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Borrow Smart for College

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It’s no secret that attending college can be an expensive proposition. And while the cost of higher education isn’t likely to go down anytime soon, most of the time, college graduates earn more throughout the course of their careers than those who choose not to earn a degree. For many, that means going to college is well worth the expense.

While some students enter school with at least some college savings, it might not be enough to cover the tab. That’s why there are scholarships and grants — money you can apply for that you don’t have to pay back—as well as work-study programs that you let you earn tuition money at student-friendly jobs. There are also student loans. They sometimes offer lower interest rates than other types of loans and can be taken out to cover costs while you’re in school. But you have to pay back student loans after graduation.

If you watch the show, however, you’ve probably heard that many students graduate not just owing money for their education, but owing a lot of it.

But how do you know how much is O.K. to borrow? It’s a big question that has a lot to do with what you want to study while in school and your plans after graduation. While there’s no guarantee that you’ll find a job in your chosen field, you can make smart decisions along the way that will mean you won’t end up paying a monthly college bill for the rest of your life.

So be smart, and consider the following before signing on the bottom line to borrow:

  • Choose a school wisely. Remember that there are many ways to get an education. Attending a four-year private school away from home will likely cost more than getting your degree at a state school close to home. Don’t count out earning AP credits to lessen your tuition bill. When it comes to spending less on an education, do what it takes to make it work without sacrificing what’s most important to you.
  • Be realistic about what you’ll earn and afford to be able to pay back. Those who study engineering can be pretty confident that someone will want to hire them after they walk across the stage in a cap and gown. But no matter what you choose to study, there’s probably an employer that will appreciate your hard work and college degree. And while an engineer is more likely to earn more sooner than a literature major, you can do research and take that into account when deciding what to study and how much to borrow along the way. A good resource to find out salary information and the demand for particular degrees or skills is the Bureau of Labor Statistics. It’s a little dry, but it has a ton of accurate and surprisingly interesting information.
  • Know your financial facts. There are different kinds of loans and different kinds of pay-back plans. For example, income-based repayment plans allow you to pay back your loan at an affordable-for-you rate, but it also means it will take longer to finish your payments. The rates and rules on a consumer loan are going to be different than those subsidized by a government program. Don’t take out a loan without understanding what your financial commitment to the debt will be — how much, how soon, how long and under what terms you’ll be paying it back.

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