Student Loans: What You Should Know

The cost of tuition and fees at colleges continues to rise, budget cuts continue at the state and institutional levels, and federal grant programs are failing to keep pace with the rising costs. As a result, there are fewer grants available so students and their families borrow more or students find themselves with a bill that cannot be paid. The risks of borrowing too much or owing a debt to the college, known as a back balance, are real and significant.

Student loans have many different terms and conditions—they are not created alike. Borrowing to pay for college may seem like an effective way to cover your expenses, but borrowing too much or taking on debt with unfavorable terms and conditions can create both immediate and long-term financial challenges. We encourage you to read more about available student loan options.

When deciding which loans, and how much, to borrow to cover the cost of college, it is important to consider several factors. First, consider the cost of your school in conjunction with the total amount of gift aid—grants and scholarships—offered. Second, consider how much in loans have been offered to you and, if applicable, your parent(s). When reviewing the total amount of loans, it is important to also multiply the annual total borrowing by the number of years you expect to be in school. Although this math will not reflect possible loan increases, interest, or fees, it will provide a more realistic number for planning purposes. Third, are there costs associated with your education that are not covered by financial aid? This is known as unmet need and may cause you to seek out other loans or cause a back balance, which results in a debt to the school.

Many private banks and even some colleges will not hesitate to offer student loans, regardless of the quality. Education has tremendous personal value; however, if the debt you and/or your family are borrowing will leave you in a worse financial situation than if you did not earn a degree, you might reconsider your decision and consider alternative options. Our Student Advisors can help; contact us here!

Before you finalize decisions about student loans, ask as many questions as possible to support an informed decision.

Continue to Student Loans: Steps to Protect Yourself