Every student studying home or Abroad needs enough financial support to complete there studies or courses.
As an international student looking to study in countries like Canada, Germany, the UK, the US, etc. you are expected to show evidence that proves you are capable of taking care of yourself financially throughout your program or at least for the first year. But what happens when you can no longer pay for your education?
Governments of so many countries who value education and the contribution it brings, provide loans for undergraduates, graduates and professional students.
Some private organizations such as banks and other approved financial institutions also provide loans for students with each having their rules guiding them.
Loans provided by the government is called Federal Student Loans and those provided by a private organization is called a Private Student Loan.
Difference between Federal Student Loan and Private Student Loan
Like we stated earlier, private loans are provided by private organizations and lenders, and Federal Loans are made available to students by the state, provincial or federal government.

They both aim to help provide students with financial aids for educational purposes. However, there are lots of differences between them, based on the interest rate, repayment plan, loan limit, tax benefits, flexibility and more.
To better understand each loan option, see more on Private Student Loan here, or Federal Student Loan Here.
Difference Table
Difference | Federal Student Loan | Private Student Loan |
Interest Rate | The Interest Rate for a Federal student loan is considerably low, and the interest rate is also fixed. | The Interest rate of private loans is not fixed and they are higher than the federal loans. The interest rate is also dependent on the private lender. |
Loan Limits | The amount available for loan is usually lower than that of the private loans | Some private lenders permit students to borrow as much as $100,000 if your credit level qualifies you. |
Subsidized Loan | Federal loans are subsidized, which means while you are in school, the government cover for the interest on the loan you collect. | The loans are not subsidized, and students are to pay the full interest rate, depending on the amount received. |
Repayment Plan | Students are allowed to complete their studies and finish school before repaying the debt. You are also allowed to pay from your monthly salary. | Some of the private lenders may allow students to push back their payment date until after graduation, but many don’t allow it. |
Credit Check | A credit check is not required to obtain a federal student loan | This is one of the important requirements for private loans. You must have a certain credit level or a co-signer. |
Financial Need | Made available for students who show financial need. | Students do not need to show financial needs |
FAFSA requirement | You are required to apply by completing the Free Application for Federal Student Aid (FAFSA). | No FAFSA required |
Loan Amount For Each
The Private Student Loan has a bigger loan limit that lets you take any amount you need; provide you have a co-signer or a good credit record.
Federal and Private Student Loans
Undergraduates (subsidized) | Subsidized ($) | Overall Limit ($) |
First Year | 3,500 | 9,500 |
Second Year | 4,500 | 10,500 |
Third Year and Above | 5,500 | 12,500 |
Total | 23,000 | 57,500 |
Graduate and Professional students can borrow up to $40,500 yearly. Private Loans can permit you to borrow as much $300,000 if your credit record matches that amount or you have a co-signer.
How To Repay A Federal Student Loan or A Private Student Loan?
The simplest way of repaying your loans is getting a job after or before graduation, and then pay some percentage every month. This is known as the Income-based repayment plan which can take as long as 10 to 15 years for the loans to be completely cleared. Find out the best ways to repay your student loans here.
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