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Federal vs. Private Loans in Pittsburgh

Understanding the Difference Between Federal and Private Student Loans in Pittsburgh, PA

Navigating student loans can be challenging, especially when trying to understand the differences between federal and private student loans. If you're in Pittsburgh and need assistance with your student debt, Graham & Borgese is here to help. Contact our experienced attorneys at (888) 801-7765 to discuss your options as soon as possible.

What Exactly Are Private Student Loans?

Like mortgages or auto loans, private student loans are provided by private lenders based on the borrower's credit history. If you fall behind on payments in Pittsburgh, the lender needs to file a timely lawsuit to secure a judgment against you. This can result in frozen bank accounts, property liens, and wage garnishments. In Pennsylvania, the statute of limitations for private student loans is governed by the promissory note or state legislation. However, certain private loans, like those offered by Sallie Mae, may be government-backed, making them exempt from the statute of limitations.

What Is A Federal Student Loan?

Federal student loans have traditionally been categorized into Federal Family Education Loan (FFEL) Programs and Direct Loans. Since 2010, only Direct Loans have been available through the William D. Ford Direct Loan Program, administered by the Department of Education. Repayments are made directly to loan servicers or the Department of Education.

In Pittsburgh, PA, the most common types of federal student loans are Stafford, PLUS, and Perkins loans:

  • Stafford Loans: Can be subsidized (government pays interest during deferment) or unsubsidized (interest accrues during deferment)
  • PLUS Loans: Borrowed by parents of undergraduates or by graduate students. Eligibility is based on creditworthiness
  • Perkins Loans: Funded and repaid through schools, guaranteed by the Department of Education

Unlike private student loans, federal student loans have no statute of limitations for collection.

Collection Tools for Defaulted Private Student Loans in Pittsburgh, PA

Falling behind on a private student loan can lead to a creditor filing a breach of contract lawsuit against you. Should the creditor succeed, they might seize funds from your assets, garnish your income, or freeze your bank accounts. Unlike credit card or medical debt, private student loans are often more challenging to manage because they are typically non-dischargeable in bankruptcy.

Collection Tools for Defaulted Federal Student Loans

Federal student loans offer lower interest rates and better repayment options but come with more stringent collection tools if you default. In Pittsburgh, PA, these can include:

  • Assignment to third-party debt collection agencies
  • Liability for collection costs, including court fees and attorney’s fees
  • Lawsuits for the entire loan amount
  • Administrative wage garnishment up to 15%
  • Interception of federal and state tax refunds
  • Withholding of Social Security benefits
  • Negative credit reporting for seven years
  • Ineligibility for additional federal financial aid
  • Denial of deferments and subsidized interest benefits
  • Potential issues with renewing professional licenses
  • Prohibition from enlisting in the Armed Forces

Get Help with Your Student Loans in Pittsburgh

If you're struggling with student loan debt in Pittsburgh, PA, Graham & Borgese can provide the guidance you need. Our attorneys specialize in both federal and private student loans and can help you navigate the complexities of your situation. online or call (888) 801-7765 to schedule a consultation.


For experienced guidance with your student loans, do not hesitate to reach out to our Pittsburgh student loan attorneys at Graham & Borgese. Schedule a consultation via online form or call (888) 801-7765.


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