How can I keep my student debt low?

When you’re borrowing money for college it’s important not to borrow too much and to be sure you’re borrowing from sources with the best rates. You want to make sure you’re getting as much education as you can, but you want to be able to afford it.

Use these tips to make sure you keep your debt as low as possible:

  • Compare college costs. Before committing to a college, use the Indiana College Costs Estimator to compare your net cost of attending one of Indiana’s colleges, after your expected financial aid.
  • Borrow only what you need. Loans must be repaid — even if you don’t finish college, didn’t like the education you received, or can’t find a job after you graduate. Never use student loans to pay off other bills or buy things you may want but don’t really need.
  • Borrow federal loans first. Federal loans (Perkins and Stafford Loans for students, PLUS loans for parents) have low fixed interest rates and flexible repayment plans. File a FAFSA (Free Application for Federal Student Aid) by April 15 each year to be considered for federal loans (or sooner, if required by the college you’re planning to attend to receive any school-based aid). Make private loans a last resort. Apply for a private loan only if federal loans and other aid you receive are not enough to cover your college costs.
  • Stay organized. Keep track of all your loans so you know exactly how much you’ve borrowed. Make sure you also keep all your loan documents so you can look up the terms of your loans. Although federal loans have many repayment options, private loans may not be so generous.
  • Research starting salaries in your field. The Bureau of Labor Statistic’s Occupational Outlook Handbook is a great place to start. A general rule of thumb is to never borrow more than what one year’s salary will be when you first start your career.

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