A student loan is the first experience with credit management for many students. To protect your credit rating, you must take proactive steps to borrow responsibly and successfully repay your student loan.
- Always accept free money first. When paying for school, take advantage of all grants, scholarships and college savings available to you before taking out a student loan. If you must borrow to pay for school, exhaust all federal loan options before considering private (sometimes called alternative) loans, which can have higher interest rates and fewer flexible repayment options.
- Borrow only what you’ll need. When accepting a student loan, know how much money you’ll actually need to cover your school expenses, which include your basic living expenses for the school term. Students are offered the maximum loan they are eligible for, but should only accept the amount they need. Be cautious in pursuing additional loans outside of those offered by your financial aid office. Ask the financial aid counselor for more information if you’re considering taking a private student loan in addition to those that have been offered by the financial aid office. Since loans must be repaid, it’s best to borrow only what you need to pay for school.
- Keep your future career in mind. When it comes to student loans, a good rule of thumb is to make sure your total amount borrowed is less than your expected starting salary, and some experts recommend that the monthly loan payment should be no more than 8 percent of expected monthly income after graduation. Information about average starting salaries in Oklahoma is available at www.oesc.ok.gov, and you can estimate monthly loan payment amounts using the debt/salary calculator at ReadySetRepay.org.