In America today, college attendees collectively owe the federal government $1.59 trillion in student loan debt. Graduates typically end up with around $30,000 that needs to be paid off.
Loans are a normal part of the higher education system, but how do you know when it’s time to borrow? Here are 4 essential questions to ask yourself before applying for a loan that will help pay for tuition.
1. “What’s my end goal?”
Many students attend college to find their path in life and explore their interests. The thing is, it’s not very practical to spend money you don’t have on exploring different career paths.
Thoroughly think through what you want to get out of attending college before considering taking out a loan. With a clear goal, you can then make a clear blueprint for how you want to navigate paying for higher education.
2. “How much will I be making after graduation?”
This question is crucial if you’re considering going to a school with pricier tuition. If you’re looking at a long road of unpaid internships and a slow climb up the career ladder, it may be best to look into more budget-friendly university options.
Consider what kind of income you’ll be making the first few years after you finish school. Your annual income should be significantly more than the loans you take out for college if you want to be debt-free in the future. The risk of bigger loans might be worth it if you’re sure to make a large sum not long after finishing school.
3. “How much money can I make during school?”
Many students delay the opportunity to pay off their loans until after they graduate, but it’s actually much better to get ahead of the game as much as possible. Search for jobs on campus that can help you make some extra money in your spare time.
Not only does working during school help to expand your resume, but you can use your income to start paying off small quantities of your student loan. Even setting aside just $20 a week toward your loan can add up to $1,040 by the following year.
4. “How much do I need to borrow to afford school?”
This is possibly the most important question to ask yourself. Create a budget of your top university options and compare the costs- what would you owe if you wanted to attend your most ideal school?
Proactive financial planning is essential to making a school choice that will benefit you in the long run. Without thinking through the essentials, you’ll never make successful steps toward the career you want.
