March 2nd, 2009
The Right Size for a Student Loan
Going to college these days is nearly requiring that students take out a loan to cover the ever increasing college tuition. What puts students and their parents in a tough situation is the task of deciding how large of a loan to borrow in order to cover the costs of college. It all comes down to doing the research and figuring out how much is right for the parent and student before making the decision and going into debt.
The student loan landscape is ever changing, and may have been true for the parent, may or may not be true for their child. So it is important to take the time to work with the college and your child’s high school counselor to learn about scholarships and grants, which do not need to be repaid, and federal programs that are available. All of these programs need applications and will take hard work on the part of the student and parents in getting them.
Before all of that, the parent should sit down and go over their finances in order to figure out what they are able to afford and how much assistance they need. Getting a student loan that is too large will end up costing big when it comes time to pay back the loan, especially if money is just sitting there waiting for a college expense. Once you have a reasonable estimate for what is available to the student, how much is able to be provided each month, you need to figure out how much is needed. This will not only include tuition, but the ever increasing costs of textbooks, housing, car and car repairs, gas, food, fees for various items, and so on. This will take a little while, but once the parents have a number, they should only borrow that amount.
It would be easy for the parents to dump it on their children, that they will have to work in order to make up any shortcomings between the needed money and the loan. However, college is a lot of work and there will be little time available for the student. What ever job they do have, most likely it will be work that is for minimum wage or close to it. If the student does have the time for a job, they should work with their school and department to find a situation within their field of study, as it will provide them with experience and connections that will help in the long run. Just know that there will be little money earned from it.
Once a number is determined for the size of the student loan, the last step is to research the numerous companies and agencies that provide student loans. Campuses are required to be unbiased when it comes to offering selections for lenders, but any advice there should be independently researched. What is important is that the parents do not just get a loan. They should research the fields, know exactly how much will be needed and from whom they borrow the money.
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