5 Things To Think About Before You Take Out Student Loans

Making Sense of Cents and College Ave Student Loans have partnered on a series of blog posts on what to expect when it comes to planning for college…especially when it comes time to pay.  Through the series, we hope families gain a little more insight on how to tackle the next four or more years ahead…

Michelle Schroeder-Gardner

Last Updated: May 27, 2023

Disclosure: This post may contain affiliate links, meaning if you decide to make a purchase via my links, I may earn a commission at no additional cost to you. See my disclosure for more info.

Making Sense of Cents and College Ave Student Loans have partnered on a series of blog posts on what to expect when it comes to planning for college…especially when it comes time to pay.  Through the series, we hope families gain a little more insight on how to tackle the next four or more years ahead with a stronger financial footing. All opinions are 100% my own.

According to an article by CNN in 2014, 40 million Americans have student loan debt. Just in 2008, that figure was 29 million Americans, so as you can see, the number is increasing drastically!

The number of student loans is also increasing. In 2008, the average borrower carried less than three. In 2014, that number jumped to approximately 4. For me, I had several different student loans, which made it hard to juggle even more!

As you can see, many, many people have student loans and that number will most likely just continue to grow well into the future.

Paying for school with student loans is very common, but before you make the jump and do that yourself, here are the things you should know.

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Here are 5 things you should think about before taking out student loans:

Fill out the FAFSA.

Before you consider taking out student loans, make sure you have filled out the FAFSA to ensure you maximize the financial aid offered to you in federal aid and from your institution. The FAFSA gives you access to a range of financial aid options, including grants, scholarships, federal loans, and work-study programs. And, fill it out sooner rather than later – financial aid programs are often on a first-come, first-served basis.

Understand the total cost of school.

If an initial sticker price of a college has you seeing student debt for years, don’t let that first number determine whether you apply or not. The school with the highest sticker price may actually give you more aid than a less expensive school, which might mean the most expensive school could be the cheapest in the end. But in addition to the tuition bill, there are several other financial factors you should know so you are not surprised by the additional fees and extra costs that can add thousands to the overall cost of college. According to a College Ave Student Loans and GET Creative, a part of the USA Today Network, Twitter Poll with 17,532 votes:

  • 46% of respondents found textbooks & supplies are the most surprising costs
  • 31% voted housing & food
  • 14% ranked extras such as the cost of gym memberships and club expenses

Will you need to purchase airplane tickets to travel home? Are club dues expensive on a particular campus? By knowing the complete cost, you’ll have a good idea of how much student loan debt you may need to take on while you are in school. By knowing this, hopefully, it will help you decide what school is the better choice for you and your situation.

Go into college with a career goal in mind.

Consider the ROI of college. What type of career do you envision and what is the starting salary of that career? It’s a general rule of thumb to not borrow more than you will earn in your first year’s salary, which can vary widely depending on what career you pursue. If you are unsure of what career, that is okay. The overall goal is to be conscious of how much money you expect to earn and set realistic expectations on the amount of debt you want to carry.

You’ll have to pay it all back one day.

Okay, this one is obvious, I know.

However, a lot of people don’t think about this when they take out student loans. I know that the future seems like it is a far way away, but one day it will be here and the less that you take out in student loans now will make your life easier later on.

You should start thinking now about what your monthly student loans payments will be after you graduate. According to a national survey of 1,040 college students by College Ave Student Loans conducted by Barnes & Noble College Insights, 1 in 3 seniors (35%) are unsure how much they will owe on their upcoming monthly student loan bill. By knowing this number in advance, this will make it seem all much more real, instead of the “free money” feeling that many college students feel like student loans are when they first take them out.

Due to this, I also recommend that a person take out the least amount in student loans that they can. So many students and parents maximize the amount they take out in student loans and then put the extra towards travel, entertainment, going out to eat, and so on, and that is just a huge disaster!

Understand your student loan options – and how you can save.

There are many people who simply do not understand student loans, even just a little bit. Here is the run down of the basics to make you a smarter borrower:

Exhaust your federal loan options. Look to federal loans first to help cover the cost of college. However, if federal student loans fall short of covering the cost of college, then explore private student loans.

Understand interest rates.  There are fixed and variable interest rates available on private student loans. Generally, you want to shop around for a loan with the lowest interest rate, as that will generally mean you will owe less overall than you would with a loan with a higher interest rate.

Pay back while in school, if you can. If you defer payments while in school, your loan is likely still incurring interest that you’ll have to pay later. However, many students may not be able to afford the full student loan repayment while in school. College Ave Student Loans encourages students to pay what they can (as little as $25 a month) while in school, which can help reduce the total cost of the loan.

Understand what a monthly payment means. Many people believe that a monthly payment is all that you have to pay or are allowed to pay. This is so incorrect! Make additional payments when you can. Or, each month, pay more on your principal than what is owed. By doing so, you can save more money in the long run. 

Select auto-payment plans. For most student loans, you can probably auto-pay them and receive a discount. Always look into this as you may be able to lower your interest rate by 0.25% on each of your student loans (0.25% is the most common discount, but that’s not set in stone. It could vary by lender.).

Choose a shorter repayment term. You will owe more money each month; however, you will save money in the long run by opting for a shorter repayment plan. To help you see how much you could save, visit College Ave Student Loans configure it out tool.

What do you wish you knew before you took out your student loans?

To learn more, visit: https://www.collegeavestudentloans.com.


