Federal or Private Loans for Cost of Living Forum

[LancesGoodNut12]

Hi everyone,

So I have received a full tuition scholarship to a T2 school, but I need to take out a loan for cost of living expenses (books, rent, food, etc.). After doing some estimating, the cost of living (basically everything beside the $45,000/year tuition) for me will be about $15,000/year. I'm debating between accepting the Federal Direct Unsubsidized Loan I was offered (Stafford I think? $20,500/year) or taking out a Graduate Loan through Wells Fargo (my current bank) for $45,000. I have good credit, so I'm not worried about the interest rate on the private loan. I know there's Loan Repayment Assistance option for the federal loan as well, but I'm not 100% on pursuing Public Service as of yet-- so that isn't a huge factor in this decision.

It seems like most law students tend to go with the federal loan... would that be the best route for me as well?

thank you!

[A. Nony Mouse]

Apart from the public service option, federal loans allow you to get on income-based repayment plans that cap your payment as a percentage of your income. If you come out of law school with a low-paying job this is extremely helpful. But it's only available for federal loans, not private.

[BDMPKT]

The first response nailed it pretty well. Federal loans have a ton of flexibility built in while private loans are subject to individual terms with minimal flexibility for repayment/etc. If you have any questions please feel free to PM me- I just finished an essay related to this topic.

[Auxilio]

I'm international so cannot take federal loans, but even getting private loans which are about 4% lower and no origination fees etc. compared to federal loans I would have taken federal if I could. That flexibility is huge, ESPECIALLY at a T2.