The economy is tough. Loans are harder to get than they once were. Major banks cut back on student loans in tough times. But that doesn’t mean student loans are off the table. It just means you may have to work a little harder.


As always, look to your financial aid office as your first stop.

They will know who is lending, and where your best bet is. A Federally-funded loan is best, but the financial aid office will have access to resources for private loans as well.

Your credit score is important, but lenders seem to be somewhat forgiving for students starting out.

They acknowledge you are at the beginning of your earning potential and want to get you as a customer now, even if you are applying for a student loan in tough times that won’t be paid back for quite some time yet. Banks and credit unions sometimes have specials going on for student loans. It’s true that in a tough economy the rates go up, but if you are in need of a loan to get an education, you won’t be alone. But it helps to have a good credit score and some experience borrowing and paying back funds responsibly. It will lower your rate and add to your already good credit rating.

Get Student Loan Debt

Get Student Loan Debt

Look for good terms

Look for a fixed interest rate you can live with on your student loan. This means you will have the same amount to pay back every month for the life of the loan. Stay away from variable rates, especially those with no caps, which can get you into real trouble with variable amounts due (often drastic changes) every month. Sometimes lenders will offer a credit card with points as a bonus to the student loan. Look very carefully at the terms and make sure you are getting a good deal. If not, don’t get rid of the card, since your total amount of credit goes up, which is in your favor for the loan-to-debt ratio, but just don’t be tempted to use it.


Be careful how you use the funds

Money received by a student without having to do anything for it but fill out some paperwork feels like free money. It’s not. Especially in tough economic times, funds from student loans should only be used when absolutely necessary. Don’t let it grow past the amount you are comfortable knowing you can pay back.

Going for a career in, say, mechanical engineering? Don’t allow the banks to extend a huge line of credit to you that would be appropriate for a doctor or someone with the potential to earn more, thereby able to pay off the loan more comfortably. There are horror stories about people who have attended vocational schools to be in professions that earn less than $50,000 to start, but have loans over $100,000, and growing every day due to interest. They will never pay off those loans, be able to buy a house, or even buy a new car; their income-to-debt ratio is too high. The banks don’t care about that for student loans. It’s your responsibility to figure that out.