Federal versus Private Student Loans
This week’s podcast takes a look the differences between federal and private student loans. On the program our financial experts are Heather Jarvis, student loan expert and founder of www.AskHeatherJarvis.com and Glen Herrick, Senior Vice-President with Wells Fargo.
Heather Jarvis starts by delineating the differences between the two types of loans available to law school students. Federal monies are funded through the government, often have many more repayment options, and have a set interest rate. Private loans, on the other hand, are offered through individual banks, have variable interest rates, and are often stricter and less flexible during the repayment process. Jarvis encourages students to consider federal loans first before taking out private loans, particularly due to the many advantages they offer during repayment. Public service loan forgiveness, which is a feature available only with federal loans, can greatly benefit lawyers willing to work in the public sector. Finally, Jarvis strongly advices students to never borrow more than they need.
Glen Herrick tells students to start with grants and scholarships for their educational funding, then look to federal loans and, finally, consider private loans if money is still needed. Herrick tells us, like Jarvis, that private loans offer few repayments options, although they do offer loan consolidation programs which can reduce monthly payments by extending the length of the loan. Herrick closes by encouraging students to be proactive borrowers, setting up automatic payment plans and constantly contacting the lender serving the loan.