We are strong believers in finding every possible way to pay for your college education WITHOUT loans. We share resources for scholarships, grants, paid fellowships and internships, etc. for that reason.
That being said, we know that loans are often offered in financial aid packages to supplement whatever grants or scholarships may not cover. For that reason, we’re sharing 5 tips to help you be strategic and smart when taking out loans so that you come out with less to pay after you graduate. The difference between owing $5,000 in student loans and $50,000 is huge.
✔️ Focus on taking federal loans instead of private loans. To put it simply, you will owe much less with a low interest rate federal loan than with a private one. The less money you have to pay back, the better.
✔️Accept subsidized loans, first. Subsidized loans do not gain interest while you’re enrolled at least half time in college, while unsubsidized loans start adding interest immediately. Again, the less money you have to pay back in the long run, the better.
✔️Only take out what you need. Trust us, you DO NOT want to take out more than absolutely necessary. If they offer you $5,000, but you only need $3,000- ONLY TAKE THE $3,000. Find a job on or off campus to support whatever else you may need for college. Remember college is a moment not a lifetime so the sacrifice is temporary.
✔️Don’t take more debt than your expected first year salary at your first job after college. This is critical and a tip given by Forbes Magazine. It is extremely important to be wise when choosing your major and career trajectory. If the expecting starting salary in your field is $50,000- aim to take less than that over the course of your college career.
✔️ Finally, have a plan. Remember the quote, “If you fail to plan, you plan to fail?” That same concept applies to taking out student loans. Make sure you understand every loan you, or your parent, takes out and the amount in interest each loan will accrue. If you can, try to figure out how much your monthly payment may be when you graduate. Just because you needed $10,000 in loans your first year, doesn’t mean you have to accept that your second year. Always be on the lookout for new scholarships, paid programs, etc. that you can take advantage of to lower your loan pull.