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Here’s the Difference Between Federal and Private Student Loans

Mr. Krabs from Spongebob reclining on a pile of money. Looking at another dollar bill in his hands/claw. Image: Nickelodeon.
(actual photo of Yale with your money)

So ya wanna go to college, do ya kid?

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Ya got smarts and big dreams and ya wanna take the world by storm? Alright, well, that’s just peachy. College is a great place to learn practical skills and get a good job, and is in no way a scam run by greedy bastards who make money by convincing 17 year olds to take loans that they will probably be paying off for the rest of their lives. You’ll do fine! Why, you could be an architect and build the skyscrapers of tomorrow. You could be a doctor and save lives. You could be a lawyer and defend the innocent from the corruption of the world. There’s a million things you could major in! So what do you think? What’s calling to you?


Oh boy… well you could always teach philosophy to more people who want to learn it so then they can teach philosophy to more people who want to learn it and the cycle continues till the sun explodes.

So where do you wanna go?


Oh jesus.

Alright, kid, you’re gonna need to take out a loan. A big one.

Federal student loans

Okay kid, so a federal student loan is the kind of loan you want. They’re given by the federal government, and they’re more likely to be forgiven by the federal government. Funny word, “forgiven”—like you made a mistake for trusting some adults to help you learn and not take all your money.

So federal loans have terms and conditions that are set by law. They also offer fixed rates and income driven repayment plans that most private loans don’t offer. See, the thing is, the federal government has more money than God. You know why? Because they print that money. And they have way better ways of making money like, you know, selling weapons and shit, than offering student loans. So the feds are gonna be less peeved if you take a while to pay off your loans, and ain’t gonna jack up the price on you. For one, they’re not legally allowed to and two they’re not incentivized to because they don’t need the money all that bad. You also don’t need a credit check for a lot of federal student loans, because you’re a student and what student has good credit? If a student had good credit they probably wouldn’t be a student because they’re probably one of those kids who skipped college and got a job doin’ shit already. Which also ain’t a bad idea.

Private student loans

Okay, so private student loans are how they get you. They’re usually lent by a bank, a credit union, or the school itself. See, unlike the Federal government, each one of these places has their own different interest rates and payment plans, and they are financially incentivized to make money of off the loans they sell, because they don’t have silos of missiles and guns that they can sell to foreign military organizations. So you gotta be especially careful with these kinda loans. They tend to be more expensive than Federal loans, and they have a higher interest rate as well. They also will sometimes make you pay them off while you’re still in school which doesn’t make any sense because how are you supposed to have a job while you’re in school? Isn’t school where you go to learn so you can get a job?

They know it doesn’t make sense, but it does make cents. And more importantly, it makes dollars. They also tend to want you to have good credit before you take out a student loan, which again, makes no fucking sense because you don’t get credit unless you’re doing adult shit already. So basically if you go to Yale for philosophy you need to take out loan to go to Yale and work a job to pay that loan while you’re in school so you can then graduate with your Philosophy degree and then apply to Yale to get a job teaching philosophy so you can work for Yale paying back the money that you spent to go to Yale in the first place.

It don’t make no sense. And unlike the federal government, Yale sure as hell isn’t gonna “forgive” that debt no matter if you’re working it off for the next five or fifty years. Because they don’t want to. What they want is money, and you’re gonna give it to ’em.

So, kid, maybe just read a bunch of books and start a YouTube channel. That’s free. And you’ll make money teaching philosophy that way.

(Featured image: Nickelodeon)

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Jack Doyle
Jack Doyle (they/them) is actually nine choirs of biblically accurate angels in crammed into one pair of $10 overalls. They have been writing articles for nerds on the internet for less than a year now. They really like anime. Like... REALLY like it. Like you know those annoying little kids that will only eat hotdogs and chicken fingers? They're like that... but with anime. It's starting to get sad.

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