Smart Student Borrowing Essential
Experts Recommend Tips for Student Borrowing in This Economy
WEST DES MOINES, IOWA (March 16, 2009) — As students prepare for college this fall,
rising costs and the poor economy may have them thinking about student loans as a means
to pay for their education. As long as students are careful to borrow wisely, student loans –
especially federal loans with their better terms and conditions – can be a useful tool,
according to the Iowa College Access Network®
ICAN recommends these tips for smart student borrowing.
1. Know what you need. Contact the admissions or financial aid office of your
college to find out estimated expenses for one year. Many colleges list this
information on their Web sites.
2. Create a budget. Create a budget showing college costs plus additional
expenses (like cell phone payments) and expected income (from earnings, for
3. Apply for financial aid. If you haven’t yet, file the Free Application for Federal
Student Aid (FAFSA), a free form that may be completed without professional
assistance provided by the U.S. Department of Education at www.fafsa.ed.gov.
You may qualify for scholarships, grants and work-study programs, which don’t
need to be repaid.
4. Search for scholarships. Talk to the school counselor and look for local
scholarships. Free online searches can match your qualifications to additional
scholarship opportunities. 5. Make a plan for the shortfall. Determine how much you still need. Then, decide
whether loans are the best way to cover that amount, considering the repayment
terms and your future earning potential.
6. Borrow only what you need. Remember that the more money you borrow, the
more you’ll need to repay, plus interest. You’ll also likely need to borrow through
additional years of college. If you can get by a little more cheaply now, it’ll literally
pay off later.
7. Consider federal loans first. Federally guaranteed loans generally offer better
rates and conditions than private loans.
8. Use private loans as a last resort. If you are confident you can repay the loans,
even if you fail to graduate or land your dream job, and you’ve exhausted other
forms of aid, private loans are an option.
9. Compare private loans carefully. Private lenders offer different terms and
conditions for education loans, making a side-by-side comparison difficult.
Consider interest rates, fees and discounts (and how long introductory offers
last), variable vs. fixed interest rates, payment deferment and reduction
programs, and penalty clauses.
10. Get help if you need it. If you have trouble understanding your financial aid
options, talk to the financial aid office at the college. You may also get free
assistance through ICAN’s College Planning Centers by calling (877) 272-4692
or visiting www.ICANsucceed.org.