Admission News

What Should You Borrow for a College Education?

choosing-a-college

Not that much! Why? Isn’t it worth it? It may be worth it on the one hand, but it may also cause you too much debt to bear.

Ann Carrns of The New York Times writes that seven in ten college graduates have student loan debt. And, now student debt averages $30,000.

About one fifth of that debt consists of money owed to private lenders and/or state programs. And, some of those loans were taken out before federal loan caps were met.

So, how do you budget for a college education without too much student debt? Here are some practical suggestions.

Borrow from the federal government.
• Federal student loans generally have lower interest rates. (3.76% in 2017)
• Federal student loans have consumer protections:
*Payment can be tried to income level.
*Payments can be suspended if you lose a job or have a financial crisis
• Partial payment can be forgiven if you have a public service job.

Don’t borrow from state-based programs. They are costlier.

Don’t borrow from private lenders.

Never borrow from other sources before you meet the federal loan cap. ($5,500 for freshman year up to $7,500 in the senior year, overall cap $31,000)

If your college costs more than federal loans will provided above what you and your parents can afford, consider another college or community college, at least for your first two years.