Other Loans

Private/Alternative

Private Loans vs Federal Loans

Private education loans may have significant disadvantages when compared with federal education loans. We encourage you to first borrow any federal loans you are eligible for. Homeowners may also want to consider a home equity loan first.

A Comparison of Federal and Private Education Loans

Federal Loans Private Loans

Co-Signer Required?

Perkins/Stafford: No
PLUS: Usually no

Usually yes

Credit Check Required?

Perkins/Stafford: No
PLUS: Yes (limited)

Yes

Deferment Options

Several options guaranteed by law

Depends on program

Grace Period

Perkins: 9 months
Stafford: 6 months
PLUS: 6 months

Depends on program

Interest Rate

Fixed

Usually variable; may or may not be capped

Loan Fees

Perkins: No fees
Stafford: up to 2%
PLUS: up to 4%

Depends on program

Loan Forgiveness Options

Several options guaranteed by law for Perkins and Stafford

Generally none

Penalties for Early Repayment

None

Depends on program

Choosing a Private Loan

When choosing a private education loan, we encourage you to compare several programs. A listing of popular private loans is available at FinAid.org.

Our office recently reviewed several private loan programs. We compared interest rates, repayment terms, fees, customer service, and other factors in order to identify the best available options for Stanford students. Based on our findings, we selected the SFCU/Nelnet Academic Private (SNAP) Loan as a good option to consider.

Some private loan programs require our office to certify your eligibility before approving your loan. If you receive financial aid, you must notify our office of any private loans you borrow as it may affect your aid eligibility.

Here are several points you should research when considering a private loan:

  • What is the interest rate; is it fixed or variable; is the rate capped?
  • What fees must be paid for this loan and when are they due?
  • How will I receive my loan funds?
  • When does repayment begin and is there a grace period?
  • What will my monthly payment be?
  • What will be the total cost if I use the full repayment period?
  • Are there penalties for early repayment? 
  • Are there deferment or forbearance options?
  • Is the loan program well-established?