Should I Apply for Federal or Private Student Loans in Tennessee?

Should I Apply for Federal or Private Student Loans in Tennessee?

Knowing the different types of student loans can be helpful when you want to save money on interest and know when you will be required to start paying off your loans. Some student loans will require you to start making repayments sooner than others.  The two main types of student loans are federal student loans and private student loans. Each type of student loan comes with different costs and benefits. If you are struggling with your repayments and have questions related to bankruptcy, consider seeking advice from a Tennessee bankruptcy lawyer.


Tennessee federal student loans consist of five types of federal loans called direct subsidized loans, direct unsubsidized loans, direct consolidation loans, graduate PLUS loans, and Parent PLUS loans. Each type of loan involves different requirements and payment plans. Knowing which loans you will have to pay for someday can help you prepare for what will come in your future.

A direct subsidized student loan means you will not have to pay for your loan or pay interest until you graduate from the college or university you are attending. This loan does have a limit of $31,000 before you graduate, and you must demonstrate an income of less than $50,000 to qualify. Unsubsidized student loans do not come with the less than $50,000 income requirement, but they do come with interest rates that can increase your total loan while you are in school.

Direct consolidation loans combine multiple student loans into one loan with a fixed interest rate and a simpler repayment plan. Graduate PLUS loans are loans borrowed for students attending graduate school while parent PLUS loans are for parents with students who are deemed as dependents.


Tennessee private student loans come with fewer benefits and more costs compared to federal student loans. For one, private student loans are unsubsidized, meaning you will be paying for interest while you are still in school. Some private loans even require students to start repaying the loan before they graduate.

Private student loans do come with the option of a fixed or variable interest rate, which gives you options. However, private student loans may come with higher interest rates, fewer repayment options, and little to no Tennessee loan forgiveness options. One other downside of a private student loan is you may not qualify if you or your parent has a bad credit history, depending on who is requesting the loan.

This is why most people reserve private student loans for cases when federal student loans fall short of covering your college costs.


Figuring out whether you should apply for a private student loan because you do not have enough financial resources can be a challenging decision to make. Consider talking with our lawyers in Chattanooga, Tennessee, and North Georgia if you are struggling financially or find yourself close to bankruptcy. Call Tom Bible Law today at (423) 690-7712 to speak with a Bankruptcy attorney in Tennessee for a free consultation. Our team of Tennessee bankruptcy lawyers is located in Chattanooga and Tullahoma.

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