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Ten Essential Borrowing Tips
And the Number One Borrowing Tip Is...
- Look at your child's award letter and figure out which need-based loans your family has been given and for what amounts.
- After you look at your family's full financial picture—education cost, awarded aid, and family share—settle on the amount you or your child actually need to borrow.
- Never borrow more than you need. Remember, you are not required to borrow the full amount of loan aid your child has been offered or to borrow the maximum loan amount.
- Don't forget about student employment as an alternative for borrowing. Although working at a job can seem like an extra burden for your child, so is struggling with high loan repayments after college.
- Apply for your loans right away. You want to make sure that the loan is approved and the money paid to the college before your family has to make your child's first student account payment.
- Follow the loan application instructions carefully. Any mistakes you or your child make will delay receipt of the funds.
- For a Stafford or Direct Loan, be aware that the amount that is paid to the college will be less than the amount for which your child signed. A fee of 3 or 4 percent will be subtracted from the loan before the check is sent to the college.
- If you will be taking out parent loans, start to keep track of your "loan tab"—the amount your monthly repayment will be—once you know the amount that you are borrowing.
- If you feel your family needs to borrow more than the amount that's been offered in your child's award letter, talk with a financial aid counselor before taking on an additional loan.
- If you or your child does take on an additional, unsubsidized loan, consider making interest payments while your child is in school. They won't be much and will save you money—you'll end up having to pay back significantly less than if you delay (and capitalize) the interest payments.
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