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Michelle Schroeder-Gardner

Author: Michelle Schroeder-Gardner

Hey! I’m Michelle Schroeder-Gardner and I am the founder of Making Sense of Cents. I’m passionate about all things personal finance, side hustles, making extra money, and online businesses. I have been featured in major publications such as Forbes, CNBC, Time, and Business Insider. Learn more here.

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  1. Ryan @ Just Another Dollar

    Great advice! I wish my student loan counseling would have been more transparent about the exact monthly payment on the debt I was accumulating throughout school. I think that would have encouraged me to borrow a bit less (and maybe not buy that motorcycle).

    I decided on accounting for my major after a gap year where I spent time reading and researching and saw that the job opportunities would be numerous. I will probably never have an issue finding a job as a CPA and I’m thankful for that.

  2. These are great advice. The summer just started, and a new school year is in the horizon. I’m sure a lot of people are also thinking about student loans for the new school year.

    I also took out a student loan, kept my expenses at a minimum, and paid it off after a few years. It was such a relief to have it all paid off!

  3. Honestly, I wish I had been more aggressive with scholarships and bursaries. There was one bursary that was based on entrance grades, it was worth $500/yr. I missed the cutoff point by the smallest margin. I hadn’t done enough research and didn’t realize how close I was to the cutoff. That ended up costing me $2,000 over the 4 years I was in school.

    Look for scholarships and bursaries. Its worth the time!

  4. Counting Quarters

    Looking around at all my friends who still have loans to pay off and are also at the point in life of wanting to purchase homes, start families and enjoy life it is just crazy. So many people that I know went through college as if it were one big party and took out thousands in extra loans to pay for it. Now they are financially crippled and trying to live as cheap as possible in order to pay it back and are miserable. Do the smart thing and research every opportunity and take on jobs during the school year and especially the summers to help soften the blow after college.

  5. Finances with Purpose

    This topic is near and dear to me, as I had to repay $200k in loans, and I’ve watched so many friends struggle through repayment – even the ones with great jobs (who end up stuck in those jobs).

    It also helps to find every dollar you can while in school. Don’t be late to apply for favorable loans or grants if they’re available to you. I received one the first year, but neglected my FAFSA until the grant money was gone the next year — oops! Couldn’t agree more about thinking about your loan bill now, either. Though in my case, the number was so large – more than a mortgage – that it was hard to even fathom.

    One more thing to add: avoid avoid avoid debt, especially consumer debt while you’re in school! I knew many friends who ran up balances, then had the double whammy of student loans plus credit card balances. (And others added on car payments.) Avoid all other debts by budgeting and living very simply until you are out of the hole…because once you graduate, you’ll want to be out of the hole. Without loans, you can take on cool jobs that may excel you career – things people like me couldn’t ever even consider until the loans were gone.

    Best of luck to all of you dealing with student debt out there!

  6. Hey Michelle,

    Now that you mentioned about taking out student loans, the thought of entertaining that in the past alone gave me a headache. I was fixated on starting a business and working it from the ground floor up before doing that. Fortunately, I didn’t have to take out a loan for college, not like I have the money to pay it back. Bad enough I have credit cards I’m currently paying off after seeing so many deals and secret sales online that I bought from. i still have to catch up with paying all that off for the next 3 months..lol 😛

  7. Looking back, I wish there had been more education on how to pay for college. I think my school assumed parents knew what they were doing and I’m lucky my parents had some knowledge.
    One other piece of advice that goes hand-in-hand with the concept that the more expensive school could cost less is that picking the wrong school, even if it’s cheaper tuition can set you back. I started out at the wrong college – I chose to commute to a closer school that wasn’t strong in my programs in order to save money and be closer to my family. Although I value the extra time I had with my father, I discovered when I transferred to the right school for me and living on campus, my costs went down. However had I started at that school as a freshman I would have qualified for significantly more scholarship money and living on campus saved me a ton on gas and food. I was able to finish in 4 years, but many other transfer students had at least a semester or more added on because credits didn’t always transfer.

  8. Crystal @ The Frugal Sisters

    A lot of great advice here! I definitely agree that it’s important to consider ROI when choosing your program and school. While Social Work is a great field to go into, it’s not the best investment to go to an expensive, private school for this degree when there are other great Social Work programs at public institutions. I thinks it’s also important to try to stay in-state to keep costs down, and new students should consider community college for taking their core education courses and then transfer the credits to the college they really want to go to.

    I’d definitely want to express a word of caution for private student loans, however. Private loans are often higher than federal loans. Some are amazingly high. Also, if you do run into some problems after graduation and you’re struggling to pay, private loan companies are not as willing to work with you and usually do not provide income based repayment plans like federal loans. Make sure you completely understand the differences between federal and private loans before signing for a private loan. It may be the best option to consider another school, or other cost savings options if federal loans and grants cannot cover the cost of tuition.

    1. Crystal @ The Frugal Sisters

      In my above comment I meant to say that the interest rate is often higher!

  9. Sveny

    I think that shows how important it can be to think about the career. I mean for me it was very important to choose an MBA program that I’m really interested in.

  10. George C

    This is so important. So many people go to University or College thinking that they can go study for a couple years, get a top end job because now they have an “amazing degree” and pay ALL their debts back in the span of a few years. In reality, this does not apply to a large portion of people, and most that go through these years unprepared end up in tens of thousands of student loans looming over them for the next 10-20 years of their lives.

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