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