In recent years, more students have begun to rely on educational loans to help pay for college. Educational loans can be an excellent resource for students trying to pay educational costs, but the debt incurred should be considered carefully. Borrowing now for college to pay later when you are working has long-term implications. Like any debt, a student loan is a serious financial obligation that you must repay. The amount you borrow now can seriously affect your life after you leave school. Besides the principal amount you borrow, all student loan programs will charge you interest for the funds. Your ability or inability to repay will affect your credit rating and your ability to borrow for other purposes, such as a car or house. If you should find yourself unable to pay, you may be subject to additional late charges, collection costs, court costs and attorney fees.
Budgeting is an excellent way to make choices when you have limited funds. If you borrow to help pay for your education, you should create a budget each year to review the items you could do without. Remember there is interest on the funds you borrow and you will be repaying over the next 10 years. Consider downloading your choice of a 9 month interactive budget worksheet, 12 month interactive budget worksheet, 9 month document worksheet, and 12 month document worksheet.
You will also want to carefully consider the career choice you have made in relation to the amount you borrow. Some professions do not offer an attractive entry level salary and may make it more difficult for you to pay sizable loan payments. (Please see the section below: How much Will You Be Able to Pay Later?)
Alternatives to Borrowing
Check with your admissions advisor about scholarships. Look first for funds that you do not have to pay back. They offer some based on need, some on academic merit, test scores, athletic skill, musical or artistic talent, community or volunteer activities, or other special abilities.
Investigate offers offered by the university, religious groups, fraternities, sororities or civic groups. Check with employers and organizations connected with your field of interest. You can view Troy University scholarships at
Consider student employment. Financial Aid may find you eligible for Federal Work-Study (FWS). Career Services is another source of part-time jobs. Also, plan to work summers and holidays to help pay tuition and expenses.
Factors to Consider
Number of Loans: Your plans for further study will affect your total indebtedness. For example, are you going to graduate school?
Length of Repayment Period: You will save interest costs if you choose a shorter repayment period (although monthly payments will be higher). Federal Direct Loans offer a variety of repayment options.
All interest rates shown in the chart above are fixed rates that will not change for the life of the loan. The lender has loan fees that are deducted proportionately from each loan disbursement you receive while enrolled in school. This means the money you receive will be less than the amount you actually borrow. For more information regarding interest rates and loan fees, please go to this website:
To decide how much indebtedness you can probably manage when you graduate, consider your expected starting salary, earnings prospects and your lifestyle. Then, estimate your anticipated level of debt and monthly payments and see if the two are in the same range. If you cannot afford your projected payments, then try to borrow less. Try to be realistic when projecting your future earnings and the amount you will need to pay living expenses after graduation. Remember, starting a new job and setting up living arrangements will require extra resources and create a heavy initial demand on your new income. Click here to use the 9 month interactive budget worksheet, 12 month interactive budget worksheet, 9 month document worksheet, or 12 month document worksheet. Use them to project your future income and debts. You can review the median pay for occupations at: USBLS, Occupational Outlook Handbook
