If you plan on going to college, there’s a good chance you’ll need to take out student loans to do it. The most important thing to understand about student loans is that they are loans – not free money. Like any loan, they need to be paid back, plus interest. Make sure to apply for as many scholarships and grants as possible in order to minimize your student loan need.
These short videos provide good insights about student loans.
Deciding how much to take out in student loans
The Consumer Financial Protection Bureau recommends taking out less than your expected starting annual salary after you graduate. If you expect to earn $40,000 per year in your first job, do everything you can to take out less than $40,000 in loans. The average amount of student loan debt for a graduating college senior in the United States was just over $37,000 in 2017. This calculator will help you determine the upper limit of student loans you should take out based on the salary you will earn with your major.
Where to get student loans
The first place to get student loans is the federal government. The financial aid award letter you receive from a college after you complete the FAFSA will tell you how much in loans you can get from them.
If you still need money to fill the gap, consider taking out Bank of North Dakota’s student loan. Bank of North Dakota provides student loans at favorable rates to North Dakota residents, whether attending college in or out of state and to out-of-state residents attending college in North Dakota.
Residents of Minnesota, South Dakota, Wyoming, Wisconsin and Montana may also access Bank of North Dakota student loans regardless of where they attend college, but the interest rate and fees are different. This also applies to students attending schools in any of these states.
You are strongly encouraged to maintain all of your checking and savings accounts with your local bank or credit union when taking out a student loan at Bank of North Dakota (BND). Also, since you can’t take out loans for cars and other personal items at BND, you never need to worry about us asking you to transfer that business.
BND student loans for college
BND has a student loan for college to help fill the funding gaps when scholarships, grants, savings and federal student loans aren’t enough to pay for college.
- North Dakota residents
For North Dakota residents attending college in North Dakota or attending an eligible college out of state, there are no fees and you receive a decreased interest rate.
- Out-of-state residents attending a North Dakota college
For out-of-state residents attending a North Dakota college, there are no fees and you receive a decreased interest rate.
- Residents of – or students attending school in – Minnesota, South Dakota, Wyoming, Wisconsin and Montana
For residents of Minnesota, South Dakota, Wyoming, Wisconsin and Montana attending school in any state other than North Dakota or for students attending schools in any of these states, there is a 3.75 percent administrative fee and a slightly increased interest rate.
Cosigning student loans
BND student loans may require a cosigner who pledges to pay back the loan if the borrower does not. Watch a short video on cosigning.
Cosigning a loan is an action that should never be taken lightly, because it can have serious implications to credit history. The loan appears on the cosigner’s credit report and can directly affect his or her credit as a debt owed.
Ideally, the borrower of a cosigned loan is reliable, never late and never misses a payment. The cosigner’s willingness to risk his or her credit helps the borrower get the loan and can help the borrower build a positive credit history. If the borrower does not make payments, the cosigner is responsible for repaying the debt. The unpaid debt will appear on both the borrower’s and cosigner’s credit reports, and if payments are late, could harm their credit and perhaps their abilities to qualify for new credit. It could also lead to collection accounts.
The loan truth
Not many things in life are free. If you borrow money, you need to repay it with interest. The longer it takes to repay a loan, the more it costs.
You start paying for student loans six months after you graduate, leave college or fall below a half-time student enrollment status. Make sure the career you choose offers a salary large enough to repay your loans. As a guide, your payments should not exceed 10% of your net income when you graduate college. For example, if your net income is $30,000 per year, your payments should be less than $3,000 per year or $250 per month. Calculate your expected salary and how much you will need to repay.
Sometimes the higher paying jobs require more years in school which means you may have to borrow more. If you’re employed, check if your employer offers tuition reimbursement programs that help you pay for college. You could end up having less total debt if that is your situation.
Salary-to-debt calculator: Salary-to-debt calculator tells you how much student loan debt you can afford based on a certain salary.
Debt-to-salary calculator: Debt-to-salary calculator tells you how much salary you will need to support your student loan debt.
