The increasing concern about mounting student debt has more families than ever expressing aversion to student loans. That’s a good thing. Student loans are not inherently bad. But the quickest way to get into financial trouble is to borrow money haphazardly without considering the potential return on the investment and whether or not you’ll be able to repay the debt in a timely manner. College is no exception.
But if you have a senior applying to college, this is not the time to exercise that caution.
For example, if you’re eliminating colleges whose sticker prices are beyond your budget, if you decline to check the box on the FAFSA indicating that you would like to be considered for loans and work-study, or if you’re so loan-averse that you won’t apply for need-based financial aid at all, you might be removing some potentially attractive options from the table.
Applying to a college with a large sticker price, agreeing to be considered for loans, applying for need-based financial aid—none of those decisions are tantamount to actually taking out a student loan.
Much as a student can compare offers of admission, a family who applies for need-based financial aid will have the opportunity to compare offers from different schools. Those aid packages can contain grants (free money that doesn’t have to be paid back), work-study, and/or loans. And you’ll have the option of declining pieces and parts of the aid package. You won’t take on debt until you (1) decide to do so, and (2) sign paperwork agreeing to the specific terms of that loan.
I understand why sending an application to an expensive college or applying for financial aid can feel like you’re opening a debt-filled can of worms. But don’t worry. That can remains firmly closed unless you decide to open it. And for most families, that decision won’t come until later this spring.