With the rising cost of education over the years, educational loans have become increasingly popular among the students.
Educational loans can be of two types: federal loans offered by the U.S. Department of Education, and private loans offered by banks, credit unions, and other financial institutions.
One important difference between federal and private loans is that private loans need credit score eligibility, while federal loans require students to demonstrate their genuine financial needs.
Students need to submit the Free Application for Federal Student Aid form (FAFSA) to apply for a federal loan.
Many private lenders offer borrowers higher borrowing limits than offered in federal loans.
However, private loans come with higher interest rates than federal loans.
According to Biden’s recent announcement on loan forgiveness, federal loan borrowers can apply for loan forgiveness.
Individual borrowers with an annual income less than $125,000, and couples with annual income less than $250,000 can apply for the loan forgiveness.
However, you don’t have any option for loan forgiveness with private loans.