« Return to "Blog"

Student Loans 101: What To Know Before Borrowing

Paying for college is a big investment, and for many students, borrowing may be part of the plan. Before you sign on the dotted line, take some time to understand what you’re borrowing—and what repayment could look like down the road. 

1. Know How Much You Actually Need

It can be tempting to borrow the maximum amount you’re offered, but you don’t have to. Start by adding up tuition, fees, books and living expenses, then subtract scholarships, grants and savings. Borrow only what you need.

The less you borrow now, the less you’ll have to repay later.

2. Understand Your Interest Rate

Your interest rate can significantly affect the total cost of your loan. Before borrowing, find out whether your rate is fixed or variable, how interest accrues and how much you could repay over the life of the loan.

Don’t focus only on the monthly payment—look at the total cost.

3. Know When Repayment Begins

Graduation doesn’t always mean your first payment is due right away. Make sure you understand when repayment starts, what your estimated monthly payment will be and how long you’ll have to repay the loan.

Knowing your future payment today can help you plan for life after college.

4. Compare Your Loan Options

Not all student loans are created equal. Depending on your situation, you may have options such as federal student loans, private student loans, refinancing or a student loan line of credit.

Compare rates, terms, fees and repayment options before making a decision.

5. Read the Fine Print

Before accepting a loan, look for fees, variable rates, cosigner requirements, prepayment policies and deferment or hardship options. If there’s something you don’t understand, ask questions before you sign.

6. Think About Your Future Self

Your future self will have rent, groceries, bills—and probably a few subscriptions you forgot about. 

Ask yourself: “Will I be comfortable making this payment after graduation?”

A little planning now can make repayment much easier later.

The Bottom Line

Student loans can help make your education possible, but it’s important to understand the financing behind your investment. Before you borrow, know how much you need, compare your options, understand the interest rate and repayment terms, and read the fine print.

Interested in exploring your options? Head over to our website to learn more about financing your education with MIT FCU. 

« Return to "Blog"