	The nonprofit graduate loan specialist

Financing Your Education

Determine How Much To Borrow

How much you should borrow depends on the following factors:

Cost of Attendance (COA)		By law, you can borrow up to the cost of attendance (as determined by your school), less other aid you might be receiving. Other aid includes such things as scholarships, grants, or work-study. Cost of attendance typically includes tuition, books, fees, room and board, and other miscellaneous living expenses. Your school develops cost of attendance figures that are meant to apply to a diverse group of students. You may not need to borrow as much as is allowed by your school. Remember it is best to borrow the minimum amount possible in order to reduce your overall financial obligations later. However, if you find that you need more than the school has allotted, you have the right to appeal the decision as long as you do not exceed the maximum amount as established by federal regulations.

Loan Limits		Some lenders may place borrowing limits on student loans. For example, the federal government places annual and aggregate borrowing limits on federal student loans. The aggregate limit is the total amount that each student can borrow in the span of his/her education. Check the terms of each loan you plan on borrowing for the annual and aggregate loan limits.

Existing Financial Commitments		Carefully and honestly assess your current financial status and any financial commitments you've made prior to entering school. Factor in consumer debt, such as auto loans or credit cards, and understand the repayment obligations of each. You will be responsible for these prior obligations in addition to any education debt you take on. Your education loans are not meant to cover these prior obligations.

Your Projected In-School and Out-of-School Budgets		Project your in-school and out-of-school budgets to determine how much money you will need while in school as well as how much you can afford to repay once you are out of school. For help with budgeting, see Develop Your Budget.

Evaluate the Bottom Line		Subtract your future expenses and anticipated monthly student loan payment from your future monthly income. If you have a surplus, it probably means that you can afford to borrow the amount you had planned. If you have a zero balance, it may mean that you have just enough to cover your future lifestyle. If you have a negative balance, you will need to reevaluate the amount you plan to borrow. To do this, you may be able to reduce your expenses while in school, or find additional non-loan resources to pay for these expenses. Student loans can be a valuable investment, but they are also an obligation. In order to ensure successful loan repayment, be sure to approach borrowing carefully and thoughtfully, and be realistic in your budget and salary projections.

You've faced reality and realized you'll have to borrow student loans to help finance your education.

Before you sign any promissory notes, the first step you should take is to determine how much you should borrow.

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