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What’s the Difference Between Private Student Loans and Federal Student Loans?

What’s the Difference Between Private Student Loans and Federal Student Loans?

Many students are unable to pay for a full school tuition all at once. Financial aid in the form of scholarships and grants can help offset the costs of school. So can student loans.

Unlike gift aid, which does not have to be paid back, student loans must be paid back to the lender. There are several types of student loans:

  • Federal student loans , which are provided to students and funded by the federal government.
  • Federal parent loans, which are provided to parents and funded by the federal government.
  • Private student loans, which are provided by lenders like credit unions, online payday KY banks, state agencies and schools.

Are student loans considered financial aid? According to the Federal Student Aid office, loans are considered a form of financial aid. It’s important for students and parents to be aware that these must be repaid with interest.

We always recommend for students to review their own situation and do what is best for them, says Ted Groff, a financial aid director at Universal Technical Institute (UTI). If they can complete school without borrowing a dime, that is the best possible situation, but most are not in that position. If they are like most, the UTI Financial Aid team can provide options to help pay for school, and it all starts with completing their FAFSA (Free Application for Federal Student Aid). 10

The FAFSA is an important form for any aspiring student to complete because applicants may be eligible for funds like scholarships and grants, which don’t need to be repaid. Upon completion of the FAFSA, students and their parents also learn about their eligibility for specific federal loans. Terms and conditions of federal loans are set by law and include benefits that private student loans might not offer. (more…)

Posted on March 28, 2022

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