Consider factors like your expected salary and eligibility for need-based aid before you borrow.
1. What’s my financial aid package?
Your financial aid package tells you how much your school will cover and how much you and your family are expected to pay. This includes any scholarships and grants your school automatically considers all students for, as well as work-study.
Your financial aid package also tells you how much you might need to take out in student loans. While it’s a good starting point, you aren’t necessarily stuck with this amount if you apply for outside funding sources.
2. Do I qualify for financial need?
Whether you qualify for financial need can affect you in two ways. First, it dictates how much you and your family are expected to pay. And second, it can impact your eligibility for in-school grants, which typically require you to qualify for financial need.
Not all schools use the same formula to determine your eligibility for need-based aid. Some rely on the Free Application for Federal Student Aid (FAFSA) formula. Others rely on the College Scholarship Service (CSS) Profile formula. You might even find a school that has its own way of calculating need.
If you’re still deciding between schools, pay attention to your financial need status. Going to a school that allows you to qualify for more need could open you up to more financial aid opportunities.
3. Have I applied for scholarships and grants?
While your school might automatically consider you for some scholarships and grants, many offer additional funding that requires an application. You might have to write an essay, participate in extra projects or complete community service. But it could shave thousands of dollars off your student debt load.
Get creative. Look for departmental scholarships and even go outside your school to government agencies and organizations that might want to invest in your future.
4. Can I benefit from an income-share agreement?
An income-share agreement (ISA) is a student loan alternative that allows students to forgo tuition in exchange for a percentage of their salary over a fixed number of years. They aren’t widely available in the US, though some private lenders and schools like Purdue have started offering them.
An ISA could be a good choice for someone in a traditionally high-paying field like engineering or medicine who plans on working a low-income job after graduation — like going into public service. That’s because the income percentage and length of your ISA often depend on your major and earning potential. Through this system, high earners could end up paying more than their tuition was originally worth. And those in traditionally low-paying fields like the arts could end up forking over a large percentage of their salary each month over a longer period of time.
5. What’s my expected starting salary after graduation?
Borrowing for school is like an investment. Many schools publish the average starting salaries of recent graduates — and some even break out these stats by major. While what you make when you graduate depends on your personal situation, it can give you a ballpark idea of how much you’ll be able to afford to repay each month.
Take this into account before you borrow, especially if you’re considering private student loans. Many private lenders offer loan terms from five to 20 years, though some may even go as high as 25 years. A longer term gives you lower monthly repayments, which you might need if your starting salary is low compared to your debt load.
6. How much do I really need to borrow?
You can typically borrow up to your school’s estimated cost of attendance. But this number often includes expenses beyond tuition and fees, like textbooks, transportation and other personal costs.
You might not actually need to borrow this much if your family can help you out a bit. Even if they can’t, finding a part-time job outside of work-study might earn you enough to cover pocket money and textbooks. You might not want to borrow the maximum amount unless a student loan refund is the only way you can support yourself.
7. What types of federal loans am I eligible for?
Federal loans are generally the best deal out there because some options are subsidized by the government. But they come with limits to how much you can borrow per loan type.
If you’re only eligible for a Graduate or Parent PLUS Loan and have good credit or a cosigner who does, you might actually be able to get a better deal with a private lender. Consider prequalifying with a few to find out what rates and terms are available to you.
Compare private student loans
How can I find a private lender that’s right for me?
You can find a private lender that fits your potential salary and current finances by comparing several factors:
- Loan amounts available. Most private lenders let you borrow up to 100% of your school-certified cost of attendance, but some start lower than others.
- In-school repayment plans. Some lenders might require you to start repayments right away, while others might let you make reduced repayments or completely hold off until your grace period is up.
- Cosigner requirements. Most lenders allow you to bring on a cosigner, but the income and credit score requirements will vary. Make sure your cosigner is eligible before applying.
- Terms. Figure out how much you might be able to repay each month and go for a lender that offers terms long enough to meet that goal.
- Customer reviews. Visit the Consumer Financial Protection Bureau (CFPB) complaint database and sites like Trustpilot to find out what your experience might be making repayments or applying for deferment or forbearance.
Bottom line
Student loans might seem inevitable, but you could reduce or even totally eliminate how much you need to borrow by considering other options first. If you need to borrow, look into all of your options to make sure you’re getting the best deal available to you.
You can learn more about how paying for school works by reading our guide to student loans.