It’s true what they say: too much of a good thing can be bad. No where is this truer than with student loans.
Education loans enable students to bridge the gap between the cost of college and what they can afford to pay after scholarships and financial aid have been applied. In this, they are necessary to helping students achieve their goals and can be viewed as a good thing.
However, the reality of the future is difficult to visualize today, especially for 18-year-old students. It’s imperative that students get a glimpse of what life with student loans will look like before they borrow in order to make smarter borrowing choices.
Private student loans are also an option. Though they have higher interest rates, the amount that you can borrow each year to pay for college is not capped like federal loans.
Next, use a net cost calculator to figure out the true cost of college. You can find these on admission and financial aid websites for each college you’re interested in attending. Net price calculators take into account the basics of your academic performance and family financial circumstances. The school then uses that information to provide a picture of what paying for school will look like for you each year. It includes:
How Much Student Loan Debt is Too Much?
At the same time, it can be difficult for students to make loan decisions that will impact them for years to come. The sum they are considering today can have a great bearing on what they do in the future, like when they buy a house, get married, or decide to start a family of their own.Understanding Student Loans
There are two types of student loans: federal and private. Federal loans are oftentimes included in a financial aid package. They come with the lowest interest rates. There are student loans specifically for students that show exceptional financial need, and then there are federal student loans for anyone.Average Student Loan Debt
CollegeBoard reports that the average student loan debt amongst borrowers is $29,400. Of 2021 – 22 college graduates, the most recent year for which there is data, approximately 51% of students had borrowed federal or private loans to help pay for college.Should You Take Out a Student Loan?
To combat overborrowing to pay for college, students should exhaust all other financial options first. This means searching for scholarships, applying for financial aid, and looking for a part-time job. If students still require money to pay for college, it’s time to look at student loans. Don’t wait until your financial aid award letter arrives to consider borrowing money to pay for college. As you begin searching for a college during your junior year of high school (or sooner, in some cases), you should also give thought to how you will pay for college. At this time, you and your parents should have some honest discussions about who is paying for college and what you can realistically afford.- Student Aid Index (SAI)
- Merit scholarships from the school based on academic performance
- Financial aid, such as grants
- Loans