Final answer:
The primary difference between a federal student loan, which is typically an installment loan, and revolving credit is how the funds are accessed and repaid.
Step-by-step explanation:
The primary difference between a federal student loan, which is typically an installment loan, and revolving credit is how the funds are accessed and repaid.
A federal student loan is a type of installment loan, which means it provides a lump sum of money that is repaid in fixed monthly installments over a specified period of time. On the other hand, revolving credit is a line of credit that allows borrowers to access funds as needed and make flexible repayments based on the amount used.
For example, with a federal student loan, you may receive a set amount of money at the beginning of each semester, and you will start repaying the loan after you graduate or leave school.
The repayment amount is usually a fixed monthly payment. Revolving credit, on the other hand, is more flexible and works like a credit card. You have a credit limit, and you can borrow and repay funds as needed. The minimum monthly payment may vary based on the amount borrowed, and interest is usually charged on the outstanding balance.