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Borrowing Wisely

Borrowing Wisely

Things to consider BEFORE you borrow:

You've Got a Right
Understand your rights and responsibilities as a student loan borrower. This information is provided to you when you take out your first student loan. If you have questions about the terms of your student loans, contact your lender or the Iowa College Student Aid Commission.

Get Free Money First
Before borrowing, it's smart to apply for all other forms of financial aid, especially scholarships and grants (which do not have to be repaid). Check with your financial aid office for scholarships, grants, work-study or other student employment options for which you may qualify. Don't borrow unless you really need the money to pay your education expenses.

Budget
Before you make a decision to borrow a student loan, you should develop a budget to determine how much you NEED to borrow. Developing a budget isn't hard and is the key to staying in control of your money. Set realistic spending goals and stick to them. Use our Budget Worksheet to help.

Only Borrow What You Need
If you still need money to cover your college expenses after you have exhausted your other options, student loans can help. Just remember, use your loan money for college, not your lifestyle. Student loans are real money that must be repaid, with interest, so borrow only what you need. Use a student loan calculator to estimate your future monthly loan payments.

Be Cautious, Be Responsible, Be Sensible
If your student loan payment is more than 8% of your income, you won't have much cash on hand for everyday living expenses. This could restrict your opportunities for purchases, like a car and a home. Use the debt/salary wizard to determine how much salary you will need to comfortably repay your future loan debt.

Consider a Part-Time Job
You may decide to pay for some of your college expenses by taking a part-time job. The extra income means having to borrow less in student loans. Part-time jobs can include work-study and jobs on and off campus.

Don't Charge It
Having a credit card for emergencies is fine. Unfortunately, a lunch here, a pair of shoes there, charged to a credit card can add up fast. If you over do it now, you will find yourself struggling to make both your student loan and credit card payments later.