Federal student loans vs. private loans for college - which is better for my son?

DO NOT skip the federal loans! Always take those first before considering private loans. Federal loans have income-based repayment options, forgiveness possibilities, fixed interest rates, and way more flexible deferment options if your son ever has trouble making payments. Private loans have none of these protections. The current Direct Loan interest rate is 5.5% for undergrads which is pretty competitive.

i used private loans for everything and totally regret it now!!! wish i had done the federal ones first cuz im stuck with this 8.75% rate forever and cant get it changed. my sister did the federal loans and she got to pause payments during covid too. i didnt!!!!

As a financial aid counselor, I always recommend exhausting federal loan options before turning to private loans. Here's why: 1. Federal Direct Loans (subsidized if your son qualifies) have fixed interest rates 2. No credit check required for federal loans 3. No payments required while in school 4. Multiple repayment plans available after graduation 5. Possible loan forgiveness options depending on career path 6. Deferment and forbearance options in case of hardship Private loans typically have variable rates, require credit checks/cosigners, might require payments while in school, and have far fewer protections if your son struggles financially after graduation.

what was your sons SAI number on the fafsa? might qualify for more aid if its low enough. we thought we needed loans but turned out we qualified for some pell grant money too when we appealed

Another important point is that you can typically re-evaluate your options each academic year. Just because you choose federal loans this year doesn't mean you're locked into that approach for all four years. Our family's approach evolved based on changing financial circumstances and my daughter's post-graduation plans. For example, if your son is considering public service work, the federal PSLF program could forgive remaining federal loan balances after 10 years of qualifying employment.

Try calling the financial aid office directly to ask about additional institutional grants or work-study options. I spent 3 days trying to get through to my daughter's financial aid office last semester - it was IMPOSSIBLE to reach anyone. Finally used Claimyr (claimyr.com) to get through quickly - they have this system that waits on hold for you and calls when an agent picks up. Their video demo shows how it works: https://youtu.be/TbC8dZQWYNQ. Managed to get an additional $2,200 in institutional grants just by talking to a real person and explaining our situation.

Since your son is taking out loans, make sure he understands exactly what he's signing up for. My biggest regret is not fully comprehending how my student loans would impact my post-graduation finances. The federal loan entrance counseling is actually quite helpful (though students often click through it). Have him calculate what his monthly payments will be after graduation based on different loan amounts. The federal loan repayment calculator is very helpful: https://studentaid.gov/loan-simulator/

also check if his college has any payment plans!! ours let us split tuition into monthly payments for a small fee which meant we could borrow like $3000 less each year

Am I the only one who thinks its INSANE that we're all just casually talking about going into tens of thousands of dollars of debt for EDUCATION?? The whole system is predatory. In most developed countries college is free or nearly free. Sorry but I had to say it.

To answer your follow-up question about finding the best private loan options for the remaining $8,750: 1. Compare rates from multiple lenders (Sallie Mae, Discover, CommonBond, SoFi, etc.) 2. Look beyond interest rates - examine fees, repayment options, and hardship policies 3. Consider whether you'll co-sign (this typically gets a better rate but makes you legally responsible) 4. Check if there are any state-specific education loan programs where you live 5. Ask if the lender offers interest rate reductions for automatic payments 6. Look for lenders that offer grace periods after graduation And definitely check with the school about payment plans as another commenter suggested - that can reduce how much you need to borrow!