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How To Know If Your Student Loans Are Private or Federal

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How To Tell If Your Student Loans Are Private or Federal

When you borrowed money to pay for college, you may not have paid much attention to the difference between federal and private student loans. You might not know who your student loan servicer is, or if you do, you may wonder for example whether that loan listed under Nelnet is federal or private.

In fact, it’s completely reasonable to ask why the difference between private and federal student loans matters in the first place.

There are a few ways to see if your student loans are private or federal — here’s how, along with what makes each different, and why knowing which type of loan you have is important.

What makes federal and private student loans different?

Federal student loans are offered through the Department of Education. Typically, these loans are easy to qualify for. For many federal student loans, your credit isn’t even checked.

There are four different federal student loan programs currently available:

  • Direct subsidized loans: These loans are awarded based on your financial need. When you apply for federal financial aid, your eligibility for subsidized loans is also considered. “Subsidized” here means that interest isn’t charged until after you graduate or drop below half time.
  • Directed unsubsidized loans: Anyone can receive an unsubsidized loan — they aren’t based on need. However, unsubsidized loans will put you on the hook for interest charges that accrue while you’re in school.
  • Direct PLUS loans: These loans are specifically for graduate students or for parents of undergraduate students taking out loans on behalf of their child. These loans aren’t based on financial need, and a credit check is required.
  • Direct consolidation loans: This type of loan allows you to combine all your federal student loans into one, giving you one manageable payment each month rather than many. Your new interest rate is the weighted average of all your loans, rounded up to the nearest one-eighth of a percent.

Private student loans, on the other hand, are offered by private lenders and have different repayment requirements compared with federal student loans. For example, private student loans can offer fixed or variable interest rates, while federal student loans only offer fixed rates.

Because the features of private loans vary from lender to lender, eligibility will depend on the bank, credit union or online financial institution that you borrow from.

Most borrowers usually favor federal student loans, given the flexible repayment options and debt-forgiveness programs they come with. But since federal loans also have borrowing limits, students may need to turn to private loans to help fund any remaining costs, and in a few cases, a private loan might have a better interest rate than their federal equivalent.

How to determine if your loans are federal

The first thing you should do to see if you have federal loans is log on to the National Student Loan Data System. The only loans listed here are federal.

If you’ve never used the NSLDS before, you’ll want to click the “Financial Aid Review” button on the homepage, hit “Accept,” and then enter your credentials.

If you have a Federal Student Aid (FSA) ID, you can enter it here. If not, there’s an option to create one. In May 2015, the government redesigned its student loan system, and you can now use your FSA ID to log on to multiple government sites. But if you haven’t visited in a while, you might need to create one.

In the event you forgot your credentials, you can click the “Forgot my username/password” button and have the information emailed to you or answer a challenge question. You’ll just be required to enter your Social Security number, last name and date of birth.

Once you log on, you’ll see a list of all the student loans that were disbursed to you. This page will also show you what your original loan amount was, and how much you currently owe.

Click on the numbered box to the left of your loan to determine your loan servicer. This will display all the information about that particular loan. Your loan servicer will be listed under the “Servicer/Lender/Guaranty Agency/ED Servicer Information” section. The name, address, phone number and website should all be displayed.

Additionally, this page will also inform you of your loan terms. Along with your original loan balance and current outstanding balance, it will tell you what the interest rate is and the current status of the loan.

How to determine if your student loan is private

As discussed, private student loans are loans not made by the government — banking institutions, such as Sallie Mae, Citizens Bank and others offer them. As a result, there are more lenders to look out for when it comes to private loans.

Unfortunately, there’s no central reporting system for private loans like there is for federal loans, which makes them slightly more tricky to track down.

Your first stop should still be the NSLDS to at least see if you have any federal loans. In 2015, just 5% of undergraduate borrowers had private student loans, so your student loans are more likely to be federal than private.

But in order to make sure you have no outstanding private student debt, you’ll want to take a look at your credit report. You can view your reports from the three main credit bureaus for free by visiting AnnualCreditReport.com.

Some lenders may not look familiar to you. Searching the lender’s name online may help you find out who the parent company is. Don’t hesitate to call the numbers available on your credit report if you’re still unsure.

If you graduated a while ago, some older loans may look unfamiliar. You might see “federal direct loan,” “federal Perkins,” or “Stafford” on your report — these are federal loans, so ensure they match up with what’s in your NSLDS file.

You might also be able to call your school’s financial aid office to see if they have records of your loans.

What should you do once you find out?

Knowing whether your student loans are private or federal can be important as you repay you college debt.

For example, knowing the difference is crucial if you ever decide to refinance or consolidate your student loans. You can only combine your debt under a direct consolidation loan if you have federal loans. Likewise, refinancing through a private lender will cause you to lose access to federal repayment and forgiveness programs, while private loans would be unaffected.

So, by knowing which type of student loans you have, you’ll get a better idea of what options you have to knock them off.

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What to Do When You Can’t Pay Your Private Student Loans

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If you’re struggling to keep up with payments on your federal student loans, options like income-driven repayment can help. But if you can’t pay your private student loans, you might not know where to turn.

