NASFAA Mention: 8 Essential Steps to Take Before Choosing a Private Student Loan

"College is expensive. That’s hardly a surprise, but as tuition has climbed and incomes have stagnated, the average net price of a four-year public college has grown to 23% of a typical household income," Money reports. 

..."Borrowing for college can be a smart investment, if done responsibly. Recent data from the U.S. Bureau of Labor Statistics shows that those with a bachelor’s degree earned almost double on a weekly basis than those with just a high school diploma, and they also had a lower unemployment rate.

To borrow responsibly, you first have to calculate exactly how much you’ll owe in tuition, living expenses, books and other miscellaneous fees. 'You never want to take more in loans than you actually need,' says Karen McCarthy, director of Policy Analysis at the National Association of Student Financial Aid Administrators (NASFAA). She also states that the same thing goes for borrowing less than you need, since you don’t want to find yourself in a tight spot in the middle of a semester.

...Part of crunching the numbers is thinking about your exit strategy, or how you plan on repaying your debt. Start by comparing your field of study’s average starting salary against how much you’ll need to borrow to graduate.

'It’s not a foolproof method,' says McCarthy, but you can use a free online loan calculator, and see how much would be a reasonable monthly payment.

'Finally, to the extent that you’re able, try to keep your borrowing to a level that’s underneath that starting salary, so that you are not struggling to repay once you get out,' she adds."

NASFAA's "Notable Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Articles included under the notable headlines section are not written by NASFAA, but rather by external sources. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

 

Publication Date: 7/10/2020

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