By Justin Chapin

A most crucial, rudimentary feature of student loans can seem like the hardest for us to actually grasp: the money must eventually be paid back. In fact, the bills will start rolling in six months from the moment you’re no longer enrolled full time.

The FSA awards subsidized and unsubsidized loans. Subsidized loans are more desirable because they accrue no interest while you are attending school at least part-time, and the latter are less so, as they do accrue interest while you are in school. Do not underestimate the cost of interest.

For example, if you accept a $10,000 unsubsidized loan with an interest rate of 6 percent, your going to pay over $600 a year merely to service the loan (added to the principle while you are in school).

Grants and scholarships, on the other hand, generally don’t have to be paid back (although they  may come with various stipulations). The most common, a Pell Grant, is awarded to students whose FAFSA demonstrates the financial need for such instruments. Before the age of 24, your income and the income of your parents/guardians will be taken into consideration. After the age of 24, only your own.

The general advice on the block these days points toward a simple rule that can help you manage your debt load: try not to borrow more than your potential earnings your first year out of college. A good way to calculate your potential earnings is to go to and click the “Salaries” link near the bottom.

However, this is not necessarily the amount of money you are going be making when your first student loan bill comes due. Depending on the demand for your skills, it may be very difficult to find a job right out of school.

To help assess your current and future standings, ask yourself some important question. What is my potential salary? What is my likely salary? Will I be able to get a job in my field right after graduation? If not, what are my other options for employment? What will my monthly payments be on my student loans? Will I be able to afford them?

The main concern is to find the job you like, but your student loans do have to be paid off, and those payments must be taken into consideration. Your education is a very serious investment, make sure you are investing the appropriate amount.

Keep in mind that none of these rules are set in stone. If you really want to understand the nature of the aid being offered to you, do see an adviser in the financial aid office or visit the resources below.

Justin Chapin is a member of the Students of Economic Interest, an economics club at USM. – A Monster site that aims to be the most comprehensive resource for student loan information on the web. – Project of the National Consumer Law Center, for people who have loans to learn their “options and rights.”


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