Figuring out how much you’ll need to borrow for college can be complicated, but having a better understanding of college costs and how much you’ll be able to pay back will make it a lot easier. When making your plan for how you’ll pay for college, start with savings, scholarships, and college grants, and keep the following in mind when determining how much to borrow in student loans:
1. Know the full cost of college
There’s a lot more to paying for college than covering tuition and room and board. When you’re figuring out how much to borrow, think about all the expenses related to your education, not just the obvious ones like books (though those are important too).
Here are a few extra expenses to consider.
Will you need a car to commute to class, or money for public transportation? Will you fly home on winter break?
Do you need lab fees, art materials, practice space, or any other added costs related to your major?
Do you have a meal plan covered or will you need money for groceries and snacks? What about a microwave or mini-fridge for your dorm room?
Include these factors in your college planning calculations so that all your bases are covered. If you don’t know exactly how much you’ll need for books, travel, and other expenses yet, you can use a free college planning calculator to input the national average or the averages for the prospective colleges on your list.
2. Think about your future career
There’s no “standard” amount of loans you should be taking out—it varies depending on your major, your school, and what you have in savings, scholarships, and grants. But as a general rule, you should only borrow what you can afford to pay back.
Research the starting salary for the career you’re interested in and compare it to the amount you’ll need to borrow. The College Board® suggests that a new graduate’s monthly student loan payments should be no more than 10 to 15 percent of their starting monthly salary.* A quick Google search for your estimated salary, a student loan payment calculator and a little math can help make sure your repayment plan is sustainable.
It’s also totally okay if you don’t know what you want to do yet. Nobody expects you to have your entire career path lined up by the time you graduate high school. But having a few career options in mind can be helpful in determining how much you should borrow—and will help you decide on your major.
3. Only borrow what you need
You should never borrow more than you need for school and school-related expenses. However, if you do mistakenly borrow more money than you need to pay your school, they’ll send you a check for the amount you overpaid them.
No, this money isn’t made free because your school didn’t need it—bummer, I know. You borrowed it and will still have to pay it back—with interest, a fee you owe your lender that adds up over time.
It’s fine to use this money for education essentials that aren’t covered by free money like scholarships and grants. But if you don’t need the money, don’t spend it on a spring break trip or Coachella tickets—no, not even if Beyoncé is headlining again (sorry Bey). The interest on your loan means you could be paying way more for these experiences in the long run.
Pay the money you don’t need back to your lender now—your future self will thank you.
4. Consider borrowing enough to cover the whole school year
In some cases, it might be worth considering applying for a loan to cover a full year of school instead of a semester.
If you already have an idea of what you’ll need to borrow for next semester, borrowing it all at once will save you from having to apply for a second time, undergoing another credit check, and possibly having two loans with two different interest rates.
The funds for next semester won’t be disbursed until your school requests them, and interest won’t accrue on them until after they’re sent to your school.
A little planning goes a long way
You don’t have to make a color-coded, multi-page spreadsheet for how you’re going to pay for your college career. Just doing a little research and having a basic plan can help you determine if you’re borrowing enough to cover all your college costs and can save you from payments you’ll have trouble keeping up with.