Smart Borrowing
Get the Facts Before You Borrow
Student loans are a great way to help cover the costs of school; however, private student loans should really be your last option for financing. Before you borrow a private student loan, learn about and take advantage of the many grant and scholarship options that are available to you.
Grants
Most grants are a form of student aid that you do not have to repay as long as you meet all of the eligibility requirements. Be sure to review all grant eligibility requirements carefully as some grants can convert to loans.
Grants are available through the federal government, your state government, and your school. Private organizations (such as foundations and companies) may also award grants. The two most common federal grants are the Pell Grant and the Federal Supplemental Educational Opportunity Grant (FSEOG).
Tips!
- Learn more about federal grant opportunities at Student Aid on the Web.
- Contact your state agency to find out about the grants available in your state.
Scholarships
A scholarship is a form of student aid that you do not have to repay if you meet all of the obligations. It's easy to think of a scholarship as a coupon to apply to your tuition, lowering your education costs.
Always apply for as many scholarships as possible before considering using loans to pay for college since you do not need to repay them.
Tips!
Look for scholarships using the free scholarship search on FastWeb.
IMPORTANT: Be wary of potential scholarship scams. You should never have to pay a fee to apply for a scholarship.
Become a Smart Borrower
MySmartBorrowing.org is a free interactive tool where you can create up to four scenarios to see how your career and college choices may affect how much you pay for college and if you are at risk for overborrowing.
NOTE: The values shown in this tool are only estimates. They are based on national averages and the information you enter.
The Five Tips for Smart Borrowing
- Research your expected salary in your future career, find an affordable school, and borrow realistically.
- Research job availability in your chosen field, before selecting your major.
- Consider all types of financial aid carefully.
- Educate yourself on the many loan options available before borrowing.
- Inconsistent or untimely loan repayment could affect your future.
The Basics of Loans
Understanding the ins and outs of student loans can be confusing; but, it doesn't have to be. Educate yourself on some important points to ensure you start out on the right path.
Borrow only what you need.
Remember, you must repay your student loans. So, borrow only what you need to cover your costs, not what you are eligible to receive.
Exhaust other types of aid before using private student loans.
If you need additional funds after obtaining financial aid through grants, scholarships, and federal loan programs, consider private student loans as a last resort.
Read your promissory note (know what you agreed to).
Before you receive your student loan, you must sign a promissory note. The promissory note is a "promise to pay" contract between you and the lender that is providing your loan money. This legally binding document specifies your responsibilities for repaying the loan.
If you withdraw from school, you are still required to repay your loan.
If you withdraw before completing your degree, you are still required to repay your loan. A portion of your loan could be returned depending on the amount of time you spent at the school. Review your school's refund policy to determine if any of the funds can be returned.
If you can't find a job, you are still responsible for repaying your loan.
Even if you can't find a job, you are still responsible for making payments on your student loan. Fortunately, there are options that may be available to you to postpone payments under certain circumstances.