Paying for college can feel overwhelming but understanding how to borrow wisely can make a big difference in your future. Whether you're just starting school or already juggling tuition bills, these five tips can help you make smarter decisions when it comes to student loans:
1. Start with the FAFSA
The Free Application for Federal Student Aid (FAFSA) is your first step toward getting financial help for college. Submitting it opens the door to federal grants, loans, scholarships, and work-study programs. Even if you’re unsure whether you’ll qualify for free aid like grants or subsidized loans, many schools use your FAFSA to determine your aid package - so don’t skip it!
2. Choose Federal Loans Before Private Loans
When it comes to borrowing, federal student loans are usually the better option. They often come with lower interest rates, flexible repayment plans based on your income, and built-in protections if you face financial challenges after graduation. Private loans may fill the gap, but they typically offer fewer safeguards.
If you do find that you need additional funding beyond what federal aid provides, CommunityAmerica offers a student loan that functions as a line of credit that might be the right fit for your family. We offer flexible repayment options and a co-borrower release once the student can qualify to hold their own loan.
3. Know the Difference Between Subsidized and Unsubsidized Loans
When you complete the FAFSA, you're automatically considered for Direct Unsubsidized Loans, which don’t require a credit check. Undergraduate students can borrow up to $5,500 in their first year, $6,500 in the second, and $7,500 in later years, with a total limit of $31,000 for a bachelor’s degree.
Students who demonstrate financial need may also qualify for Direct Subsidized Loans. With this option, the government pays the interest while you’re in school and during the six-month grace period after graduation. Since unsubsidized loans begin accruing interest immediately, understanding the difference between the two can help you make more informed, cost-conscious borrowing decisions.
4. Apply for Scholarships Every Year, not Just Freshman Year
Many students think scholarships are only for incoming freshmen, but there are plenty of opportunities available every year throughout college. Applying annually can help reduce your costs and limit how much you need to borrow. New scholarships open up regularly, and some require you to reapply or maintain certain academic standards to keep receiving funds. Your eligibility can also change based on your major, activities, or achievements, so staying proactive means more chances to earn aid.
To make the most of this, set reminders each semester to search for scholarships, use your school’s financial aid resources, and keep your application materials, like your resume and personal statement, updated.
5. Only Borrow What You Truly Need
It’s easy to accept the full loan amount offered but remember that all loans must be repaid with interest. To avoid unnecessary debt, calculate your total college expenses—like tuition, housing, and books—and subtract scholarships, grants, and savings. Borrow only what’s needed to cover the gap.
Borrowing less now means paying less interest later and having more financial flexibility after graduation. Be mindful not to use loans for extra expenses and focus on borrowing responsibly to keep your future manageable.
At CommunityAmerica, we’re here to support you through every step of the journey—from planning to payment. Whether you're just getting started or have specific questions, our College & Career Planner, Karly Scholl, is ready to help you create a plan that works for you. Schedule an appointment with our College Planner to get personalized support.
