Private vs Federal Loan Comparison Calculator

Federal student loans are funded by the U.S. government and offer fixed interest rates, income-driven repayment plans, deferment, forbearance, and potential loan forgiveness options. Private loans are issued by banks, credit unions, and online lenders with rates based on your credit profile. Federal loans generally offer more protections, while private loans may sometimes offer lower rates for borrowers with excellent credit.

For federal loans, the current undergraduate direct loan rate is set annually by Congress — around 5–7% in recent years. For private loans, rates range from roughly 4% to 15%+ depending on your credit score and the lender. A rate below 7% is generally considered competitive. Always compare the APR (Annual Percentage Rate), which includes fees, rather than just the interest rate.

Yes, financial advisors almost universally recommend exhausting all federal loan eligibility first. Federal loans come with borrower protections like income-driven repayment, Public Service Loan Forgiveness (PSLF), and deferment options that private loans typically do not offer. Only turn to private loans after federal aid and scholarships have been fully explored.

An origination fee is a one-time processing fee charged when your loan is disbursed. It is deducted from your loan amount upfront, meaning you receive slightly less money than you borrowed. Federal direct loans currently charge about 1.057%, while many private lenders charge no origination fee — though some do. This fee effectively raises the true cost of borrowing.

With deferred repayment, you make no payments while in school, but interest typically continues to accrue on unsubsidized federal and private loans. That accrued interest capitalizes (gets added to your principal balance) when repayment begins, meaning you end up paying interest on a larger balance. Deferred repayment lowers your in-school burden but increases your total cost compared to making interest-only or full payments during school.

Most lenders — both federal loan servicers and private lenders — offer a 0.25% interest rate reduction when you enroll in automatic payments (ACH). While a quarter percent may seem small, on a $20,000 loan over 10 years it can save hundreds of dollars. Always enroll in auto-pay if your budget allows it.

Yes, you can refinance federal loans into a private loan to potentially get a lower interest rate. However, doing so permanently eliminates your access to federal protections like income-driven repayment plans, PSLF eligibility, and federal deferment or forbearance. Refinancing makes the most sense if you have stable income, good credit, and do not plan to use federal forgiveness programs.

Enter the same loan amount for both loan types, then input the interest rate, term, origination fee, and repayment type offered by each. The calculator will show you the monthly payment, total interest paid, and total cost for each option. The difference in total cost tells you exactly how much you save by choosing the cheaper loan.