|
|
Scholarships & Aid
How Much Should You Borrow?
You've faced reality and realized you'll need student
loans to help finance your education. But before you sign
any promissory notes, take an organized first step and
determine how much you'll need to borrow.
The dollar amount you should borrow will depend on the
following factors: cost of attendance as
established by your school; loan limits established by the
federal government and other lenders; your existing
financial commitments, such as car
loans or mortgages;
other resources you may have, such as savings accounts;
and the amount of debt you can afford to repay once you
graduate.
The sum of these parts equals an educated estimate of your
loan amount. Each of these factors is explained below.
By law, you can borrow up to the cost of attendance (as
determined by your school), less other aid you might be
receiving. Other aid includes such things as scholarships,
grants, or work-study. Cost of attendance typically
includes tuition, books, fees, room and board, and other
miscellaneous living expenses.
Your school's cost of attendance figures are meant to
apply to a diverse group of students. You may not need to
borrow as much as your school allows. Remember: It is best
to borrow the minimum amount possible in order to reduce
your overall financial obligations later. However, if you
find that you need more than the school has allotted, you
have the right to appeal the decision as long as you do
not exceed the maximum amount as established by federal
regulations.
Some lenders may place borrowing limits on student loans.
For example, the federal government places
annual and aggregate borrowing limits on federal student
loans. The aggregate limit is the total amount each
student can borrow in the span of his/her education. Check
the terms of each loan you plan to take on for the annual
and aggregate loan limits.
Carefully and honestly assess your current financial
status and any financial commitments you've made prior to
entering school. Factor in consumer debt, such as auto
loans or credit cards, and understand the repayment
obligations of each. You will be responsible for these
prior obligations in addition to any education debt you
take on. Your education loans are not meant to cover these
prior obligations.
Another consideration is a realistic determination of your
future income. Research the job market and starting
salaries in the field you plan to pursue. Remember that
you will be paying for your education with your future
income. Will you be able to manage your monthly payments,
considering your likely starting salary? When choosing a
loan program, be sure to investigate loans that offer
alternative repayment plans that can help you manage your
payments, especially early on in your career.
Step 1: Calculate the Amount of Assistance Needed
Construct an in-school budget, identifying your
expenses (both education expenses and living expenses) and
your resources (including income, other contributions, and
other financial aid). Subtract your expenses from your
resources. If there is a negative balance, you may need to
borrow this amount in student loans. On the Access Group
website you'll find budget calculators to help you plan an
in-school budget.
Remember: Your school will calculate your cost of
attendance only for the in-school period, which is not
normally a full 12 months. You will need to consider how
you will cover your expenses when you are not enrolled in
classes.
Step 2: Project Total Student Loan Debt and Monthly
Payment Upon Graduation
To project your total student loan debt upon
graduation, multiply the amount of assistance needed by
the
number of years you expect to be in school. Remember that
accrued interest will be added, which can significantly
increase the total you'll have to repay. Also, be sure you
understand how much you will be required to pay each
month. Access Group has loan repayment calculators to help
you estimate your monthly payments, taking into
consideration accrued interest.
Step 3: Estimate an Out-of-School Budget
Estimate your expenses once you graduate. Your
out-of-school budget will include most of the same
components as your in-school budget, minus the education
expenses. You likely will have new expenses related to
your job, as well as the added expense of your student
loan payments.
Next, you should estimate a monthly starting salary. Be
conservative with these figures. Check with your school
for more current information on average starting salaries
for recent graduates. Access Group has budget calculators
to help you plan an out-of-school budget.
Step 4: Evaluate the Bottom Line
Subtract your future expenses and anticipated monthly
student loan payment from your anticipated future monthly
income. If you have a surplus, it probably means that you
can afford to borrow the amount you had planned. If you
have a zero balance, it may mean that you have just enough
to cover your future lifestyle. If you have a negative
balance, you will need to reevaluate the amount you plan
to borrow. To do this, you may be able to reduce your
expenses while in school, or find additional non-loan
resources to pay for these expenses in order to reduce the
amount you must borrow.
Student loans can be a valuable investment, but they are
also an obligation. In order to ensure successful loan
repayment, be sure to approach borrowing carefully and
thoughtfully, and be realistic in your budget and salary
projections. |
|
Advertisement |
|
|
Advertisement |
|
|
| |
|