Pros and Cons of Federal vs. Private Student Loans

https://www.wsj.com/articles/the-pros-and-cons-of-federal-vs-private-student-loans-1541092900

Federal student loans may carry lower interest rates than private loans, and they have more repayment options for students. Even if the rate offered by a private lender is lower, federal student loans offer important protections such as income-based repayment and loan-forgiveness opportunities. Students should never replace a federal loan with a private student loan.

However, federal loans have yearly and aggregate limits on what a student may borrow, depending on the student’s year in school and whether he or she is considered a dependent. For instance, a first-year undergraduate student who is considered a dependent may generally borrow up to $5,500; no more than $3,500 of this amount may be in subsidized loans. The aggregate limit for such a student is $31,000, and no more than $23,000 of this amount may be in subsidized loans. Federal student loans also charge a loan fee, currently 1.062% for loans disbursed from Oct. 1, 2018, through Sept. 30, 2019.