Federal vs Private Student Loan
You can get a loan from any lender you choose. On the other hand, government programs typically offer the most affordable, borrower-friendly, and simple to qualify for loans. Consequently, it is preferable to take advantage of those offers first.
If you still need more money after borrowing everything the government will offer you, you may seek help from private lenders. Banks, credit unions, and internet lenders are the most common private lenders. They could market the loans as “student loans” or provide direct loans that can be used for anything you want.
You must meet the requirements of a personal loan before applying. As a result, you will need excellent credit and sufficient money to repay them. Many students do not have either, so a parent (or someone with superior income and credit) typically applies for the loan or co-signs it with the student, making both parties 100% responsible if they do not pay back the loan.
A newly issued federal loan has a set interest rate, but private loans might have changeable rates. As a result, you are taking considerably more risk—if interest rates rise significantly, your required payment may.
