Think Before You Borrow

It's easy to rush through the loan process. But if you take a minute and consider the following points, you or your child could save some money in the long term.

Avoid Falling into the Loan Trap

Because need-based loans are easy to apply for and don't require payments while your child is in school, it's tempting to borrow up to the maximum amount—even if it is more than either of you can afford to repay.

Ask Yourselves How Much Loan Your Child Actually Needs

Your family doesn't have to borrow the entire amount shown in your child's award letter.

Explore Ways to Reduce Your Family's Loans

Can your child hold down expenses? Can your child work more, either in the academic year or during vacations? Are there scholarships for your child? If your child reduces spending or brings in more money, the amount you or your child has to borrow decreases.

Go for the Loan with the Best Terms

The lower the interest rate, the less expensive the loan—in other words, the less you or your child will have to repay.

Starting with least expensive, your family's loan "batting order" should be:

Student Loans

1. Federal Perkins Loans
2. Federal Subsidized Stafford or Direct Loans
3. Federal Unsubsidized Stafford or Direct Loans
4. Alternative Loans

Some students may have access to a special loan source (like the Air Force Aid Society) with terms comparable to Perkins or subsidized Stafford/Direct Loans. It may be worth your family's time to look into the possibilities.

Federal PLUS Loans for Parents

Some colleges offer their own parent loan programs. We recommend that you check with the financial aid office to see if the school offers its own loan program, and if you qualify, before you submit a PLUS Loan application.