Private banks and loan companies also offer student and parent loans. Known as “alternative loans,” these loans often:
- charge higher or variable interest rates,
- base rates on the borrower’s credit score, and
- require a co-signor.
While these loans help many students afford to go to college, it is critical you understand the terms of all of your loans, regardless of the source. Make sure your post-graduation repayment plan is reasonable. Federal student loans may be deferred if you cannot find a job, but alternative loans often cannot be. Before you borrow, it's a good idea to estimate your post-graduation indebtedness.
|Federal Student Loans||Private Student Loans|
|You will not have to start repaying your federal student loans until you graduate, leave school, or change your enrollment status to less than half-time.||Many private student loans require payments while you are still in school.|
|The interest rate is fixed and is often lower than private loans—and much lower than some credit card interest rates. View the current interest rates on federal student loans.||Private student loans can have variable interest rates, some greater than 18%. A variable rate may substantially increase the total amount you repay.|
|Undergraduate students with financial need will likely qualify for a subsidized loan where the government pays the interest while you are in school on at least a half-time basis.||Private student loans are not subsidized. No one pays the interest on your loan but you.|
|You don’t need to get a credit check for most federal student loans (except for PLUS loans). Federal student loans can help you establish a good credit record.||Private student loans may require an established credit record. The cost of a private student loan will depend on your credit score and other factors.|
|You won’t need a cosigner to get a federal student loan in most cases.||You may need a cosigner.|
|Interest may be tax deductible.||Interest may not be tax deductible.|
|Loans can be consolidated into a Direct Consolidation Loan. Learn about your consolidation options.||Private student loans cannot be consolidated into a Direct Consolidation Loan. |
|If you are having trouble repaying your loan, you may be able to temporarily postpone or lower your payments.||Private student loans may not offer forbearance or deferment options.|
|There are several repayment plans, including an option to tie your monthly payment to your income.||You should check with your lender to find out about your repayment options.|
|There is no prepayment penalty fee.||You need to make sure there are no prepayment penalty fees.|
|You may be eligible to have some portion of your loans forgiven if you work in public service. Learn about our loan forgiveness programs.||It is unlikely that your lender will offer a loan forgiveness program.|
|Free help is available at 1-800-4-FED-AID and on our websites.||The Consumer Financial Protection Bureau's private student loan ombudsman may be able to assist you if you have concerns about your private student loan.|
Click here to view a list of private loan options.
Under federal law, students applying for a private education loan will be provided a series of disclosures by their lender and will be required to complete the Private Education Loan Applicant Self-Certification Form. Students will need their cost of attendance and financial aid amounts to complete the Self-Certification Form. These requirements extend the amount of processing time students should expect when borrowing private loans to fund their education. It is very important that students and families plan accordingly.
The loans listed on Framingham State University's web site were selected in response to a request by the Financial Aid Office to the education lending community to provide information about their loan programs. The Financial Aid Office has listed the programs based on competitive interest rates, borrower benefits, and customer service history. You are not obligated to choose your loan only from those lenders listed above.