If you’re like most students, you’ll likely need to consider borrowing student loans to pay for college. But what’s the best way to borrow?

Student loans are a big commitment that can take several years to pay off, and there are several things to know before you accept any loan terms.

Thankfully, there are experts willing to share their knowledge and help students like you borrow smart. In a recent Twitter chat, a group of nonprofit organizations and experts on higher education got together to share their best tips on student loan borrowing.

Trellis Company, a nonprofit* that helps borrowers repay their student loans and works to improve access and success in higher education, co-hosted the chat with the Education Finance Council (EFC). They were joined by several other higher ed organizations focused on student financial wellness. Check out their tips on the topics below!

Understanding and comparing financial aid award offers

Financial aid award offers don’t all look the same. Comparing them is an essential part of figuring out how much to borrow and which loans you should choose.

Like the Higher Education Financial Wellness Alliance (HEFWA) recommends, contacting your financial aid office is a great first step if you need help with your financial aid offer letter. They can help you understand any confusing or unclear terminology.

If you’re still in high school, your high school counselor can also help you understand your financial aid offer.

Borrowing the right amount for college

Picture this: you get a financial aid offer from the school of your dreams. When you total up all the grants and scholarships in your offer, they come up short of paying for your full cost of attendance.

This happens to many students. Often times, taking out student loans can be the best option to cover the gap between the aid you don’t have to pay back and what you still owe.

If you need to borrow, here’s what the experts have to say about it:

When you’re figuring out how much you need to borrow, keep these things in mind:

  • The cost of the school you plan on attending
  • The college major you intend on picking
  • The potential annual salary of your intended major

Your school choice and major affect your future pay. Will you make enough money after graduation to repay the amount you borrowed?

Additionally, consider Kevin Wilson’s advice below. Make sure that the amount you’re borrowing doesn’t result in a monthly loan payment that’s more than 10% of your future career’s potential monthly gross salary.

Use MOSAIEC’s Student Loan Payment Calculator to get an idea of what your monthly payments could look like based on how much you borrow, and make sure you’re staying under that 10% guideline.

The best type of student loan

From federal to private, unsubsidized to subsidized, there are a lot of student loan options to choose from. But how can you make sense of them and find the best type for you?

Completing the FAFSA is an important first step in getting the best federal student loans. But from your federal loan options, which should you choose—subsidized or unsubsidized? Here’s what Trellis and Kevin Wilson had to say:

When you need to borrow more than your federal loan limit

For federal loans, there are limits to how much you can borrow each year (annual loan limits) and in total (aggregate loan limits).

If you borrow federal student loans up to your loan limit, then you can’t borrow any more after that. When that happens, here’s what to do:

What the federal student loan application process looks like

To take out a federal student loan, you first have to apply for one. That means filling out the Free Application for Federal Student Aid, also known as the FAFSA.

The FAFSA helps you apply for not only federal loans, but also grants and work-study opportunities.

When you fill out the FAFSA, you’ll be asked for information about yourself (and your parents if you’re a dependent student). It’s best to keep a few documents handy when completing it.

What happens with federal and private student loans while you’re in school

When you take out student loans, you’ll need to keep track of them while you’re finishing your education.

Federal loans have what’s called a “grace period”, which gives them an important advantage over private loans.

Borrowing less while you’re in school is a good goal to aim for. Working with your financial aid office to borrow less is a partnership that can pay off!

When it comes to private loans, things get a little more complicated—but don’t worry! Your lender is there to help you have a successful repayment, so keep in touch with them!

Student loan repayment… and how you can prepare for it!

At last, the elephant in the room: when do you start repaying your student loans? The answer depends on the type of loan you have.

The grace period for federal loans also factors into when you repay your subsidized and unsubsidized federal loans.

Repayment goes more smoothly when you keep tabs on your loans. When you follow the right steps, it’s totally doable!

When you borrow, make the informed decision

Borrowing student loans can have serious, long-lasting impacts on your life. Using the tips above, you can be better prepared to take the right steps, borrow wisely, and use student loans only when you really need them!

*Trellis Company provides MOSAIEC as a free public service dedicated to helping college students find the best ways to pay for their education and graduate with the lowest amount of student loan debt possible.

Photo of Financial Coach Beth.About Beth

For over 25 years, I have worked to help students go to college. The last 15 of those years have been focused on providing one on one counseling to students, parents and family members throughout the financial aid and college-going process.

I am a financial coach because I enjoy talking with people, and helping them with building their future by exploring their educational, personal and financial goals, and celebrating their successes. I hope to provide the tools and support you need to help you achieve your goals.

This service is not intended to constitute any tax, investment or legal advice. If you need investment, legal, tax advice, and/or credit counseling, please consult with a professional within those areas.

Links to third-party financial resources are provided as a convenience for informational purposes only. Trellis Company does not endorse or approve any of the products, services or opinions of the entities or individuals associated with these links.  Trellis Company bears no responsibility for the accuracy, legality or content of any external site associated with the links provided or any subsequent links.

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