How much should you borrow with private student loans?
College is an exciting time, but for many students, it can also be financially challenging. With the average cost of attendance in the tens of thousands per year (or more), many turn to student loans to help cover the price of tuition, housing and other expenses.
Private student loans can help you bridge the gap after maximizing other sources of financial aid, but it's essential to borrow smartly. You want to be able to pay for your education, but you also want to avoid setting yourself up for financial difficulties down the road.
To make the best choice for your immediate and future finances, it's crucial to know how much you should consider taking out in private student loans.
Explore your private student loan options online now to learn more.
How much should you borrow with private student loans?
Take the following steps to figure out your borrowing needs and how private student loans can help you meet them.
Calculate the total cost of attendance
The first step in determining how much to borrow with private student loans is calculating your total cost of attendance. This includes not only tuition and fees but also room and board, textbooks, transportation and personal expenses. You can get this information on the school's financial aid website or by speaking with someone in the financial office.
Max out other financial aid sources
The federal government offers a variety of loan programs to eligible students, including subsidized and unsubsidized loans. These loans often have lower interest rates and better repayment terms than private loans. You can also apply for scholarships and grants, which you don't need to repay, as well as work-study programs to help cover your costs.
Be sure to max out all of these options first. Whatever you can't cover with other financial aid, you can cover with private student loans.
Estimate your future earnings
Before you borrow any money, it's important to consider how much you expect to earn after you graduate. This will help you determine how much you can reasonably afford to borrow.
Research the average salary for your chosen career field and estimate how much you will have to pay for rent, bills and other expenses after graduation. If you've completed an internship in your field of study, talk to your mentors about entry-level salaries for newly hired graduates.
You don't want to be stuck with monthly payments that are higher than what you can afford with your projected income. Also, keep in mind that overspending on college expenses could cut into your future earnings, limiting your ability to live comfortably as a graduate.
Find out how much you could borrow with private student loans here.
Review the repayment options
When borrowing with private student loans, it's important to review the different repayment options available to you. Some lenders offer flexible repayment plans or hardship repayment options like forbearance and forgiveness.
Make sure you understand all of the repayment options, terms and conditions of any loan you're considering. If possible, choose a lender that offers a variety of repayment options to help you manage your debt and lower future financial worries.
Borrow only what you need
Private student loans have significantly higher borrowing limits than federal ones — typically between $75,000 and $100,000. But the amount you can borrow isn't the same as the amount you should borrow.
Remember that you'll have to pay back everything you borrow, plus interest. So, borrow only what you need to cover essential expenses. In addition, consider ways to reduce your college costs, such as living off-campus or buying used textbooks, or getting a part-time job to help pay for expenses.
Don't give into the temptation to borrow more "just in case." This can lead to financial trouble down the road.
The bottom line
Private student loans can be a useful way to help cover the cost of college, but it's important to borrow responsibly. By taking steps like maxing out your other financing options and borrowing only what you need, you can make smart borrowing decisions and set yourself up for financial success after graduation.
In addition, be sure to shop around for the best interest rates. There are plenty of private student loans to choose from, and by taking the time to research different loans, you can get the best terms you qualify for and make the most of your funds.
