Government and Private Loans are not the same

Mainly due to interest rate differences (on loan options such as home equity loans) many people want to get a private loan to pay off or in lieu of their government backed student loan.  This can work in a perfect world scenario but before you do be sure to weigh all your options to be sure it is the best move over all.

The first thing to remember is loans from the main four servicers do not have late fees if you miss a payment.  In addition if you are unable to make payments there are forbearance and deferment options available to you.  Also, things such as various loan payment programs including ones based on your income (that can be as low as $0.00) are available for government backed loans.

Though these reasons may not seem like a big deal if you can make the payments now, these safety nets may come in handy if you ever heaven forbid have something bad happen such as a job loss or month to month problems such car problems, etc.  Overall considering worst case scenario when making your decision always helps you make the best decision for you!  This doesn’t mean an outside loan still won’t be your best choice, but as always, an informed borrower makes the best choices!