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

Private Loans

  • Have higher interest rates
  • Look at your credit record
  • Offer worse repayment options

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

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