Student loans are a big source of funds to pay for the cost of attending college. There are two types of student loans commonly referred to Federal student loans (such as the Direct Loan) or private student loans (from banks, credit unions, and other financing companies).
It is important to know the differences because each student loan type can determine the best option for you.
Federal Student Loans are loans funded by the federal government to help pay for your education. A Federal student loan is borrowed money you must repay with interest. Generally, Federal student loan payments are not required until after graduation or separation from the school.
Private Student Loans are nonfederal loans made by a lender such as a bank, credit union, state agency, or a school. Payments are generally not required until you graduate or leave school. They do not have the same federal protections or benefits but interest rates may be a bit more competitive.