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If you or your child is considering higher education, you may be looking at funding options.

Loans account for more than 40% of all financial aid dollars received by college students, and approximately six out of every 10 students who received a bachelor’s degree borrowed to pay at least some of their college expenses.

Having a good borrowing strategy is crucial to maintaining debt once it’s time to start making payments. Consider following these steps to make the most of your investment:

Estimate the full cost of college

Before comparing financial aid packages from colleges, the first thing any student needs to do is figure out the comprehensive cost of his education – room, board, school materials, transportation, etc. Next, factor in any grants and scholarships from schools, savings and potential earnings from a part-time job. 

Weigh loan options

Student loans fall into two main categories: federal and private.

  • Federal loans are offered through the government and come with fixed rates and borrower protections, including the ability to lower or postpone payments if you experience financial hardship.
  • Private loans may have fixed or variable rates and don't typically offer flexible student loan repayment options.
Make sure to thoroughly research your options to see which best fits your situation because ultimately, your monthly payments may be affected by the type of loan you take. 

Research your earning potential

For a student loan burden to be manageable, the total amount you owe should be less than your starting salary after graduation. Start researching the published salaries of recent graduates—both from colleges you're considering and majors you're interested in­ – before making borrowing decisions.

Periodically review your debt

During school, look to see if you’re still on track for your borrowing strategy. If you’ve been spending more than you expected, consider working more over the summer or cutting back on some expenses. Student loans aren't free money. You'll pay back what you take and then some, after interest is accounted for—so be frugal when possible. 

Refinancing your mortgage or an auto loan may save you money

Consider looking at current interest rates to potentially free up some of your funds for college expenses.

Keep a healthy mindset about debt

Well-researched, manageable amounts of student debt can provide a student with motivation and real-life experience. Taking out a loan to pay for education is an investment, and a reasonable amount of student debt can be one of the best investments a student will ever make.

Courtesy of: http://www.usnews.com/