How to pick a college that won’t leave you with a mountain of student loan debt

Student loan debt

Students who are looking at prospective colleges might want to think a little more carefully about the total price they’ll pay for that education when all is said and done.

The average college graduate had $37,172 in debt in 2016, a 6 percent increase from the year before, according to

But many students focus on their top choices instead of the sticker price. And that price often comes with hidden costs, according to experts who help students evaluate loans.

“You shouldn’t borrow more for your education than your first year’s salary,” said Mark Kantrowitz, a financial aid expert and writer at the website Private Student Loans Guru.

Following that rule enables borrowers to pay their debt back in 10 years. Taking on more loans often entails a longer repayment horizon, and financial struggles, Kantrowitz said.

There are some indications that students are getting the message. More than half of incoming college students indicated they had “some concern” about paying for college, while 13.3 percent indicated they had major concerns, according to a Cooperative Institute Research Program survey released earlier this year.

Here are some tips for making sure your college won’t leave you underwater financially after graduation.

Evaluate your financial aid award letters carefully

Prospective students should use the net price in their offer to evaluate how much it will cost to attend a school, according to Kantrowitz. That net price is calculated by subtracting all financial aid, grants and scholarships to determine what you will pay from savings, income and loans to attend the school.

“The net price correlates very well with debt at graduation,” Kantrowitz said.

Some financial aid award letters can blur the distinction between grants and loans. Watch for abbreviations like “L” or “LN” or terse terms such as “federal Stafford” that do not obviously indicate which parts are loans.

The opaqueness has led some families to think they have a free ride from a college when in reality they have a six-figure combination of expenses and debt, according to Kantrowitz.

“The disclosures are not clear,” he said.

Understand what the financial package means

Federal loans typically offer the best terms, but are often capped at relatively low amounts, said Adam S. Minsky, an attorney specializing in helping student loan borrowers.

Private loans or Parent Plus loans have more strings attached. Private loans frequently have interest rates that are high and variable. They often require a parent to co-sign the loan and offer very little flexibility if there’s a hardship.

Parent Plus loans require a parent to take on the debt burden. Though these loans are governed by federal law, they typically have higher interest rates than other federal loans, Minsky said. Parent Plus loans also have less flexibility in repayment, such as no income-driven repayment plan, and cannot be transferred to the child.

“There’s a lot of dangers there,” Minsky said.

Borrowers also need to be wary of schools that are front-loading grants, according to Kantrowitz. As college costs go up following freshman year and grants remain unchanged, the student will be borrowing more.

Students can check on a school’s grant records at under the financial aid tab. If the average grant amount goes down from freshmen to other undergraduates or the percentage receiving grants goes down, that’s a sign you will pay more in subsequent years, Kantrowitz said.

Shop around for schools

Early action and early decision are two popular routes for applying to a college or university.

While early action is not binding, early decision does require that a student attend the school if they are accepted.

“It prevents you from shopping around,” Kantrowitz said. “Your financial aid package might be very different at another college.”

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Students who are planning to pursue higher education should think about what they want to study first, then decide on the school, said Whitney Hansen, a personal finance coach and adjunct professor at Boise State University.

“If they’re unsure, then I do not recommend going to an out of state college,” Hansen said.

Look for creative ways to reduce costs

Students need to carefully consider all of the costs that go along with attending college, Kantrowitz advised.

That includes everything from transportation home over holidays and breaks to how much you will eat out to how many photocopies you may make, he said.

Students can help offset those costs by using strategies that can result in big savings.

Tuition exchange programs are one way for students to pay what they would for school in their state but still go away to an out-of-state school, according to Hansen.