthly payment be?
  • What will be the total cost if I use the full repayment period?
  • Are there penalties for early repayment? 
  • Are there deferment or forbearance options?
  • Is the loan program well-established?