The answer is almost always the same: exhaust federal loans first, then consider private. But knowing why — and the exceptions — helps you make a smarter decision.
| Feature | Federal | Private |
|---|---|---|
| Interest rates (2025–26) | 6.39%–8.94% fixed | 4%–17% variable or fixed |
| Credit check required | No (except PLUS) | Yes |
| Income-driven repayment | Yes | Rarely |
| Loan forgiveness eligible | Yes (PSLF, IDR) | No |
| Deferment / forbearance | Broad options | Limited |
| Subsidized option | Yes (undergrads) | No |
Federal loans come with protections private loans don't offer: income-driven repayment plans, Public Service Loan Forgiveness, deferment during hardship, and no credit check for most borrowers. These features can be worth thousands of dollars over a repayment period.
Subsidized federal loans are especially valuable — the government pays your interest while you're in school, which prevents balance growth before you even graduate.
If you've maxed out federal loan limits and still need funding, private loans fill the gap. Borrowers with strong credit (or a creditworthy cosigner) may qualify for rates below the federal rate. But only consider private loans if you're confident in your repayment ability — you lose all federal protections.
Calculate your total loan cost before you borrow.
Student Loan Calculator →Refinancing federal loans into a private loan permanently removes access to income-driven repayment, forgiveness programs, and deferment. Even if the rate is lower, this is almost never worth it unless you have very high income and no risk of needing those protections.