A Breakdown of How Student Loans Work
A Breakdown of How Student Loans Work A Breakdown of How Student Loans Work Federal student loans are often the first step for students looking for help paying for college. While they’re not the only type of loan available for college students, they’re the most common. It’s also important to note that they’re different than private student loans. Here are some of the main differences: Federal loans offer lower interest rates and have more flexible repayment terms than private student loans. Private loans usually require a credit check and collateral, while federal loans don’t. Some federal loans may only require proof of need. Interest rates are fixed on federal loans, while private loans can have variable interest rates, some greater than 18 percent. Interest paid on federal student loans may be tax deductible, but not on private loans. Many private student loans require payments while you’re in school, while repayment of federal student loans don’t begin until you graduate, lea...