By Caroline Kurzawa

Today, the average student takes out approximately $30,000 in loans to pay for a college education. From 2009 to 2019, there has been roughly a 26% increase in the amount that students have borrowed.

Filing out the Free Application for Federal Student Aid (FAFSA) can be confusing enough, and then students are faced with the choice about what loans to accept even though they may not know exactly what the different types of loans mean.

Elizabeth Conway, a recent University of Georgia graduate, remembers not understanding what accepting loans meant back when she was 18 years old.

“I don’t know anything about the world,” Conway said. “How is this fair that I had to make this decision?”

Unfortunately, many students find themselves in this position, as their inexperience leaves them uncertain about the financial responsibility that loans entail.

A common mistake that many students make when taking out loans is accepting all of the loans that are made available to them. It is more beneficial for students to carefully consider and plan out what you actually need versus what is offered.

“Just because you qualify for a student loan, doesn’t mean you should take that student loan,” said Sheri Worthy, head of the financial planning, housing and consumer economics department at the University of Georgia.

Just as there are many types of loans, there are many different ways to plan to pay back those loans. For many loans, students are given a six-month grace period between graduation and when their first loan payment is due. Students may choose to take advantage of this window and save up, or students can go ahead and begin to pay down the loan.

Students are also faced with the choice to either pay back their loans with large lump sum payments or making the regular minimum monthly payment.

Conway said that her debt is not the “huge, scary number” it could be since she also received scholarships to help pay for her education, but paying off her debt through monthly payments will still take some time before she can check it off her list.

This decision to pay a lump sum is best considered in relation to other debt students may have, such as credit card bills, according to Worthy. If you have the funds, paying a large lump sum may be helpful because you avoid having your payments go toward interest. If you want to stay on a regular payment schedule but want to make sure your payment is going toward the principal, confirm the details of payment with your lender.

There are also ways to defer your loan repayments if you are still continuing education or joining the military.

“One of the reasons I continued with a master’s degree was to defer my student loan payment because I didn’t have a job…I graduated into a recession. And then the same thing happened when I graduated with my master’s. It was another recession,” Worthy said. “So, I got a Ph.D. to defer my student loans longer and eventually got a Ph.D. out of it.”

Communicating with your lender is key if you run into trouble with payments. You can negotiate a forbearance of your loan, where you put the loan payments on hold based on an agreement between you and the lender until you are able to resume payment.

Student loans are not likely to go away anytime soon. However, there are ways to be smart about how you handle your debt and what loans you accept.

“Getting a college degree is still a really valuable thing, and so, if borrowing money to make that happen is necessary, then it’s absolutely something you should borrow money for,” Worthy said.

Caroline Kurzawa is studying journalism at the University of Georgia. She is a 2020 Cox-SABEW Fellow, a training program in partnership with UGA’s Cox Institute for Journalism Innovation, Management & Leadership.