Responsible borrowing starts with education and ends with decision-making. A majority of people will have to borrow money to pursue their academic goals. Borrowing for education is an investment in your future that can pay itself back multiple times over, but only if done responsibly. The first and most important step in responsible borrowing is making sure that you graduate. Failure to finish your academic journey means you will be left without the degree but with all the debt. Aside from being sure to complete your program, you can do a few other things to be sure that you are borrowing responsibly.

Don't Figure it out Later:

For some reason, many borrowers take an "I'll figure it out later" approach to educational loans. This is a bad idea. No one would ever buy a house by saying, "I’ll take the big one on the corner, just send me the bill later.” – sound crazy, right? You would ask the realtor what the monthly payment will be, and then you would decide based on that amount. It would be best if you were doing the same thing with your educational costs. Each semester that you attend school, you should be tracking your loan amounts. Track them by each semester and also holistically. By doing this, you will have a good sense of how much you have borrowed, what your expected payment will be, and how much you may need to borrow in order to complete your studies.

A Financial Roadmap to Graduation:

When you step on campus, you will most likely set up an appointment with an academic adviser. This meeting will help to set up an academic plan toward graduation. You will have a roadmap to academic success. You should be doing the same with your finances. It makes sense to have a financial roadmap to graduation as well as an academic one. Doing this allows you to anticipate some potential setbacks or roadblocks you may face. Maybe your plan will enable you to recognize that you’ll need a paid internship next year. Perhaps you realize that you will only receive that scholarship for two years, so you may have to pick up some part-time work your junior year. By planning out and mapping your financial path to graduation, you give yourself a greater chance of success and fulfillment. The financial life of a college student can be stressful, but with a solid plan in place, it doesn’t have to be.

Understand Total Cost:

When you are making your financial roadmap, you will need to really think about the total cost of attending an institution of higher education. Tuition and books are only part of the expenses. You can find the published costs of attendance (COA) for any school you may be attending, but there is more to consider. You will need to consider all of the things that go into college life – in addition to the fixed and known costs. Social life, entertainment, friends, trips, clothing, personal care expenses, tickets to events, ordering food; these are all things that can really add up outside of the published COA. When you sit down and make a plan for these types of expenses, in addition to the costs of education, you are planning from a position of strength.

Create a Budget:

Once you have done the recommended steps above, it's now time to put it in writing and create a budget. You should be working on and through a budget each and every semester that you are in school. A sound budgeting system may not only be beneficial for you financially but could also be helpful academically. You might feel less financial stress, or you may not have to work as many hours; this can be beneficial to your grades. Consistently using a budget helps you stay grounded and realistic about income and expenses but also gives you the freedom to do some things that you enjoy in life.

Learning Checkpoint:

Optional: The Consumer Finance Protection Bureau explains even more Student Loan Key Terms and ConditionsLinks to an external site.