At this point you probably know that a federally sponsored student loan is better than a privately sponsored loan. The reasons are simple. Federally sponsored loans usually offer a lower rate of interest, more generous terms and conditions, and a more lienient grace period.

Be careful when applying for a student loan directly at your university. Always ask if the packages offered you are federally sponsored or privately sponsored. Some universities will package student loans with their own title and loan. Sometimes you cannot tell from the description whether the source of the loan is federal or private. That's why you need to ask.

A little precaution can save you much trouble later on.