How Much Should You Borrow for a College Degree?
BIG Ideas:
- With the high cost of college today, many students rely on student loans to fund their college education.
- Make sure you understand the full cost of college, including tuition, fees, room and board, books and supplies.
- Take advantage of scholarships, grants and savings to minimize the amount you have to borrow.
College is an exciting new chapter full of independence, opportunity, and personal growth. But with that freedom comes some big decisions like choosing a major, where you’ll live, and how you’re going to pay for it all.
With the average cost of college now topping $38,000 per year, scholarships, grants, and savings often aren’t enough, leaving most students to rely on loans to fill the gap. This raises an important question: how much should you actually borrow for college? While the answer depends on your individual situation, there are steps you can take to determine the right amount, starting with calculating your total cost of attendance.
- Calculate Your Cost of Attendance. The first step in figuring out how much to borrow for college is understanding your total cost of attendance. College expenses go far beyond tuition, so be sure to include all costs—such as fees, room and board, books, and supplies—when calculating your total.
- Subtract Scholarships, Grants and Savings. Once you’ve calculated your total cost of attendance, the next step is to figure out how much of that cost you can cover without student loans. Start by subtracting any scholarships or grants you’ve received. Then, factor in money you’ve already saved for college or any contributions from your family. The remaining amount is what you may need to borrow to cover your education.
- Maximize Federal Aid. Next, subtract any federal aid you received through your FAFSA. Be sure to include grants you’re eligible for, any work-study opportunities you can take advantage of, and the amount of federal student loans you qualify for. While federal student loans do contribute to the total amount you borrow, you may be eligible for benefits like Public Service Loan Forgiveness (PSLF) and Income-Driven Repayment (IDR) plans that can make repayment more manageable.
- Consider Creative Ways to Save. Now that you’ve determined how much of your total cost of attendance is left to cover after scholarships, grants, savings and federal aid, it’s time to get creative. Could you reduce your expenses by starting at a community college or living at home? Can you find additional scholarships or grants to help cover costs? Or maybe pick up a part-time job or side hustle to contribute toward your education? Every bit you save now can reduce how much more you need to borrow.
- Apply for Private Student Loans. After maximizing scholarships, grants, savings, federal aid and getting creative, you may still need additional funds to cover your cost of attendance. Private student loans, often from a bank or a non-profit organization like Brazos, can help fill the gap by giving you the flexibility to fund the rest of your education and reach your goals. When considering a private loan:
- Borrow only what you need to cover remaining costs.
- Compare lenders to find the best interest rates and repayment terms.
- Plan ahead for repayment by estimating your monthly costs.
Final Thoughts
Figuring out how much to borrow for college doesn’t have to be overwhelming. By understanding your total costs, applying for scholarships and grants, maximizing financial aid, exploring creative ways to save, and borrowing responsibly, you can cover your college expenses without breaking the bank.
Brazos is Here to Help Make Borrowing Affordable
For more than 40 years, Brazos has helped make college costs more affordable for parents and students. As a Texas non-profit lender, we offer competitive rates that can help you save. Contact us to learn more.