Sense & Centsibility Blog

A College Student’s Primer on Student Loans

StudentAugust is here and school is right around the corner. As a new college student, you may be filled with a mix of emotions about the adventure you will soon begin. Meeting new friends, maybe moving someplace far from home, and starting your adult life can be exciting and even a little scary at times.

Settling in to a routine that demands balancing classes, studying, working part-time and having some fun will not only be a challenge, but will also take some time. While in college, don’t put your student loans on auto-pilot or you just may have a painful shock (or loan balance) when it all ends a few short years down the road.

Tips to follow:

1. Have a conversation with your parents to determine if they will be able to assist the financing of your higher education. Find out how much help, if any, you can expect each year you attend college.

2. Familiarize yourself with the types of loans available, the interest rates for each, and exactly how they work. A useful website sponsored by the Department of Education provides this information and can be found at Although this website was designed specifically for people who advise students and families on preparing for college, there is no reason you too can’t go directly to the loan source. And while it would be nice, do not rely on the information given to you by the financial aid office at your chosen college. Unfortunately, many of these staff are woefully undertrained and do not understand all the nuances about student loans themselves.

3. Do not borrow private student loans if at all possible. I am not maligning private student loan lenders in any way. The simple fact is private loans offer very few options when repayment begins. Typically, your payment is expected when due or you may have defaulted on your loans. Compare this to federal student loans which offer many repayment options depending on your financial situation. Deferments and forbearances that offer temporary relief may also be available for those not yet working or earning little income.

4. Track the amount of loan money you borrow to keep it under control. As a student loan counselor, I often hear borrowers say they had no idea they borrowed so much money until the loans came due. Many parents are in the same boat. You can easily remedy this by looking into alternate funding options, attending a school that is affordable for your budget, and working part-time to cover some living costs.

5. Try not to live on student loan money or your loan balances will skyrocket. Student loans are meant for tuition, books, and fees. Of course no one will stop you if you use the loan proceeds for other expenses, but you will owe far more debt than necessary if you don’t work. Consider living with roommates to share living costs and get out of the dorm as soon as you can. Although you may enjoy the hustle and bustle of dorm life, it won’t be much fun when your inflated loan payments come due.

6. Maximum loan balances should be capped at the first year salary you expect to earn in the career or industry you have chosen. Yes that’s right. If you expect your first job to pay you $30,000 in the first year, do NOT borrow more than that!

Why you may ask? First, there are no guarantees you will find a job right after college graduation. And if you do, it may be in another industry or at a lower salary than you expect. Do your homework up front so you know what average salaries should be, especially for recent graduates. And remember, the more student loan debt you borrow, the less likely you will qualify for other loans such as a mortgage or auto loan when you need it.

Student loans are a helpful tool to finance your higher education. However, if you ignore how much you borrow or rely solely on loan money, your graduation may be a gateway to a lifelong struggle to repay those loans. LSS Financial Counseling has counselors who specialize in Student Loan Counseling. We can help you understand your rights and your options. Call us at 888.577.2227 or visit our website to learn more.

Understand your student loan options--for free with LSS.

  • Explore available repayment options and potential solutions
  • Determine your eligibility for federal repayment options
  • Develop a budget to cover monthly expenses
  • Assistance contracting private lenders to determine possible repayment solutions
  • Identify ways to avoid defaulting and suffering the related consequences

Author Barbara Millers is a Financial Counselor at LSS Financial Counseling.