Federal vs. Private Loans

Dear American Student Assistance:

I received a “Notice of Loan Guarantee and Disclosure,” but it only outlined the subsidized and unsubsidized portions of my loan. It had nothing about my private loan. Will that come in another notice? Will my private loan be disbursed on the same day as my other loan?

Sincerely,
Benjamin

Dear Benjamin:

Great question! There are many different kinds of financial aid, including loans, grants, work-study programs, etc. Federal loans are guaranteed by the U.S. Department of Education and are very different from private loans. Any information that you need to know about private loans will come separately from the lender that you have chosen for those loans.

Contact either the financial aid office at your school or your lender directly. They will be able to tell you all the information you need about your private loans, including the disbursement date and terms for those loans. 

It is so important to understand exactly how much and what kind of debt you are agreeing to when you take out student loans. ASA receives many anecdotes from students who assumed the terms for all of their loans were the same as those they saw for their federal loans. So, make sure you read every word of those loan documents before you sign them.

Regards,
American Student Assistance

Loan Repayment

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