Unlike federal student loans, which are issued and guaranteed by the U.S. Department of Education and managed by an assigned loan servicer, private student loans are issued by private lenders — banks, credit unions and investors who provide funding to online lenders — and are not guaranteed by the federal government. Unlike federal student loans, which let you choose your repayment term after you graduate (or leave school), private student loans require that you choose before receiving your loan. Since private student loans are meant to be used only for educational purposes, the maximum loan amount for an academic year is determined by the costs of your school, minus federal student loans, grants, scholarships, or other financial aid you get.