Loan Choice (Federal vs. Private)

• Good credit or average credit
• Perhaps a shorter established credit history, for example new permanent residents

• Excellent credit
• Generally longer established credit history
• Access to a cosigner with excellent credit

• Generally lower risk tolerance

• Generally higher risk tolerance

• Plan to take a longer time to pay
• Expect to need flexibility to restructure their monthly payments
• Unsure about their plans following graduation

• Plan to pay the loan off aggressively over a short period of time
• Less concerned about flexible repayment options
• Confident in their repayment ability following graduation

• Students who have borrowed in the federal loan program for prior degrees and still have outstanding prior loan debt
• Students who have dependents

• Students who have borrowed previously but have paid the loans in full or who have borrowed a private loan in a prior degree

• Fixed interest rate for both loans for the life of the loan
• All borrowers receive the same interest rate, regardless of an individual's credit evaluation

• May be fixed or variable
• Depends on borrower’s credit evaluation by the lender
• May be tied to a specific repayment plan as indicated on the loan application or promissory note

• Federal Direct Unsub =1.057% 
• Federal Grad PLUS = 4.228% 

*(for loans first disbursed on or after Oct. 1, 2020)

• Most private loans do not have an origination fee (varies by lender)
• Origination fees are typically lower (2-2.5% on average)

• In-school deferment (repayment deferred until 6 months after graduation or enrollment drops below 6 credits)

• In-school deferment (unless the terms of the loan require payment after disbursement)
• Grace period is typically 6 months after graduation (may vary by lender)

• Flexible repayment plans
• Standard repayment term is 10 years; Extended is 25 years
• Income-based repayment plans available
• May change repayment plan at least once per year

• Repayment plans vary by lender (typically ranging from 5-15 years)
• You may be required to commit to a repayment plan at the time of your application
• Usually little to no flexibility to change repayment plans

• Generous forbearance options for economic hardship or unemployment (up to 36 months) if you cannot make your loan payment

• Forbearance options vary by lender and are typically much shorter than the federal forbearance

• Loans are automatically discharged for total disability or death
• Family members are not held responsible for loan payments

• Discharge options vary by lender and are not guaranteed
• Family members or spouse may be responsible for loans under these circumstances