Student Loans

The two main categories of student loans are federal and private loans. Federal loans are a better deal and should almost always be pursued first. Private loans cost more and offer fewer repayment options, but the lender is more limited in collecting a defaulted loan. Neither type of student loan is automatically wiped out in bankruptcy, although in extreme circumstances it may be possible to obtain a bankruptcy discharge of a student loan debt.

Federal Loans:

No co-signers

Lower interest rates

Better repayment options

Available without consideration of credit
(except for PLUS loans—parents or grad students)

BUT—no statute of limitations for collecting the loan; may be collected through wage garnishment and tax intercepts

Private Loans:

Have higher interest rates

Consider your credit record

Offer worse repayment options

BUT are subject to statute of limitations (4 years in PA unless “under seal”); no wage garnishments in PA

There are many excellent sources of information: