What is the Difference Between Federal and Private Student Loans?

by DeLadurantey Law Office, LLC on April 17, 2014

QuestionIf you are struggling to pay your student loans, we can help. Your available options differ depending on whether your loan is federal or private. Below is a short explanation of the differences between the two.

Private Student Loans

Private student loans are similar to your other loans such as your car loan, mortgage or even credit card. A private loan is obtained through a private lending institution and it is based on your credit. Your rights and obligations are governed by the promissory note you executed when you obtained the loan.

Federal Student Loans

There are several different types of federal loans, but the most popular are:

  • Stafford loans. A Stafford loan is the most common type of federal student loan. It can be subsidized, which means the government pays the interest during a deferment period, or unsubsidized (borrower pays the interest).
  • Perkins loans. A Perkins loan is provided by your school directly. It is a low-interest federal loan. To be eligible, a borrower must demonstrate exceptional financial need.
  • PLUS loans. PLUS loans are the only federal loan that is based on your creditworthiness. This type of loan can be used by students pursuing a graduate degree or by parents of a dependent undergraduate student to help pay education expenses.

If you need assistance taking control of a private or federal student loan, let us help. We can assist you with negotiating a payment plan, seeking loan forgiveness and many other available options. We walk you through the process step by step to determine the most beneficial strategy for you.

The “defender of the little guy,” DeLadurantey Law Office. LLC. handles student loan law matters and bankruptcy matters (Chapter 7 and Chapter 13) in Milwaukee, South Milwaukee, West Milwaukee, and Milwaukee County, including the municipalities of Bayside, Brown Deer, Cudahy, Fox Point, Franklin, Glendale, Greendale, Greenfield, Hales Corners, Oak Creek, River Hills, Shorewood, St. Francis, Wauwatosa, West Allis, and Whitefish Bay.  The firm also can handle your debt negotiations, debt relief, and mortgage loan modifications.   Contact DeLadurantey Law Office, LLC by phone: (414) 377-0518.  Like us on Facebook.


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