Federal student loans are loans that are made through special government programs. These programs include the Direct Loan Program, Perkins Program, or Federal Family Education Loan (FFEL) Program. Since 2019, all new federal student loans are given out directly by the federal government through the Direct Loan Program. But many borrowers still have older types of federal student loans, including FFEL and Perkins Loans, that are issued by private lenders or schools.
Private student loans are issued by a bank, lender, or other institution. Private loans are not backed by the federal government and are made outside of the federal government programs.
The majority of student loans are federal student loans. There are limits on how much you can borrow in federal student loans. If you have taken out the maximum amount of federal student loans, you may have also taken out private student loans to cover the rest of your education costs.
Federal student loans are generally better than private student loans because there are special benefits and protections provided by law to help borrowers with federal student loans. Most private student loans do not have protections for borrowers who are struggling to pay. Private loans have different terms and protections depending on loan agreement. The terms for private loans are made by the lender in the loan agreement.
Federal Student Loans
- Loans are issued through a federal government program
- Apply using the FAFSA form
- Government caps the amount you can borrow
- Doesn’t require a credit check (except for Parent PLUS Loans)
- No co-signers (but parents may be able to get Parent PLUS Loans to pay for their children’s education)
- Interest rates are fixed (except for some older loans)
- Special protections are provided by law, such as income-driven repayment plans, interest subsidies, loan cancellation and forgiveness programs, and help for borrowers in default
- Find information on federal loans on studentaid.gov
Private Student Loans
- Loans are issued by a bank, lender, or other institution
- Apply directly with the lender
- Amount you can borrow is set by the lender
- Loans offered are based on your credit
- A co-signer may be required by the lender (usually a close relative, but doesn’t have to be)
- Interest rates may vary
- Private lenders rarely offer affordable repayment plans, loan cancellation or forgiveness programs, or pathways out of default
- No central place to find private student loan information
Learn more on our Finding Your Student Loan Information page.