College Loans: How Much Should I Borrow?

Try to only borrow as much as your child will need with an education loan

When it comes to determining how much you'll need to borrow in college loans to help finance your child's education, it all begins with the FAFSA form.

Under the Federal Department of Education's FAFSA process, the formula which governs all student financial aid, your family will be assigned an expected family contribution (EFC). That number will tell you how much your family will have to come up with each year as its contribution to the overall costs. Simply take whatever amount you have earmarked for college savings, and deduct it from there. What remains is the approximate amount that must be borrowed for an education loan. Bear in mind that the total cost of college is more than just tuition and room & board.

Also note that education loans for your student's college needs cannot be channeled to other purposes. Remember that any educational loan application will eventually be sent to the school of your child's choice for certification purposes. The school will certify that the amount being borrowed is in line with the tuition, room and board and other costs accrued. And in any event, the money will eventually be sent to the school rather than the student or the parents.

Questions to consider when evaluating how much to borrow in college loans:

  • What effect will this borrowing have on our other family priorities, financial and otherwise?
  • When will these educational loan repayment commitments kick in?
  • What are my options for deferring repayment in case of now-unseen financial hardships?
  • What effect will the accumulated interest have on my ability to repay?

And of course, always be mindful of the fact that by taking on this debt - either directly by taking out an education loan yourself or by co-signing your child's loan - you have made a pledge to repay which can affect your credit standing for other family needs.

Learn more about affordable education loans from Charter One

You can find helpful information about affordable financing options for students and parents, including our TruFit Student Loan™. Answer frequently asked student loan questions or call an educational loan specialist at 1-800-721-3969, and we'll help walk you through the process.

Additional student loan and college planning resources

Direct vs. Indirect Costs of College
Understanding In-State Versus Out-of-State Tuition
The Cost Differences Between Public and Private Schools
Choosing the Right Student Loans
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