When you get your financial aid award letters, you have a lot to do and a lot of decisions to make. These tips can help you stay on top of it all:
1. Borrow only what you need. After you look at your full financial picture — education cost, awarded aid and family share — determine the amount you actually need to borrow. You're not required to accept all you're offered.
2. Consider working. With a paycheck coming in, you won't need to borrow as much. Studies have shown that students who work part time often do better in college than those who don't work at all. Just be sure not to let your work interfere with your education.
3. Understand what you've been offered. Look at your award letter, focus on any need-based loans and note the amount. If you feel you need to borrow more, get advice from a financial aid officer at the college.
4. Finalize your loans on time and follow instructions. As of July 1, 2010, many colleges are changing their loan processing procedures. Make sure you check with your financial aid officer to ensure you know the rules, deadlines and requirements for applying for federal loans.
5. Shop around. If you decide you need a private (alternative) loan, take the time to compare interest rates, fees, repayment options and borrower benefits. Your college can probably recommend certain lenders, but you are not obligated to borrow from them. The Student Loan Comparison Calculator walks you through the process and identifies the loans that cost you the least over the long term.
6. Ask questions about your loans. Find out from your financial aid officer: How much will this loan cost me in total? What are my monthly payments going to be? Can I qualify for a lower interest rate? Is the rate fixed or variable?
7. Pay attention to the credit requirements for private loans. Private loans require credit checks. If you have no credit history, you need a creditworthy cosigner. Typically, the better the cosigner's credit history and credit score, the better the interest rate and other loan terms.
8. Don't be surprised if fees take a portion of your loan. Many loans have fees, which are typically subtracted from the total amount of the loan up front.
9. Know what you're signing. Before borrowing, make sure you understand the terms and conditions, such as repayment requirements, spelled out in your promissory note (loan contract).
10. Consider making interest payments on unsubsidized loans as a student. They won't be much and you can reduce the amount you have to pay back.