Student Loans – Private or Government Loan?

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When financing higher education, there are two available student loan options for students. It is either from private entities or from the government. Each option has its own features, benefits, and repayment structure. Choosing a student loan should depend on existing finances, current goals, and aspirations.

Private Student Loan

A private student loan is a loan offered by private entities. This includes banks, credit unions, and financial organisations. Private student loans require credit checks and have fixed or variable interest rates that are higher than government rates. They are more rigid when it comes to repayment options.
A private loan is often an ideal option when you need additional funds to cover tuition or school expenses.

Government Student Loan

As the name suggests, a government student loan is a loan funded by the government. It has lower interest rates. Unlike private loans, government funded student loans are easier to qualify for. Government student loans require no credit history, making it ideal for students.

Choosing One

The rule of thumb when choosing a student loan is to get a government loan first. Government student loans have better borrower protections. A student should only take a student loan if the existing government student loan is not enough to cover the costs of higher education.

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