If you plan to borrow money to help pay for college, you are among the majority: Research by U.S. News & World Report[1] says that around 65% of college students graduate with debt, to the tune of about $30,000 per student. And while borrowing may be a necessity for you due to the current cost of an education, you can take measures to keep your total debt to a manageable level.

The golden rule in student borrowing is this: Only borrow what you absolutely need. These tips are intended to help you minimize the amount you may need to borrow and navigate your borrowing options wisely:

Set an upper limit. Determine and stick to a debt ceiling. As a general rule, you should not, over the course of your college career, borrow more than you expect to earn in your first year after graduation. Research salaries for the position you plan to hold to get a sense of what you can expect to earn. Although it doesn’t break average salaries down geographically (there can be significant regional variances), the Federal Reserve Bank of New York’s “Labor Market Outcomes of College Graduates by Major” is one place to start.

Keep a running tally of the loans you take out each school year to stay on top of your cumulative debt. If you see that total rising faster than you’d like, take steps to get back on track. 

Choose your college wisely. The costs of attending college can vary widely from university to university. Research tuition, room and board, fees, transportation and other costs, as well as the types of grants, scholarships and other aid colleges may offer. In general, students who attend public colleges in their own state tend to end up with less student debt, but there are exceptions. For example, some elite colleges replace loans with grants in their financial aid packages to reduce the amount of debt students incur.

Strengthen your financial situation. The more money you have now to pay toward your education, the less you will need to borrow. Here are just a few ways to bolster your financial well-being.

  • Open a savings account and/or college savings plan. If you still have time to save for college, consider tucking away as much as possible into a savings account or 529 tax-advantaged savings plan
  • Get a part-time job. Regular income can help you manage education and living costs. Be aware, though, that the amount of money you make could affect how much financial aid you may be eligible to receive. For the 2020-21 school year, a student can earn up to $6,840 (including workstudy and any other employment income) without that income being included in family income calculations. Fifty percent of income beyond this threshold is added to the family income total.[2]
  • Live frugally during your college years. Cut corners wherever possible, always asking yourself, "Is this something I NEED or WANT?" If you have the option, see how much you could save by living off-campus with roommates. Or, if it’s close, consider living at home to reduce living expenses. 
  • Build regular tuition payments into your budget. When you pay as you go, you may reduce your long-term costs. Many colleges offer tuition installment plans that enable you to make monthly payments. They may charge a nominal fee, but you won’t accrue interest as you would with a loan.

Apply for scholarships. Scholarships are “free money” — money awarded by a college, organization, business, individual, etc. that doesn’t need to be paid back. Research scholarship opportunities and apply for as many as you can. 

File a FAFSA — ASAP. Completing and submitting the Free Application for Federal Student Aid (FAFSA) at studentaid.gov will help you find out how much federal financial aid — grants, student loans and work-study — you may qualify for. Grants are money you don’t need to pay back, and work-study gives you the opportunity to earn money toward your education. Federal student loans may offer lower interest rates and more flexible repayment options than private loans. 

Evaluate private education loans. If federal and state grants and loans don’t cover your financial needs, you may consider a private student loan from a bank, credit union or other lender. Look for the best terms possible, comparing interest rates, APR, duration and repayment options, and borrow only what you need. 

Once you’ve taken out a loan of any kind, try to make interest-only or full monthly payments while you’re in school so that your debt doesn’t continue to grow due to accruing interest. Keeping your debt in check can help you reduce the burden you’ll face upon graduation.