by Karli Greenfield | Estimated Reading Time: 3 minutes
Let’s get this out the way – borrowing any amount of money from any entity is a big deal. Here’s the great news, if you read the last sentence and thought, “Obviously, I already know that”, you are well on your way to being a responsible borrower. Some of the most concerning conversations financial aid counselors have with students and families are those where borrowing is met with a sense of, “I’ll worry about paying it back later” or “everyone has student loans, oh well.” On the other hand, it is true that more than half of all college students utilize student loans each year to cover remaining college costs. Borrowing student loans for educational expenses does not have to be met with fear if you are prepared to make responsible borrowing decisions. Before you borrow, consider the following:
- Understand the cost before borrowing, and never over-borrow. Before deciding to utilize student or parent education loans, make sure that you need them. If you do not know how much you will need to pay to cover your student’s remaining direct costs, stop here – find that out first. Not only will this assist you in making decisions about whether you need loans but will also inform you of the amount of loan debt you or your student must be prepared to repay. You should never borrow more than you need to cover your student’s education-related expenses.
- Do your research and know the key factors. Before borrowing, make sure that you have done your research on key loan factors, such as interest rates, origination fees, and repayment terms. While Federal student loans typically carry the lowest student loan interest rates, and most flexible repayment terms, other state, institutional, and private loan programs may be well-suited to your student’s program of study, career path, funding needs, etc.
- Apply for other scholarships and grants. It is never too late to search for additional scholarships and grants to lower your student’s college costs. Encourage your student to apply for all possible college and state funded scholarship opportunities. Furthermore, students should continually browse for outside scholarships throughout their entire college career. Remind them to think of it this way, “The more scholarships I earn now, the less I pay later.”
- Encourage your student to live like a student. Remind your student to drop or refrain from beginning expensive habits. For many students who are leaving home for the first time or are perhaps using work earnings and loan funding to cover daily expenses for the first time, this principle can be easy to forget. We have all been there at some point – money management isn’t always easy, especially for young adults just beginning to manage their own finances.
- Include your student in the process. In most cases, student loans are taken out in your student’s name, with repayment arrangements that will eventually be required directly from your student. Here is what you want to avoid…your student gets to their senior year, and they are preparing to graduate. Graduation comes and goes, and they begin their first post-college job, and they get their first repayment notification. Suddenly, you get a frantic call, and the financial aid counselor at their prior college gets a frantic call. The best way to encourage responsible borrowing habits in your student is to include them in the entire borrowing process, as they will likely have forms and processes to complete anyway.
- Monitor borrowing throughout college. While topics like loan borrowing and repayment can induce a certain level of stress that is easier to avoid, borrowing is not something you want to be “out-of-sight, out-of-mind”. Keeping a watchful eye on loan balances, loan lender communications, and repayment terms can ease the fear and stress when it comes time for repayment to begin. It can also help you make responsible decisions about further borrowing as your student navigates each year of their college career. Federal student loans can be monitored on the studentaid.gov website.
- Ask for help. I cannot stress this enough – schedule a time to discuss your student’s loan options with a financial aid counselor. Better yet, ask your student to schedule a meeting for your family to discuss loan options with a financial aid counselor at their college. Financial aid counselors are trained to assist you with assessing your student’s cost of attendance, navigating your options, and providing information about the education loans your family may have already borrowed.
Karli Greenfield is a higher education financial aid and enrollment professional. She holds more than 12 years of experience in financial aid, 11 NASFAA Professional Financial Aid Credentials, and years of active participation on the GA Association of Student Financial AidAdministrators board. She is passionate about working with students and families, and innovating college enrollment processes. Karli Greenfield, MBA | LinkedIn
