What to Consider Before Borrowing

Ask Yourself...

Do I need to borrow anything?

First, look at other sources of money: grants, scholarship, and income from your job, or work study. Are those sources enough to cover your tuition, books, and living expenses? If they are, then you don't need to borrow anything! In your award letter, choose "Decline" under Accept Award for each loan.

How much do I really need?

If your other sources are not enough, then you have to decide if you want to take out a loan and how much you want to borrow. To decide how much to borrow, figure out the smallest amount you need to get by. Don't use borrowed money for luxuries, drinks, tattoos, vacations, parties or anything unnecessary. Loans are for education and living expenses only.

What is my target total loan debt?

Many people have to take on some debt to complete their degree. When taking on student debt, you want to try to hit your target total loan debt. Your target total loan debt will be a manageable amount of debt: you'll be able repay this amount and have money left over each month to spare. The closer you can get to this, the less painful repayment is going to be.

Student Debt Sweet Spot Calculator
sweet spot icon

Your monthly take-home pay will be about:

Affordable monthly loan payments would be about:

Your total loan debt should be under:

 Make sure that your total loan debt is in the sweet spot

Now that you've made sure you have enough to finish your degree, you want to make sure that your total loan debt is in your sweet spot. To do this, you need to know your total target loan debt, which you can figure out in the Student Debt Sweet Spot calculator above. You'll divide the total loan debt by the number of years you'll be in school to get the target amount you should borrow each year.

total target loan debt
number of years you'll be in school
maximum amount you should borrow each year

Did you know...

Are you planning to transfer to a four year school? If you borrow more than you should before transferring you may be in danger of running out of loan money before you earn your degree. See How much do I owe for information on loan limits.