Federal vs. Private Student Loans

The most important fact in student lending: federal loans and private loans are two completely different things, and they get treated completely differently by every program described elsewhere on this site.

Federal loans

Federal loans are issued or guaranteed by the U.S. Department of Education. They include Direct Subsidized, Direct Unsubsidized, Direct PLUS, and the older FFEL and Perkins programs. Federal loans are eligible for:

• Income-driven repayment plans (SAVE, PAYE, IBR, ICR)
• Public Service Loan Forgiveness
• Borrower's Defense to Repayment
• Total and Permanent Disability discharge
• Deferment and forbearance with federal protections

Federal loans also have fixed interest rates set by Congress and are tracked in NSLDS.

Private loans

Private student loans are issued by banks, credit unions, and online lenders (Sallie Mae, Earnest, SoFi, Citizens, Discover, your local bank). They are not eligible for any of the federal programs above. Your only options on a private loan are typically:

• Paying as scheduled
• Refinancing for a lower rate (if your credit qualifies)
• Negotiating with the lender
• In rare cases, settlement

Private loans have variable or fixed rates set by the lender, and are governed by your loan contract — not federal regulation.

How to tell which you have

Federal loans appear in studentaid.gov under your NSLDS record. Private loans appear on your credit report but not in NSLDS. If a loan doesn't show up at studentaid.gov, it's almost certainly private.

The realistic strategy split

For federal loans, the play is usually optimizing your IDR plan, pursuing forgiveness if eligible, and handling re-certification carefully. For private loans, the play is usually refinancing if you have strong credit, negotiating if you don't, and settling as a last resort.