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Learn How to Borrow a Student Loan Responsibly

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Written by CB Community

Student loans can be very beneficial, as they can help you meet your financial needs in college.  Enrolling in higher education can be incredibly expensive, and this is where student loans come in handy. Banks, along with money lending bodies, can advance loans to students with favorable terms.

Generally, student loans carry relatively low interest rates and minimal processing fees. Most of these loans have very favorable repayment plans as well. For instance, a student can choose to repay by means of monthly installments while still studying. Alternatively, they may choose to repay the loan after finishing studies and gaining employment. However, it is important to remember that these are still loans, and that you need to borrow responsibly. To acknowledge why responsible borrowing is very important, let us briefly discuss the effects such loans may have on you and your future.

The Effects of Taking Student Loans

Every debt taken is an obligation, and student loans are no exemption. While the effect of borrowing might not be felt now, your financial profile may be significantly affected for many years.
Recent statistics show an average graduate owes probably $40,000. The United States has the largest amount of student loan debts, a total of $1.48 trillion in the hands of 44 million debtors. Student loans can have a significant impact on your financial plans. Here we will examine four ways in which you can be affected.

1. It Impacts Your Debt to Income Ratio

This is the ratio that shows the amount of your monthly income that goes to debt payments. It is a very significant ratio that lenders use to determine your eligibility for car loans and mortgages. Most financial experts suggest that you maintain your debt to income ratio at a maximum of 36%. If your ration is beyond this figure, you are less likely to be approved for other loans. Still, there are chances of qualifying for loans but at very high interest rates.

2. Student Loans Are Non Dischargeable

This means they have to be settled, no matter the circumstances. If someone accumulates too much debt that they are not able to repay, they may be declared personally bankrupt, a move that cancels their debts. Even so, one cannot get away with a nondischargeable debt, not even by declaring bankruptcy. Unless you are deceased, the only way to get rid of student loan debt is by paying it off. This means you will be committed to settling the debt regardless of the hardships you may be going through in life.

3. Limits Your Ability to Undertake Important Projects

Many graduates are struggling to settle their student loan debts. This has made a good number of them hesitant to take more debts even in cases where it may be absolutely necessary to do so.

4. Limits your Retirement Saving Plans

If you are struggling to settle your debt, the ability to save towards retirement can become restrained. If it is really difficult to repay your student loan, it will be equally very difficult to contribute to retirement.

With the above conditions, it is important that you borrow responsibly. With that being said, responsible borrowing is not always easy. Below are some important points to keep in mind in order to borrow with care.


Tips for Responsible Borrowing

Borrow Only The Amount You Need

You may be at liberty to borrow to the Cost of Attendance Budget. Among the things included in this are tuition fees, housing expenses, food, and cost of transport. Although these may not be applicable to all students, it is not a requirement that you take the maximum amount you are entitled to. Knowing that this is an obligation you have to shoulder should motivate you to take only the amount you need.

Endeavor to Live Like a Student

Remember you will have to spend the better part of your life in the workforce, so this will be temporary. It is unwise to borrow in order to subsidize a luxurious lifestyle. You have your own journey so do not compare yourself with others. Avoiding the temptation to buy something now for temporary pleasure is a discipline that you will thank yourself for later.

Carry Out Extensive Research Prior to Borrowing

Different licensed money lenders can provide the lowest rates, however, you should be careful not to become a casualty. Banks can trick you into borrowing by offering lower rates, but the processing fees could be large. So consider every detail of the terms from lenders before applying. Are you a member of a credit union? Confirm with them if they give student loans. Usually, credit unions offer the best terms compared to other lenders.

Avoid Large Loans

You should aim at borrowing as little as you can, and not try to see how much you can get. Every dollar lost in repaying a student loan could be worth more if directed to other priorities. Avoid setting higher loan targets whenever possible.

Choose a School That Suits You

There are so many things students look for in learning institutions, among them being academic reputation and program offering. Nevertheless, the fundamental criteria that many forget is cost. Make sure you compare the overall costs in different institutions and weigh them against the possible financial aid.


Enrolling for higher education is one of the best investments you can ever make. If you cannot afford the fee required as well as the upkeep, borrowing with student loans is a viable option, but do so responsibly. Student loans can turn out to be very costly in the future, so it important that you make wise decisions now. Remember you are a student and adjust your lifestyle so you do not borrow more than you need.

For more great College Tips, check out the other blogs on College Basics.

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CB Community

Passionate members of the College Basics community that include students, essay writers, consultants and beyond. Please note, while community content has passed our editorial guidelines, we do not endorse any product or service contained in these articles which may also include links for which College Basics is compensated.