Borrowing Wisely for College - Iowa College Access Network - ICAN

Borrowing Wisely for College

Paying for college may be your first big financial purchase. It's not to be taken lightly.

To help you with this huge investment, many types of financial aid are available. While it may seem easier to worry about the details later, the best course is to make sure you understand exactly what you're getting into so you don't get in over your head.

  • Understand financial aid. Don't forget that the Free Application for Federal Student Aid (FAFSA) needs to be filed each year you wish to receive financial aid. The FAFSA is a free form that may be completed without professional assistance via paper or electronic forms provided by the U.S. Department of Education. Keep searching for and using grants, scholarships and other sources of aid that don't need to be repaid before you take out student loans.
  • Look for other options. Besides financial aid, you might have other ways to help you pay for college.
  • Be loan savvy. Research the different types of loans and the terms associated with them. If you don't understand what a lender tells you, ask questions until you do. Remember, you're the customer, and a lender needs to satisfy you to win your business.
  • Borrow only what you need. If you decide that borrowing is necessary, consider exactly what you need and create an in-school budget.
  • Use loans the right way. Student loans are meant to help you with college costs, not support a lifestyle. Since you must repay every dollar you borrow now with interest later, student loans should be used only for education-related costs.
  • Calculate your loan payment. Figure out how much you want to borrow over your entire college education, and then calculate your projected payments. Will this be affordable?
  • Know your obligations. Understand how much you owe and when you need to start paying it back. Review your Master Promissory Notes (MPNs) or talk to your lender.
  • Keep in touch. Contact your loan holder if you have any questions about your student loans. Make sure your loan holder can reach you at your current address and phone number.
  • Reduce your debt. Make interest payments while you're in school and when you have some extra cash make an extra payment. These strategies will save you money in interest charges and cut your total repayment time.

Download the ICAN Achieve Financial Success booklet (PDF) to learn more about smart borrowing.

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