Myth: I Should Borrow As Much As I Can In Student Loans

Don't borrow as much as you can in student loans

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Considering how expensive college is nowadays, it makes sense that people would believe they need to take as much out in student loans as possible to cover the cost of tuition. This, however, is the exact opposite of what you should do.

Student Loan Repayment and Interest

You must keep in mind that when you borrow money, you have to pay the money back someday. Not only that, the interest on that loan keeps on accruing till you have finished paying off the loan. The more you borrow, the bigger the debt you pay off after you graduate. Not only in the original loan amount, but also in the interest accrued. Unless you lined up a high paying job immediately after graduation, you could find yourself struggling to stay afloat with such a large financial commitment.

Borrow Only What You Need

The smartest thing to do is to calculate exactly how much you will need for that year, taking into consideration tuition fees, cost of text books, room and board, and all other incidental expenses. Then borrow only what you need and nothing more. There’s no reason why you should borrow more than you need either.

Before borrowing, take another look at your expenses and see where you can cut down on costs so you can borrow even less. Make a budget and see what you can save on. As a general rule, when it comes to any types of loans, including student loans, the less you borrow the better. You want to have as little student loans as possible, so that you aren’t burdened with them for a long time. 

Other Financial Aid Options First

The best way of cutting down on student loans is by applying for other forms of financial aid. First and foremost: scholarships. There are countless scholarship opportunities out there and you can apply to as many of them as you’re eligible for. They’re gifts of free money that don’t have to be repaid. You may receive less financial aid if you have a lot of scholarship awards, but you should still apply for them! That makes them the ideal form of aid to pay your college tuition. Beyond that, work study programs, grants, and federal aid should be considered before any type of student loan. If you have to take out a loan, federal loans are preferable to private loans, as the federal options generally are more flexible and have lower interest rates.

And don’t forget about filing the FAFSA. It doesn’t matter if you don’t think you qualify for any aid, file the FAFSA anyway. Not only does the FAFSA open you to federal student loans, you never know what sort of merit-based aid you actually qualify for. Additionally, some outside scholarships require your FAFSA. If you’re having trouble filing the FAFSA, don’t worry. There are plenty of (free) online and real life resources available. That means online guides or FAFSA courses offered locally.

Use College Raptor’s free Student Loan Finder to compare lenders and interest rates side by side!

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