Unlike the federal government, private lenders usually aren’t so flexible when it comes to adjusting monthly payments. But that doesn’t mean all hope is lost if you need a break from your bills.

If you’re wondering how to lower private student loan payments, here are six strategies that could help.

1. Can’t pay private student loans? Ask about forbearance

While federal student loans come with a variety of repayment plans, private student loan options are up to the discretion of each lender. Whether you borrowed from a bank, credit union or online lender, you’ll have to check with your lender to see if it offers options for lowering your payments.

Some private lenders, like CommonBond and Sallie Mae, let you temporarily postpone payments through deferment or forbearance. Interest may continue to accrue during this period, but you won’t have to make payments. This break could give you the breathing room you need until you can get your finances in better shape.

Again, not every lender offers forbearance, but it’s worth checking with yours to see if it provides this borrower protection. It could also help to track down your student loan promissory note or contract for more details on your repayment agreement and options.

2. Speak with your lender about adjusting payments

Even if your lender won’t let you pause payments outright, it might be open to lowering your monthly bill — after all, it doesn’t want you to walk away from your debt completely and default.

So prepare your case, and call your lender with detailed reasons for your request. While your bank or credit union is under no obligation to help you, it might be willing to lower payments.

At the same time, make sure you’re truly speaking with your lender and not some third-party service making overblown promises. Unfortunately, there are student loan scammers out there trying to prey on borrowers in difficult situations. If someone is promising to wipe away your debt overnight or charging you a hefty fee for consolidation, beware.

3. Learn how to lower private student loan payments through refinancing

A private lender may or may not be open to adjusting your payments upon request, but you can always restructure your debt through student loan refinancing, so long as you qualify. When you refinance, you swap one or more of your old student loans for a new one with a new lender.

At this point, you can choose new repayment terms, often between five and 20 years. A longer repayment term could lower your student loan payments, making them less burdensome on your bank account from month to month.

You might also snag a lower interest rate, which could save you money over the life of your debt. That said, only creditworthy borrowers (or those with a creditworthy cosigner) can qualify for refinancing.

Refinancing is a surefire way to adjust your monthly payments, but it’s not accessible for everyone.

4. Explore student loan repayment assistance programs

Forgiveness programs such as Public Service Loan Forgiveness will wipe away federal student debt, but they typically don’t help with private student loans. Luckily, there are some student loan repayment assistance programs (LRAPs) that will help with private student loan debt.

Most states and even some universities offer LRAPs to student loan borrowers who live in certain areas or work in specific occupations. Some common jobs that often qualify include doctors and nurses, dentists, pharmacists, veterinarians and teachers.

If you’re eligible, an LRAP could pay off thousands of dollars of your student loans for you. You might also explore companies that offer a student loan matching benefit, especially if you’re open to changing your job.

This outside assistance could go a long way toward paying off your private student loan debt.

5. Find ways to increase your income and decrease your spending

Outside of help from your lender or loan assistance programs, you can use strategies to conquer your private student loan debt on your own.

A great first step is to sit down and come up with a budget. Write down your monthly income and expenses, and root out areas where you could spend less. If you can cut down on spending, you might have more room in your budget for extra student loan payments to speed you way out of debt.

Of course, creating a savings habit will only take you so far, especially if you’re working with a limited income — so you should also focus your efforts on increasing your income.

Maybe you could further your education and gain the skills you need for a higher-paying job. Or perhaps you could find ways to get a promotion and pay raise at your current workplace.

And beyond boosting your main salary, consider side hustles for extra cash. From driving for Lyft to doing jobs for TaskRabbit to freelancing on Upwork, there are lots of possibilities for making extra money.

All this hustling might require sacrifice in other areas of your life; still, it could be worth the extra effort to get out from under the shadow of student debt.

6. Consider bankruptcy as a last resort

Discharging student loans in bankruptcy is rare, but not impossible. If you can prove your student loans present severe financial hardship, you might be able to get them wiped away in Chapter 7 or Chapter 13 bankruptcy.

Of course, declaring bankruptcy can take a long time, destroy your credit and cost you thousands in legal fees— it’s a route that’s really only for those in serious financial straits.

If you are considering bankruptcy, try to speak with a student loan lawyer first so you understand exactly how it could affect your student debt. In some cases you may be able to find low-cost or even free legal aid.

Learn how to lower private student loan payments and avoid default

When if comes to federal loans, you can almost always trim your monthly payments with an income-driven plan or similar strategy. But if you’re trying to figure out how to lower private student loan payments, you could be stuck with the repayment plan you agreed to in the beginning.

Sill, it’s worth checking your contract for additional options, as well as asking your lender about forbearance or adjusted payments. And if you can qualify for refinancing, it could be a savvy way to restructure your debt.

Whatever you do, don’t wait to deal with your student loan situation, especially if you’re struggling to pay your bills. Ignoring the problem could just cause your loans to fall into delinquency or even default, which could make a bad situation worse.

So if you feel like you can’t pay your private student loans, be proactive about finding a solution that works for you.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.