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Tips for Borrowing Student Loans Wisely

College tuition is rising nationwide – and student loan debt is following at record rates. If you’re considering a student loan, ask yourself a few hard questions first. An eyes-wide-open approach, combined with a few smart choices and simple sacrifices, will help you keep debt to a minimum and assure your personal financial wellbeing after college.

What is the true cost of my education?

The cost of college is more than just tuition and books. To determine the full expense of your education – the Cost of Attendance (COA) – you will need to consider room and board, transportation, equipment and supplies, as well as tuition, fees and books. Online resources like College Scorecard can help you assess and compare the total COA of the universities you’re considering.

How much should I borrow?

It’s possible you will qualify for a much larger loan than you need – but you’re not obligated to accept the full amount. In fact, it’s better to scrimp, save and borrow only what you must. If you need extra spending money, find a part-time job or save up during the summer months, and avoid the trap of using loan dollars for nonessential expenses. If this still isn’t cutting it, consider other ways to save money, like living at home, renting instead of purchasing new books, or putting these tips to use.

How long will it take to repay my loans?

This largely depends on your future salary and your ability to keep loans to a minimum. While a college degree does impact your earning potential, it’s not a guarantee of a high-paying job.

First, take a close look at starting salaries in your chosen profession. You can search the federal Bureau of Labor Statistics to compare earnings for various jobs or visit Salary.com and Glassdoor.com for insights on average pay. A student pursuing a career with a starting salary of $30,000 will need to be much more pragmatic than someone whose first job will pay $75,000.

Once you understand your earning potential after graduation, use an online calculator to get a sense of your future monthly loan payments, how long it will take to pay off your debt, and the total loan cost with interest. Given your anticipated salary, is this loan repayment manageable? What can you do to bring down your debt, or even begin making interest payments while still in school?

If you borrow wisely, are realistic about what you can afford, and make practical spending decisions while in college, you can begin life after college with a clean slate – not straddled with debt.