Compare Private Student Loans to Stafford Loans

Stafford loans (also known as Federal Direct Loans) are federally-funded student loans. Federal loans are the best, first choice for students seeking student loans for college.

However, there are some situations in which private student loans may be a complementary choice to Stafford loans.

Keep in mind that while some older Stafford loans may be managed by private companies (like Sallie Mae), they are not the same as private student loans.

Federal Stafford Loans Private Student Loans
Loan Limits Subject to annual and lifetime loan limits Cover up to the Cost of Attendance
  • Need-based and non need-based options
  • Available to US citizens and permanent residents
  • Varies by lender
  • Typically available to US citizens and permanent residents
  • May be available to international students with a US cosigner
Interest Rates
  • Fixed or variable
  • Vary by lender
Credit Not Credit-Based Credit-Based
Uses Most school-related expenses Most school-related expenses
Repayment Plans Variety of repayment plans, including Income-Based Repayment (IBR) Repayment plans vary by lender
Repayment Options Deferment, forbearance, and forgiveness available Deferment and forbearance options vary by lender
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Common Questions

Are Stafford loans federal or private?

Stafford loans are federal student loans that are part of the Direct Loan Program run by the Department of Education. While some older types of Stafford loans may be managed by a private entity (like Sallie Mae), they are still considered federal loans.

Which is better, Stafford or private loans?

It's best to exhaust all federal aid first and use private loans as a last resort. While private loans can be a great option for students to fill the gap left by insufficient financial aid, they do not come with the same borrower benefits of Stafford loans. Many families use a combination to help afford the costs of college.

Can Stafford and private loans be consolidated?

No. At this time federal loans need to be consolidated with a Direct Consolidation Loan and private loans should be consolidated through a separate private consolidation loan.

For More Information always recommends that students explore all of their financial aid options, from scholarships and grants to federal student loans, in addition to learning more about private student loans.