Advantages of Direct Loan over private Student Loan

--> Applying for student loan is one thing and the kind of loan to apply is another thing. Commonly there are two kinds; The Federal student loans/direct loans which are funded by the federal government and the private student loans which are funded by non federal organization, the lenders usually maybe the state agency, credit union, school or the bank.

Though both act as financial aid package, federal direct loans have advantages over the private loan which are as follows;

• For any kind of help you may need or inquiries you may want to make, you’ll have to reach the Consumer Financial Protection Bureau’s Private student loan ombudsman, in contrast, federal student loan’s help can be found by calling this number 1-800-4FED-AID or visiting their website.

• Hardly do the lender of private student loans have forgiveness program unlike the direct loans which may forgive some portion of your loan if you work in public service. 

• It’s a common thing in private student loan that payment is done while you are still studying  in the other hand , the payment of federal loans commences when you’ve graduated, left school, or changed your enrollment status to less than half-time.

• Private student loans can have different interest rates; some go beyond 18% while Federal loans have fixed interest rates.

• There is no subsidy in private loans however to students more especially the undergraduate ones who have financial need, in federal loans the U.S Department of education pays the interest after the school has determined the amount you can borrow.

• Though other loans may require a cosigner to sign for you in order to finish the processing of the loan, the federal student loan only takes your signature and that’s enough.

• Students who face issues in payment of their loans are not excused in private lending organizations unlike in the other hand if you face difficulties you may postpone or they may lower the amount you pay.

• Unlike private student loans there are repayment options including connecting your monthly payment to your income.

• Whatever case it may be there is no prepayment fee in direct loan in difference you have to work hard to see that you don’t create that atmosphere when it comes to other sources.

The above listed pros and cons are a summary. For detailed information you visit Federal Student Aid Website.