Families that want to get schooled on the smart way to
finance a degree should consider these rules:
ALWAYS borrow before parents. Always.
USE federal Stafford loans. These
are fixed-rate loans with flexible repayment terms, and everyone, regardless
of financial need, is eligible.
BORROW no more than they expect to make at their first job. Financial
aid expert Mark Kantrowitz (finaid.org) has found that when total debt
exceeds your starting annual salary, the odds of defaulting go way up.
THE STAFFORD LOAN limits ($5,500 to $7,500 for a dependent undergraduate)
don’t cover what the student needs, don’t be tempted by private loans.
BORROW ONLY if their retirement savings are on track. No
ifs, ands, or buts.
BORROW ONLY through the federal PLUS program, which offers fixed-rate loans
with flexible repayment options.
THE STUDENT STILL can’t swing it, consider a less expensive school. Parents
and students should not be
willing to take on massive debt.