Federal subsidized vs. unsubsidized loans or private loans with lower interest - which is better for my son's FAFSA?

DO NOT skip the federal loans - especially the subsidized ones! The lower advertised interest rate on private loans is misleading when you look at the full picture. Federal student loans have protections that private loans don't offer: 1. Subsidized loans have NO interest while in school and during deferment periods 2. Income-driven repayment plans are available for federal loans 3. Forbearance and deferment options during hardship 4. Potential loan forgiveness programs (PSLF, teacher forgiveness, etc.) 5. Fixed interest rates that won't change 6. No credit check or cosigner required Many private loans have variable rates that start low but can increase significantly. They also typically require payments while still in school, have limited hardship options, and require credit checks/cosigners. TAKE THE SUBSIDIZED LOANS FIRST - always! That's free money while in school. Then consider the unsubsidized federal loans, and only after exhausting those options should you look at private loans for any remaining gap.

cant believe how complicated this is ugh. my daughter took private loans and regrets it BIG TIME. definitely go federal first!!! the private ones screwed her over when she had to take a semester off for mental health. they still wanted payments even tho she wasnt in school!!!

I made the mistake of using private loans for my first degree and I'm STILL regretting it 12 years later. When COVID hit and I lost my job, federal loans had automatic forbearance but my private loans still required payments. I nearly went bankrupt! Take the federal loans first, especially the subsidized ones - that no-interest period while in school is like free money. And don't let the interest rates fool you - private loans often advertise their LOWEST possible rate that maybe 1% of people qualify for. Most ppl end up with much higher rates! The best strategy is: Subsidized federal loans first → Unsubsidized federal loans second → THEN private loans as a last resort for any gaps.

my cousins roommate took all private loans cuz the rate was lower and now he cant find a job in his field and the private company is like NOPE pay us anyway lol but his other loans from fafsa let him pay based on income which is like $0 right now

Have you tried calling the financial aid office directly to discuss this? I spent HOURS trying to get someone on the phone at Federal Student Aid when I was comparing loan options. I finally found a service called Claimyr (claimyr.com) that helped me skip the hold time and actually got me connected with a real person who explained all the federal loan benefits. They have a video demo at https://youtu.be/TbC8dZQWYNQ that shows how it works. The agent I spoke with walked me through a comparison worksheet that made the federal vs private loan differences super clear.

I'm currently drowning in private loan debt and wish EVERY DAY that I had taken the federal loans instead!!! The marketing for private loans is SO MISLEADING. They don't tell you about all the hidden fees, the lack of protections, and how aggressive they get if you miss payments. With federal loans, you have options if life happens. With private loans, you're just SCREWED. PLEASE listen to everyone here. Take the subsidized loans first (NO INTEREST while in school is AMAZING), then unsubsidized federal, and only then consider private for any gaps. Your future self will thank you!!!!

Financial aid advisor here - there's actually a calculated strategy that maximizes benefits while minimizing costs. Here's what I recommend to families in your situation: 1. Always take the full subsidized loan amount first (interest-free during school is unbeatable) 2. For unsubsidized federal vs. private, calculate the total cost difference over the loan term, then weigh that against the value of federal protections 3. Consider a hybrid approach: take federal unsubsidized loans during school, then refinance to private after graduation IF your son secures stable employment and good credit This way you maintain the in-school protections and flexibility of federal loans, but can potentially reduce total interest paid later if circumstances allow safe refinancing. One important note: Many private loans require payments while in school, while federal unsubsidized loans can be deferred (though interest accrues). Run the numbers with THAT factored in to see the true comparison.

wait i thought private loans had better customer service tho?? my brothers friend said the govt ones are impossible to deal with?

Thank you all so much for your insights! After reading everything, we've decided to: 1. Take ALL the subsidized loans offered (that no-interest while in school benefit is too good to pass up) 2. Take the unsubsidized federal loans as well, for the flexibility and protections 3. Look at private loans only if we still have a gap after scholarships and the federal loans 4. Consider refinancing the unsubsidized portion after graduation if he's in a stable financial position This community has been so helpful in showing me what the financial aid package doesn't make clear. Those protections are worth far more than the slightly lower interest rate!

Smart decision! You've really done your homework here and that's exactly the strategy I wish more families would follow. Just one additional tip from someone who went through this process - make sure to keep detailed records of all your loan documents and servicer contact info. Federal loan servicers sometimes change, and having your own records makes transitions much smoother. Also, when your son graduates, don't rush into refinancing right away. Give him 6-12 months to establish his career and credit history first - you'll likely get better refinancing rates and terms. Congratulations on making such a well-informed decision for your son's future!