Fast Answers to Your Top Personal and Student Loan Questions

Eligibility and Credit Requirements

Whether you can qualify for a personal loan or a student loan often comes down to credit and financial history, but the specifics differ significantly. Federal student loans are generally the most accessible: most do not require a credit check, and a cosigner is typically not needed. Private student loans and personal loans, on the other hand, usually require a credit review.

For federal student loans, eligibility is largely based on financial need (for subsidized loans) and enrollment status, not credit score. Private student loan lenders evaluate your creditworthiness, income, and debt-to-income ratio. Personal loan lenders also consider your credit score and income; a good score is often needed for the best rates, while lower scores may lead to higher rates or denial.

• Most federal student loans do not require a credit check, except for Direct PLUS loans.
• Federal student loans usually do not require a cosigner.
• Private student loan eligibility is based on credit score, income, and debt-to-income ratio.
• Personal loans typically require a good credit score to qualify for the best rates.

Sources: Office of Student Financial Aid, University of Illinois, Consumer Financial Protection Bureau, Experian, Credible

Interest Rates and Fees

Interest rates can be the biggest factor in the cost of a loan, and the differences between federal student loans, private student loans, and personal loans are substantial. Federal student loans typically have lower interest rates than private student loans or personal loans. For the 2026-2027 school year, fixed rates on federal undergraduate loans are 6.52%, graduate loans are 8.07%, and Direct PLUS loans are 9.07%.

Fees also matter. Federal student loans charge an origination fee: 1.057% for Direct Subsidized and Unsubsidized loans, and 4.228% for Direct PLUS loans. Private student loans and personal loans may have origination fees or other charges, but these are set by the lender and vary.

The federal rates and fees shown are as reported by Credible for the 2026-2027 school year; always verify current figures on the official Federal Student Aid website.

Sources: Office of Student Financial Aid, University of Illinois, Broadview Federal Credit Union, Credible

Repayment and Forgiveness

Repayment options are a major differentiator between federal and private student loans, and they also affect whether you might consider using a personal loan for education expenses. Federal student loans offer several repayment plans, including income-driven options that base your monthly payment on your income. They also come with forbearance and deferment options, and public service workers may qualify for loan forgiveness. Private student loans generally lack these features: they may require payments while you are still in school, and they do not offer income-driven repayment or federal forgiveness programs. Personal loans for education would also lose federal protections.

Default thresholds also differ. Federal student loans go into default after about 270 days of missed payments, while private student loans can default in as few as 120 days (about four months).

• Federal student loans offer income-driven repayment plans.
• Public Service Loan Forgiveness is available for qualifying federal loan borrowers.
• Federal student loans typically don't require repayment until after you leave school or drop below half-time.
• Many private student loans require payments while you're still in school.
• Default on federal loans occurs after 270 days of missed payments; private loans can default after 120 days.

Sources: Office of Student Financial Aid, University of Illinois, Consumer Financial Protection Bureau, Broadview Federal Credit Union

Loan Amounts and Terms

The amount you can borrow and the repayment term vary significantly between loan types. Federal student loans have set annual and lifetime limits based on your year in school and dependency status. Private student loan maximums vary by lender and are based on your credit and income.

Federal student loans have a standard repayment term of 10 years (120 months) with fixed payments. For private student loans and personal loans, terms and conditions are set by the lender and can vary; check with individual lenders for specifics.

• Federal student loans have annual and lifetime borrowing limits.
• Private student loan maximums vary by lender.
• Personal loan terms vary by lender.
• Federal student loans have a standard repayment term of 10 years.

Sources: Office of Student Financial Aid, University of Illinois, Consumer Financial Protection Bureau, Credible

Application and Approval Process

Applying for a personal loan or a private student loan involves a credit check and a review of your financial situation, while federal student loans start with the Free Application for Federal Student Aid (FAFSA) and generally do not require a credit check for most loans. Understanding the process can help you prepare.

Federal student loans require you to complete the FAFSA, and you must be enrolled at least half-time to receive funds. Private student loans and personal loans require a formal application with a credit check, and you may need a cosigner for private student loans if your credit history is limited. For personal loans, having a good credit score improves your chances of approval and getting a lower rate.

• Federal student loans: complete the FAFSA; most loans don't require a credit check.
• Private student loans: application includes a credit check; cosigner may be required.
• Personal loans: credit score and income are key factors; good credit helps secure better rates.
• Approval timelines and documentation requirements vary by lender.

Sources: Office of Student Financial Aid, University of Illinois, Consumer Financial Protection Bureau, Credible