COLLEGE LOANS

COLLEGE LOANS

What to watch

How to calculate how much to borrow:

1. Estimate what your annual salary is likely to be when you graduate. If you know which area of study you are going into, look up the current salary for that field at the Bureau of Labor Statistics.

2. Do not borrow more than your expected annual salary.

3. At an interest rate of 10 percent, the borrower can calculate that 10 percent of each year’s salary will go to paying back student loans.

4. If the borrower continues making regular payments, the debt will be repaid within 10 years after graduation.

General tips to get funding for college:

1. Start early: In your sophomore and junior years of high school, research scholarships and make a list of those you qualify for and when the deadlines are.

2. Prioritize: Students who need help paying for school should look first for scholarships, grants, federal loans and then private loans.

3. Research: Use the Internet to search for scholarships — more than $2 billion worth are available each year.

4. FAFSA: Fill out the Free Application for Federal Student Aid (FAFSA) at www.fafsa.ed.gov. Even if you don’t think that you will qualify for federal grants, it’s still required for federal loans. Federal loans have lower interest rates than private loans.

5. Last resort: Use private loans only after exhausting all other options. Look carefully at the interest rate because it may different than the advertised rate. Also, check to see if the loan has a fixed or variable interest rate.

6. Jump ahead: Start paying back your loans as soon as possible.

7. Communicate: If you begin to fall behind in your loan payments, contact your loan agency to renegotiate a lower monthly payment. You might end up paying more interest in the long-term, but at least you will not default on the loans.

8. Remember: Bankruptcy will not get rid of your student loans.

Sources: Chris Penn, CTO of Student Loan Network and James Stanger,

associate director of technology at Youngstown State University