Experts: Choose federal over private loans

College courses are hard. But student loans can be even harder. A key tip from experts: Choose federal over private loans.

Here's why:

Federal student loans are not subject to credit checks, and there is no income limit.

If you lose your job, you can defer payments for up to three years.

You can pay back your loan as a portion of your income, typically 10 percent or less, as part of the income-based repayment program. People who faithfully make payments for 25 years will have their loans forgiven, regardless of what's remaining on the loan.

Those who work for a nonprofit organization or a government agency, and are enrolled in an income-based repayment program, can have their loans forgiven after 10 years.

Private loans often have variable rates and require credit checks. Pauline Abernathy, vice president of the Institute for College Access & Success (TICAS), said they're like using a credit card to finance an education.

Still, about 52 percent of student borrowers take out less than they could have in federal loans, according to the Project on Student Debt, a TICAS initiative.

There's widespread misinformation about federal loans, the project asserts.

Surveys show that students assume wrongly that their families earn too much for federal loans, or they believe the federal process is too complicated, or their schools don't point out the difference in types of loans.

Experts theorize that some students and their families don't like giving information to the government and would rather get loans from private institutions.

The takeaway message from the experts at the Project on Student Debt: "Use private loans only as a last resort."

   - Alfred Lubrano