Federal student loans come with fixed rates and offer the same interest rate to all borrowers, regardless of credit score or income. The interest rate you're offered depends on the type of lender you're pursuing and your financial picture. Before borrowing student loans, make sure you know all of the term options your lender offers so you can choose the right path for your financial needs. On the flip side, a longer term for your student loans will lower your monthly payment but will accumulate more interest charges over time. Some lenders offer lower interest rates as an incentive for a short term length. A shorter loan term can help you save more money on interest charges during your repayment period but result in a larger monthly payment. Terms for private student loans can be as short as five years and as long as 20 years. Like private student loan amounts, private student loan repayment terms vary by lender. However, student loans that are under an alternative payment plan offer terms from 10 to 25 years. For federal student loans under a standard repayment plan, the default loan term is 10 years. Your loan term is the amount of time you have to repay the loan in full. If you must take out loans to finance educational gaps, consider maximizing federal student loan limits before turning to a private student loan, as federal student loans come with additional benefits like income-driven repayment plans and forgiveness programs. Regardless of whether you borrow federal or private student loans, borrow only the amount you need per school year after exhausting all grant and scholarship options. Some lenders also impose lifetime borrowing limits, which may be up to $150,000 or more, depending on your degree. In general, private student loan lenders offer loan amounts that cover the gap between a school’s cost of attendance and any other financial aid a student receives. Each lender also sets its own borrowing criteria, interest rates and repayment terms. Loan amounts for private student loans vary by lender.
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