NEWARK, Del.--(BUSINESS WIRE)--With fall tuition coming due in the next few weeks, Sallie Mae, the nation’s No. 1 financial services company specializing in education, offers families new resources to help them make informed paying-for-college decisions.
Available through its financial literacy website, CollegeAnswer.com, Sallie Mae offers tips and tools to help students avoid borrowing more than they need to pay for college.
- Talk to someone you trust who is experienced in money matters. Perhaps that’s a parent or grandparent. Or, it could be someone in your school’s financial aid office. You’ll learn tips and gain valuable real-life perspective.
- Finance your education, not your lifestyle. Don’t borrow more than you need. Remember that student loans are intended to finance your school expenses, not your lifestyle. In fact, your school will usually be asked to certify that the loan will be used for school expenses. Remember, every dollar you don’t borrow is a dollar — plus interest — that you don’t have to pay back later.
- Think about your life after college — you’re going to have expenses. You might want to get a new car, take a vacation, or, eventually, buy a house. Smart planning now can help you afford those things later.
- Be responsible. Before agreeing to the terms of your student loan, find out what your expected monthly payments will be once your loan is in repayment. Keep in mind that you may need additional student loans to complete your degree – or even for graduate school. Be sure you’re comfortable with your projected repayment amount.
- Borrow less than what you expect to make your first year out of college, say many experts. While it’s not guaranteed that you’ll earn this amount, you can estimate what your potential first year’s salary might be. The U.S. Department of Labor offers a helpful salary estimator.
- Be aware of your future debt-to-income ratio. Generally, a financial advisor will encourage you to understand your “debt-to-income ratio”—that is, your total monthly debt payments as a percentage of what you earn every month. Sallie Mae’s Education Investment Planner can help you calculate what starting salary you’ll need in order to afford your student loan payments. One rule of thumb: your student loan payments are likely to be manageable if they are 10 percent or less of your starting salary. For example, if you graduated with $25,000 in student loans (a typical amount for the 60-some percent of college grads who borrow), the monthly payments would be $288, so you would need a starting salary of approximately $35,000 to easily manage these payments.
Sallie Mae’s longstanding advice has been for students and families to follow its 1-2-3 approach to paying for college: first, tap college savings and maximize scholarships and grants. Second, explore federal student loans. Third, fill the gap with a responsible private education loan with your choice of in-school payment options to help you save money.
Join the conversation on how to save, plan and pay for college at Facebook.com/SallieMae.
Sallie Mae (NASDAQ: SLM) is the nation’s No. 1 financial services company specializing in education. Whether college is a long way off or just around the corner, Sallie Mae turns education dreams into reality for its 25 million customers. With products and services that include college savings programs, scholarship search tools, education loans, insurance, and online banking, Sallie Mae offers solutions that help families save, plan, and pay for college. Sallie Mae also provides financial services to hundreds of college campuses as well as to federal and state governments. Learn more at SallieMae.com. Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.