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Wise Borrowing
Borrow as little as possible
- Use savings. Every dollar you save is a dollar you don't need to borrow and pay back with interest. Save money you earn during the summer to apply toward your college costs.
- Use current income. Spend your work-study income wisely - determine how much of your income you need for living expenses and how much can go to pay a portion of your tuition and fees. If you don't receive work-study, consider a part-time job near campus. Many businesses need extra help during holiday and tourist seasons - look for these short-term work opportunities during college breaks. Check to see if your school has a tuition payment plan. Tuition payment plans allow you to pay part or all of the tuition monthly over the school year. These plans are usually less expensive than loans, as most charge a small administrative fee but no interest.
- Make a spending plan. Consider how your choices about current day-to-day living expenses affect the amount of loans you'll need to pay back after you complete school. Check out budget calculators at the sites: Mapping Your Future and EDWise. The calculators can help you determine how spending decisions you make now impact you down the road.
- Borrow only what you need, when you need it. You can apply for more loans at mid-semester or next semester if you end up needing more (and haven't borrowed the maximum). Don't use loan money to increase your standard of living while you're a student.
Choose the best deal
- Look at the origination fees and interest costs over the life of the loan.
- Consider tax benefits, lender interest rate reductions, or other incentives that will save you money as you repay the loan.
- Consider home equity or retirement fund loans and compare the pros and cons to federal and private education loans for your individual situation.
- Consider the quality of customer service you will receive from the lender. Quality service can save you money in the long run.
- Come speak with a KCAC counselor for clarification and assisting in securing and selecting your best loan option.
Prepare for repayment first
Education loans are a part of most students' aid packages. They are also available for parents to help pay the family contribution or unmet need.
Repayment of education loans is a part of your monthly budget for many years after graduation. The choices you make as you borrow and as you repay your loans affect how much you end up repaying - which in turn affects your overall finances and your ability to spend your hard-earned money in ways that are important to you.
Planning now, before you borrow, can help you successfully manage your education debt as part of your long-term financial success.
Create a budget
- Understand your personal priorities and expectations. What do you expect to earn for a starting salary and beyond?
- How much will you be able to afford in monthly education loan payments for the 10 years or more after completing college? The standard guideline is that education loans should take no more than 8-10 percent of your monthly income.
- What are you willing to give up during that time in order to make these payments?
- What are you willing to give up during school to reduce the amount borrowed now, and thus have lower monthly payment amounts later?
Check out these budget calculators for additional planning help:
Mapping Your Future and EdWise
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