Student Loans in The United States - Private Student Loans

Private Student Loans

These are loans that are not guaranteed by a government agency and are made to students by banks or finance companies. Private loans are higher cost than federal loans, and are generally only used when students have exhausted the borrowing limit under federal student loans. They are also not eligible for Income Based Repayment plans, and frequently have less flexible payment terms, higher fees, and more penalties.

These are loans that are not guaranteed by a government agency and are made to students by banks or finance companies. Advocates of private student loans suggest that they combine the best elements of the different government loans into one: They generally offer higher loan limits than federal student loans, ensuring the student is not left with a budget gap. But unlike federal parent loans, they generally offer a grace period with no payments due until after graduation (this grace period ranges as high as 12 months after graduation, though most private lenders offer six months). However, some higher education advocates are private loan detractors because of the higher interest rates, multiple fees, and lack of borrower protections private loans carry that are not associated with federal loans.