From Forbes
tips for student loan Don’t take on debt that’s more than your expected first year’s starting salary. Start looking for free money now. When you have to borrow, go with federal loans before private loans. Take out private loans only after you have maximized your federal loans.
Considering that the average student loan borrower graduates with more than $26,000 in debt, you need a strategy to keep your loan debt from ballooning out of control. After all, student loan debt could affect your or your child’s quality of life after graduation.“Every dollar for student loans is a dollar less for other priorities like buying a car, buying a house, getting married, having children,” says Mark Kantrowitz, senior vice president and publisher of edvisors.com, publishers of more than a dozen websites about planning and paying for college. “All that costs money and you’ll have tighter finances if you’re paying your student loans.”
1. Don’t take on debt that’s more than your expected first year’s starting salary.
Ideally, it should be a lot less so you can pay your debt in 10 years or less. Get a ballpark estimate of your total student loan debt by multiplying your first-year loan amount by the number of years of your program — for instance, four if you’re earning a bachelor’s degree. To find salary information, check out websites such as salary.com, payscale.com or glassdoor.com.
2. Start looking for free money now.
Grants and scholarships, unlike student loans, don’t need to be paid back. Check out free scholarship-matching sites such as fastweb.com, studentscholarshipsearch.com and collegescholarship.org. But don’t get too optimistic. Only about one in eight students in four-your education programs uses a scholarship to pay for school, and the average amount is $2,800 a year, which won’t cover tuition at most colleges. As for completely free rides? Those go to less than 0.3% of undergraduate students, says Kantrowitz.
3. When you have to borrow, go with federal loans before private loans.
Every year of college, fill out the Free Application for Federal Student Aid, or FAFSA, form. With this information, the Office of Federal Aid can help you identify federal grants, loans, and work-study funds, and schools will base their financial aid packages on this form. Federal loans offer many advantages over private ones. First, they have fixed instead of variable interest rates. Second, they offer deferment periods, in which the borrower doesn’t have to make payments such as when he or she is enrolled in school or unemployed. Additionally, federal loans do not require a cosigner who will be obligated to pay the loan back if you can’t.
4. Take out private loans only after you have maximized your federal loans.
If you need to take on a private loan, you may be taking on too much debt. Only do so after maximizing your federal loans. You have to apply in order to find out what rate you will get from each lender, so shop around. The one with the lowest advertised price may not offer you the best rate. Then, look at when you begin repayment: immediately while still in school or, preferably, six months after you graduate?
Read the full article from Forbes.
