Answers / Student loans
STUDENT LOANS

What’s the difference between federal and private student loans?

SHORT ANSWER

Federal loans offer income-driven repayment, forgiveness options, and deferment protections. Private loans generally don’t — they’re credit-based with fewer safety nets. It matters a lot if you struggle to repay.

The type of student loan you have dramatically changes your options. Federal loans come with borrower protections: income-driven repayment plans, potential forgiveness programs, deferment and forbearance, and no credit check for most. Private loans are issued by banks based on credit, and while some are flexible, they generally lack the income-driven plans, forgiveness, and generous hardship protections federal loans offer. If you’re deciding whether to borrow, or struggling to repay, knowing which you have determines which relief options are even available to you.

What to do, in order

  1. Determine whether each loan is federal or private.
  2. For federal loans, explore income-driven repayment plans.
  3. Check eligibility for forgiveness programs (federal only).
  4. For private loans, contact the lender about hardship options.
  5. Never refinance federal loans to private without weighing lost protections.

Common questions

Should I refinance federal loans into a private loan?

Be cautious — refinancing federal loans to private permanently gives up income-driven repayment, forgiveness, and federal hardship protections, even for a lower rate.

Which student loans can be forgiven?

Forgiveness programs (like income-driven forgiveness or public service) generally apply to federal loans. Private loans typically don’t offer forgiveness.

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