Federal and private differ
Plans and protections depend on the type.
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Student loan repayment basics
Federal and private loans work differently. Federal repayment options changed on 1 July 2026 — know which loans you have first.
In this lesson you will
- Tell federal and private loans apart
- Know where to check federal plans
- Direct extra payments to the costliest loan
Student loans are either federal (from the US Department of Education) or private (from a bank or lender). The difference matters, because federal loans come with repayment plans and protections that private loans usually do not.
Know your loans
Log in to StudentAid.gov to see your federal loans, servicer and balances. Private loans appear on your credit report and with the lender.
Federal repayment, from 1 July 2026
The Department of Education is moving new borrowers to two plans: a Tiered Standard plan and the income-based Repayment Assistance Plan (RAP). Under RAP, payments are based on income, reduced for dependants, and unpaid monthly interest is waived when payments are made on time. Borrowers in older plans have a transition period. Plans and rules change, so confirm your options on StudentAid.gov or with your servicer.
Private loans
Private loans follow the lender’s contract. Options may include refinancing or temporary hardship arrangements; ask the lender directly and get terms in writing.
Habits that help with any loan
- Set up autopay; some lenders offer a small rate reduction for it.
- Pay on time — missed payments affect your credit.
- If you can pay extra, target the highest-rate loan and ask that extra go to principal.
- Contact your servicer early if you cannot pay; options usually shrink after you fall behind.
By the GetGuac team · Editorial policy
Three ideas to keep
Rules changed in 2026
Confirm your plan on StudentAid.gov.
Call early
Options are wider before you miss payments.
Do it in 4 steps
List every loan
Federal or private, rate, servicer.
Check your federal plan
On StudentAid.gov.
Set up autopay
Never miss a payment.
Target extra money
Highest rate first, to principal.
Where an extra $100 a month should go
Illustrative loans; monthly interest estimated as balance × rate ÷ 12.
| Loan | Balance | Rate | Interest per month |
|---|---|---|---|
| Federal loan A | $12,000 | 4.5% | $45.00 |
| Federal loan B | $8,000 | 6.5% | $43.33 |
| Private loan | $6,000 | 9.0% | $45.00 |
The private loan has the highest rate, so extra payments there save the most interest — while keeping the federal loans on their plan.
Where this usually goes wrong
- Not knowing which loans are federal
- Ignoring letters from your servicer
- Refinancing federal loans without checking what you lose
Log in to StudentAid.gov and write down your servicer and current repayment plan.
Tools and guides for this lesson
Quick quiz
1. Where do you see your federal student loans?
2. Which loans usually have federal repayment plans?
3. Extra payments save the most interest on…
0 of 3 answered
Puzzle
A $9,000 loan at 6% APR. Roughly how much interest accrues in one month?
Show the answer
$45
$9,000 × 0.06 ÷ 12 = $45.