Student loans can be a great idea for any students who don’t have enough money to pay for college on their own. Parents can only help so much, and with the rising cost of tuition, it is important to plan your finances from the beginning of your college career. Heed these five tips for taking out student loans.

1. Apply for FAFSA

The first step to getting financial aid is filling out your FAFSA from the institution(s) you are planning to attend. Typically, you can fill them out at the college in person or online. Call your school’s financial aid office to get all of the information you need to apply for student loans and scholarships.

2. Don’t forget to apply for scholarships

You may think you won’t qualify for any scholarships, but it doesn’t hurt to try. There are so many scholarships available and quite a few of them go unclaimed every year. From need-based to performance-based, it is worth the time it takes you to apply to get the money you need to get through school. Remember, the more scholarships you get, the less student loans you need to take out.

3. How much should you take out?

After your FAFSA is processed you will receive a financial aid package stating how much in student loans and scholarships you qualify for and at what percentage of interest rate. The lower the interest rate the better, and be sure that you know the difference between subsidized and unsubsidized student loans.

  • Federal Subsidized Loans: These loans are the best loan to get because you won’t accrue interest until while you are in school at least half time and for 6 months after you stop going to school.
  • Federal Unsubsidized Loans and Private Loans: These loans will continually accrue interest no matter if you are in school or not, so you will end up paying more for the loan than if it was subsidized.

When deciding on how much you should take out, you should only take out what you need at that time. A lot of financial aid packages will offer you much more than your tuition and cost for attendance, which is great if you absolutely need it to pay for rent and other living expenses. However, if you don’t have experiencing managing your money, any extra money you take out can be easily spent on things you don’t need.

Plan out your budget for the year, taking into account your rent, food, tuition, books, and any other expenses, and only take out what you are unable to pay for without a student loan.

4. Be wary of private loans

While private loans can be a decent option if you are unable to get a loan from the federal government, you need to make sure that you know what you are getting into. Unfortunately, some banks will offer private loans to college students that end up having high interest rates and monthly payments, making it difficult and potentially stressful to pay off.

5. Plan to pay it back

It is so easy to take out loans when you are a college student, but don’t forget that you will eventually have to pay it back one way or another. Student loans never default, even if you claim bankruptcy, so don’t think you will get out of your $40,000 in loans. Whatever amount of money you take out, make sure you have a plan to pay it back.