Here's how Private and Federal Student Loans compare — and how to tell which one fits your situation.
There are two primary types of student loans: federal student loans and private student loans. Understanding the differences can help you choose the financing option that best fits your educational and financial goals.
Paying for college is one of the biggest financial decisions many students and families make. While scholarships and grants can help reduce costs, they may not cover the entire cost of college. That's why many students turn to student loans to help bridge the gap.
What Are Student Loans?
Student loans are borrowed funds that help pay college expenses such as tuition, housing, books, and meal plans. Unlike scholarships and grants, student loans must be repaid, usually with interest. Repayment generally begins after the borrower graduates, leaves school, or drops below the required enrollment status.
Federal Student Loans
Federal student loans are funded by the U.S. Department of Education. To be considered, students must complete the Free Application for Federal Student Aid (FAFSA).
Features of Federal Student Loans include:
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Fixed interest rates, set annually
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No credit check or cosigner required for most undergraduate Direct Loans
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Income-driven repayment plans that may adjust monthly payments based on income
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Deferment and forbearance options for qualifying financial hardships
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Potential eligibility for federal loan forgiveness programs, including Public Service Loan Forgiveness (PSLF)
There are two primary types of federal loans available to undergraduate students, Direct Subsidized Loans and Direct Unsubsidized Loans:
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Available to students who demonstrate financial need. While you're enrolled at least half-time and during certain other periods, the government pays the interest on the loan.
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Direct Unsubsidized Loans
Available regardless of financial need. Interest begins accruing once the loan is disbursed, although repayment typically begins after you leave school or drop below half-time enrollment.
Because federal student loans are part of a government program, the terms, borrowing limits, and available programs can change when new legislation is passed. For example, federal student loan changes that took effect on July 1, 2026, updated certain federal student loan borrowing limits and program availability. When comparing loan options, it’s important to understand not only the current terms of a loan, but also how future changes to federal programs could impact borrowing options.
Private Student Loans
Private student loans are offered by banks, credit unions, and other private lenders.
Private student loans generally offer:
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Fixed or variable interest rate options
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Credit-based approval requirements
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Cosigner options for students who may need additional credit support
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Borrowing limits based on the lender's guidelines and the school's certified cost of attendance
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Repayment terms and borrower benefits that vary by lender
Because every lender is different, it's important to compare loan features, repayment options, and borrower benefits before choosing a private student loan.
| Feature | Federal Student Loans | Private Student Loans |
|---|---|---|
| Lender | U.S. Department of Education | Banks, credit unions, and private lenders |
| Application | Submit the FAFSA | Apply directly through the lender |
| Credit Check | Not required for most undergraduate Direct Loans | Usually required |
| Interest Rates | Fixed rates set annually by the federal government | Fixed or variable, depending on lender and borrower qualifications |
| Loan Limits | Annual and lifetime limits set by federal law | Often up to the school's certified cost of attendance, minus other aid, subject to lender approval |
Understanding Your Borrowing Options
Every student's financial situation is different. The amount you need to borrow, your eligibility, repayment preferences, and future financial goals can all play a role when comparing student loan options.
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How much you need to borrow
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The total cost of repayment over time
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Available repayment options
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Whether a cosigner may be needed
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Additional borrower benefits offered by the lender
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A student loan calculator can help you estimate your potential monthly payments and understand how borrowing today may impact your future budget.
Use Park View’s Student Loan Calculator to explore different borrowing scenarios and repayment amounts.
Private Student Loans at Park View
For students and families looking for additional education financing options, Park View offers private student loans through LendKey.
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Private Student Loans at Park View
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Borrow up to $120,000 for undergraduate education or $160,000 for graduate education
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Flexible repayment options, including multiple in-school payment options for eligible borrowers
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No origination fees or prepayment penalties
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Whether Cosigner options that may help students qualify, with the opportunity for eligible borrowers to request cosigner release after meeting requirements
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The ability to use funds for qualified education expenses, including tuition, room and board, books, and computers
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A convenient online application process and loan management tools to view balances, make payments, and manage your loan anytime
Make an Informed Borrowing Decision
Federal and private student loans can help students and families manage the cost of higher education. The best option depends on your individual needs, eligibility, borrowing goals, and repayment preferences.
Before borrowing, compare your options, understand the repayment terms, and choose the solution that best fits your financial situation.
With the right information, you can choose an education financing option that supports your goals today and in the future.
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