Borrowing

Educational student loans are available to students regardless of your family's financial circumstances (citizenship or other criteria may apply). Federal educational loans carry a low interest rate and the government pays the interest for some students while they are in school. You need to repay the loans back after you graduate or leave school.

You don't need to know the details of the various loan or work programs now to take advantage of them when you go to school. However, if you want to know more, you can learn about loan and work programs here.

Worried About Borrowing?

No one should borrow if they don't have to, but federal student and parent educational loans can be a great tool to help you pay for college.

Unlike car loans or credit card debt, educational loans help you buy something that will increase in value. They are an investment in your future.

Student and parent loans are designed to make repayment manageable. Repayment doesn't begin until after you leave school and there are a number of features that let you stretch out the payments over 15, 20, or 30 years. You can also defer your student loans if you return to school.

The amount you can borrow depends on your college costs, your expected family contribution, your year in school and enrollment status, whether you're dependent or independent, and how much other financial aid you receive.

After determining how much you may need to borrow for college expenses, consider how much you can afford to borrow. Monthly loan payments can range from as little as $50 to over $1,400, depending on how much you borrow or your accumulated educational debt. Remember — manageable payments depend on your income after you leave school, your monthly student loan payment, and other living expenses and consumer debt.

Repayment options for Stafford loans include payments that stay the same each month (standard), payments that rise gradually (graduated), payments that are linked to monthly gross income (income-sensitive), and payments that stretch over a longer period of time (extended).

Borrow Wisely

If you need help paying for college, start early and explore all your options. First look into grants, scholarships, employment opportunities and other financial aid you don't have to pay back. Your high school counselor or college financial aid administrator can give you a jump start.

Stafford loans are the largest source of financial aid from the federal government. These low-interest loans are for undergraduate, graduate, career, and professional students. Keep in mind that all student loans must be paid back, with interest. Even if you don't graduate, can't find a job or aren't happy with your education, you still must repay your loan.

You may see TV commercials or magazine advertisements for alternative educational loans. These types of loans are higher interest loans and some do not have to be processed through the campus financial aid office. Before applying, be sure you understand all the requirements. Payments usually may have to begin immediately. Compare the loan to the federal Stafford or Direct student loan provisions. Seek advice from a campus financial aid officer before applying. Not understanding what you apply for can cause much problems later.

To learn about and compare private loan terms side-by-side, visit the California Private Loan Marketplace.

Learn more about California Private Loan Marketplace disclosures.

Before borrowing determine how much you can afford to repay. You can estimate how much you'll need, what your monthly payments and other expenses will be and what you can expect to earn after graduation using EDWISE®, the online financial planning guide from EDFUND. You'll get clear, concise information to help you manage your money wisely while in school and after.

For more information on borrowing for college, look for the following PDF files and others on EDFUND's publications page.

• A Stafford Student Loan Can Help You Pay for College Brochure (I-45)
• Paying for Your Child's College Education With a PLUS Loan Brochure (I-44)

Credit Cards

The cost of using credit can be 18% or more. If you use credit cards, pay off the balances monthly and leave them at home when you shop. Impulse purchases can add up. In fact, if you charge tuition ($1,000) and books ($400) for one term and only make the minimum monthly payment of $28, it will take you 93 months to pay off that debt.