There are two broad categories of student loans: federal or private. Federal loans are offered by the US Department of Education and are a very attractive option for most students. That’s because federal student loans offer things most private lenders don’t, including: a fixed interest rate that isn’t based on your creditworthiness; All borrowers are offered the same standard rates..
However, private student loans are still worth it in some cases. If you have excellent credit, for example, private student loans may offer better interest rates than standard federal rates. Private student loans can also be helpful if you have a gap in your college finances and need extra cash.
The exact terms of private student loans vary by lender, but you can find the following in many private loans: The ability to choose between fixed and variable interest rates A simple application process Low or no principal fee The ability to add a cosigner if your credit is insufficient