6 Questions to Ask Before Taking College Loans in 2024-25

livemint.com:

If you’re thinking about a college loan for next fall, it’s time to start looking at your options. Factors for students and their families to consider include who is taking the loan—parent, student, or both—the type of loan, amount and interest rate, which could be considerably higher than in recent years. Repayment plans are another consideration, including a new repayment option for federal student loans announced earlier this year by President Biden.

Also, remember that the Free Application for Federal Student Aid, commonly known as Fafsa, for the 2024-25 academic year won’t be available until December, two months later than usual. As always, families need to take their overall debt picture into account. A recent survey by New York Life found that 78% of adults with student loans say their student debt is getting in the way of their long-term goals, and 75% say they would have done something differently to avoid taking out student loans.

Here’s what people considering loans need to ask themselves for the next school year: How much can I afford to borrow? Parents and students should first estimate the cost of each college they are looking at and the amounts that would have to be borrowed given the family’s financial situation. Net price calculators—generally available on a college’s website—can give prospective students a sense of what they might pay, after taking grants and scholarship aid into account. Federal Student Aid, which is part of the Education Department, offers a loan-simulator tool to help students explore the impact of borrowing.