1. Understand the costs
“Start with the Net Price Calculator,” said Rebekah Salcedo, Director of Scholarships and Financial Aid at the University of Arizona. The Net Price Calculator (found on your school’s website) is a tool you can use to estimate the costs for your school – it subtracts gift aid, so you get a better idea of how much you might need to borrow.
2. Be informed about student loans
Once you know what college costs and how much you may need to borrow, it’s important to fully understand your student loan and how it works, including what is interest, what is principal and what the interest rate on your loan will be. Additionally, you should know what fees may be included, what your monthly payment will be (including the breakdown of principal and interest), and when your loan repayment will begin.
3. Budget conservatively: Finance your education costs, not your lifestyle
Be conservative with your spending while in college and remember the big picture, suggests Simone Backstedt, a staff assistant in the Financial Aid Office at Westfield State University in Westfield, Massachusetts. “Look at making your money last four to five years,” she said. Learning how to budget means understanding the difference between things you want and the things you need. That may mean your lifestyle won’t be the same as was when you were living with your parents.
4. Form a realistic picture of your future income
Your future career and earnings are key to your ability to repay your student loans. As you borrow for college, consider what your future earnings might be after graduation, suggests Susan Stephenson, Financial Aid Director at Eastern Wyoming Community College in Torrington, Wyoming. Understanding how interest accrues over time and what your monthly loan payments might be is crucial, she notes.
5. Minimize your debt
Keeping an eye toward repayment is important as you borrow for college. Help minimize your debt by being successful in school and staying cost-conscious at all times. “Finish as early as your degree program allows,” Salcedo said. “Students can take on an unanticipated amount of debt by extending their time in school. Tuition is a worthy investment, but when it’s more than you need to pay or beyond tuition and essential items, then you need to think about it.”