At Dickinson, we understand each family's financial situation is unique. We encourage families to consider their choices as they create a financial plan and invest in their child's education. To aid with that, we are providing a helpful chart comparing federal and private loans.
| Federal Loans | Private Loans | |
|---|---|---|
| Borrower Eligibility | Students are eligible as long as the FAFSA is completed for that year. Federal Direct Subsidized loan eligibility is determined by financial need. Parents looking to take out a Federal Direct Parent PLUS loan must not have adverse credit history. | Most students will need a cosigner to share liability with. Some lenders do look at academic progress in lieu of credit. Private Parent loans are also available through select lenders |
| Interest Rates | Interest rates are fixed. For the 25-26 academic year, the Federal Direct Undergraduate interest rate is 6.39% and the Federal Direct Parent PLUS Loan interest rate is 8.94% | Interest rates will vary for each lender. The interest rates can either be fixed or variable and the actual rates will depend on the borrower's credit score, income, repayment terms, and loan amount. |
| Fees | Federal loans have an origination fee. The current origination fee for Federal Direct Undergraduate loans is 1.057% and for Federal Direct Parent PLUS Loans is 4.228% | Most private lenders do not issue a fee for student loans. However, we strongly recommend reviewing the terms and conditions before borrowing. |
| Tax Consideration | Interest may be tax-deductible | Interest may be tax-deductible |
| Subsidized Loans | Undergraduate students who have financial need may qualify for a subsidized loan. Subsidized loans are very borrower-friendly because the federal government pays the interest while you are enrolled in school at least half-time, during your 6-month grace period, and during some deferments and forbearances. | Private loans are not subsidized, and therefore you will be responsible for any interest accrual once the loan is disbursed. |
| Credit | Federal Direct Undergraduate Student Loans do not require any credit check. These loans are a great way for students to build credit while enrolled. Federal Direct Parent PLUS loans do require a credit check before approval. | Most private student loan lenders do require a credit check before approving the loan application. Some will even base the interest rate off your credit rating. |
| Cosigner | You do not need a co-signer for Federal Direct Undergraduate Student Loans. | Student's without established credit will need a cosigner for most private lenders. |
| Repayment | Federal Direct Undergraduate Student Loans will not go into repayment as long as the student remains enrolled at least half-time. Once the student graduates, withdraws, or drops below half-time, their student loans enter a 6-month grace period where payments are not required. The loan enters repayment after the 6-month grace period. | Repayment terms vary from lender to lender. We strongly encourage students to review the repayment terms before taking out a private loan. |
| Repayment Options | Federal loans offer several different repayment options, deferments, and forbearances for borrowers who may need them. | Repayment options vary from lender to lender. We strongly encourage students to review the repayment terms before taking out a private loan. |
| Early Pay Off Fee | There is no penalty for paying your loan off early. | Borrowers should contact their lender before paying their loan off early to ensure there is not a fee. |
| Forgiveness | You may be eligible to have some or all of your federal student loan forgiven if you work in public service or meet any of the other forgiveness criteria. Federal insurance forgives loan in case of parent or student death. | Private lenders are very unlikely to offer any type of forgiveness program. Some lenders will forgive loans in case of death, please review the loan disclosure. |
| Assistance | If you need assistance, you should contact your loan servicer first. If they are unable to help, you may contact 1-880-4-FED-AID, or obtain additional help on studentaid.gov. | The Consumer Financial Protection Bureau ombudsman may be able to assist. |