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How Much Should We Borrow in Student Loans?

how much are student loans

By Jodi Okun. Paying for College Expert

Welcome to's “Paying for College” site, led by expert, Jodi Okun.

Jodi Okun is the founder of College Financial Aid Advisors. She has successfully helped thousands of families navigate the financial aid process. Her expertise parallels her passion and has made her a top influencer in the financial aid industry.

Through Jodi’s large and loyal Twitter following, she has organically incorporated philanthropy into her brand. Every Thursday at 5pm PST, Jodi hosts #CollegeCash: a Twitter chat devoted to connecting college-bound families with higher education professionals. On average, #CollegeCash receives more than ten million impressions per week, making it a top resource for parents and students.

Recently, Jodi was featured on Huffington Post as a Top 30 Influencer on Personal Finance on Wealth.

It seems like a rather obvious statement, doesn’t it - borrow only what you need in student loans. But, when you’re trying to figure out the costs of college, and weighing that with how much you will be able to realistically repay in the future, it can get frustratingly difficult. It might feel like you need to be a bit of a future prognosticator, but here are a few tips that should help you settle on an amount:

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1. Calculate the Total Costs of Attendance. Some parts are pretty obvious, but others can be a bit more obscure. Parents might already be covering some of these expenses, so they don’t necessarily need to be taken into consideration. Your costs might include:

  • Tuition
  • Fees and expenses
  • Lodging - dorm or off-campus
  • Food - meal plan or cooking your own
  • Travel expenses to get back and forth to campus
  • Car expenses such as gas, insurance, parking and repairs if you have a car
  • Books
  • Cell phone and data plan, if not included in a family plan.
  • Health insurance, if not covered on the parents’ policy.
  • Laundry
  • Entertainment - how many times do you plan to go out each month, are there free movies and entertainment on campus, what is the cost for pizza parties and other entertainment?
  • Personal expenses - school supplies,

    hygiene items, daily coffees, snacks, hair care - it can be surprising how quickly seemingly small items add up

  • Miscellaneous - athletic equipment, dues for various clubs, allowance for tutoring if needed and other items that can increase your expenses.

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2. Estimate How Much is Available to Cover These Costs: The school should give you a pretty good idea of how much you have been granted in financial aid. This includes scholarships and grants from the college itself, federal financial aid to which you might be entitled, and any state grants that might be available. To this amount you can add:

  • Value of any federal work-study program you can participate in through the school to earn money.
  • Private scholarships
  • Additional money you can earn through part-time jobs.
  • College savings account

3. Decide on a Loan Amount and Type of Student Loans: Once you have made these calculations, you should have a much better idea of how much money is needed. Try to borrow only that amount through student loans. Use federal student loans first, and then do careful research to determine which private student loan lenders offer the best deal for your situation.

Once you receive the money and have paid the school, put a strict budget in place for spending any balance. Use the money only for reasonable purchases; don’t spend it because it is available. If there is any extra money left over, save it to apply to the next tuition bill.

Keep track of your spending so you can go through these calculations again for the next semester and school year. Look at areas where you think you will spend more or less money. Try to keep borrowing as low as possible so that you don’t place an unreasonable burden on yourself. You must keep a close tally on how much you borrow so that you can reasonably estimate what your monthly payments will be upon graduation. Although there are different types of repayment plans available. especially from the federal government, you want to make sure that you have a realistic probability of being able to make those payments with the money you will be earning.

Category: Credit

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