A college education is an investment in a student's future — and often, that investment requires supplemental financing in the form of student loans.

More than half (55%) of families plan to borrow student loans to help pay for college, according to a recent College Ave Student Loans survey. Most believe they will take on between $10,000 and $40,000 worth of loans.

But with nearly 45 million Americans owing $1.7 trillion in student loan debt, it's important to plan ahead to make sure student loans are manageable after graduation. Keep reading for tips on how to borrow money for college without sacrificing your family's financial stability.

Calculate how much you will need to borrow to cover college expenses

Paying for college has become more challenging than ever. The price tag of college tuition alone has risen 33% since 2000, and that doesn't even include other related expenses. In fact, nearly three-quarters (72%) of families surveyed were surprised by the total cost of college, and about a third (34%) didn't budget enough money to cover higher education costs.

"Like other major investments we make in our lifetime, paying for college can come with additional costs that may not have been anticipated or have changed since the initial planning stages."

- Joe DePaulo, Co-Founder, and CEO of College Ave Student Loans

For example, a student who decides to live off-campus potentially needs to deal with the rising cost of the rent. Plus, recent inflation makes it more difficult to afford everyday living expenses like groceries. And many students need 5 or 6 years to earn a degree, further driving costs.

You should account for the following expenses when deciding how much money you need to borrow to pay for college:

  • Tuition
  • Room and board, or rent
  • Meal plan, or groceries
  • Textbooks
  • Electronics
  • Transportation
  • Fraternity or sorority dues
  • Personal expenses

Since federal student loans won't likely cover all these costs, it may be pertinent for students to get a part-time job to help make ends meet during college. Creating a budget is another way to plan for extraneous living expenses. Sometimes, though, these small measures are not enough to cover the unexpected costs of college, and it may be necessary to borrow more money. 

Federal student loan borrowers may need to take out private student loans to bridge the financing gap. If you decide to do this, make sure you compare interest rates across multiple lenders to make sure you're getting a fair rate.

The Free Application for Federal Student Aid (FAFSA) is just what it sounds like: a form that families can fill out to see what kind of financial aid they may qualify for, including federal student loans and grants. About 70% of families filled out the FAFSA, according to a recent report from Sallie Mae, but many of them had to file an appeal to get additional financing.

Many families use federal student loans to cover expenses, but it's important to remember that these need to be repaid with interest over time.

In addition, you should also research grants, scholarships, and student loan forgiveness programs that are available through the federal government or otherwise. 

Use private loans or Direct PLUS loans to bridge the financing gap

When you've exhausted all your traditional student loan financing options, it may be necessary to borrow more money to fully cover the cost of college. Families often turn to Direct PLUS loans or private student loans to bridge the gap when traditional federal Direct loans won't cut it. 

Here are some of the key differences between private and PLUS loans:

  • Interest rates: Direct PLUS loans have the highest fixed interest rate of all federal loans at 6.28% for loans disbursed before July 1, 2022. Private student loan interest rates are on the borrower's credit score as well as the terms of the loan. The average rate is 5.45% for 10-year, fixed-rate loans and 2.83% for variable-rate loans, according to August Credible data.
  • Fees: Private student loans may or may not come with a loan origination fee, which is typically added to the total cost of the loan. Direct PLUS loans have a one-time fee of 4.228%.
  • Protections: Federal PLUS loans may be eligible for relief measures like income-contingent repayment plans (ICR), economic hardship forbearance, unemployment deferment, and even student loan forgiveness programs. Private student loans are not eligible for these protections and wouldn't be eligible for student debt cancellation, but they may be discharged in bankruptcy.

Private loans are a popular option for many families looking for additional college financing because of their flexible repayment options. About 1 in 8 families borrowed private student loans in the 2020-21 school year, according to Sallie Mae. If you decide to borrow private student loans, be sure to compare interest rates so you can get the best possible deal for your situation.