What is a federal student loan?

Federal loans are borrowed funds that must be repaid along with the interest that accrues. A federal loan allows the applicant and loan co-sign members to borrow money to help pay for college through federal government programs. 

What is a private student loan?

Private loans are nonfederal loans issued by private lenders like banks, credit unions, state agency, or a school. Private student loans are not subsidized. No one pays the interest on your loan but you. Private student loans may require an established credit record. The cost of a private student loan will depend on your credit score and other factors.  For more information or to see a list private student loan lenders, see: PAU Lender List.

How can students tell the difference?

Not sure whether a loan being offered is a private loan or federal loan? Check out the name of the loan—does it include the word “federal”? If not, ask the financial aid office. Often, private loans are marketed directly to student borrowers. If a private loan is not acquired, let the financial aid office know so they can provide counseling on future loans and financial wellness.

Why are federal student loans a better option to pay for college?

Federal student loans offer borrowers many benefits not typically found with private loans, including low, fixed interest rates, a six-month grace period during which no payments are due, income-driven repayment options, ways to lower or postpone payments, loan forgiveness or discharge based on your job or disability, and deferment options for military or volunteer service or if you return to school. All of federal student loan options should be explored before considering a private loan.

For information regarding the types of federal student loans are available and how much can be borrowed go to:  

federal student aid logo

To borrow a federal student loan to attend Palo Alto University, students must complete a Loan Entrance Counseling and a Master Promissory Note at:



1791 Arastradero Road
Palo Alto, CA 94304

Phone: (800) 818-6136 Fax: (650) 433-3888





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