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Some Tips for Taking out Student Loans

As credit standards for private loans have tightened, some for-profit, or "proprietary," colleges are now lending money directly to students.

Such borrowing may be worthwhile, but here are some tips for protecting yourself on any student loan from three experts: Deanne Loonin of the National Consumer Law Center, Tim Ranzetta of Student Lending Analytics, and Mark Kantrowitz of the Web site

• Fill out the FAFSA form for government aid, and always max out on federal grants and loans before turning to other sources. Rates are lower, and the new income-based repayment plan offers protections if you experience financial difficulties or choose a lower-paying career.

• Be wary of any lender that refuses to provide information on terms and fees. Make sure you understand the repayment requirements, both for while you're in school and after.

• If possible, apply with a creditworthy co-signer to reduce costs.

• Borrow as little as possible, no matter how much somebody is willing to offer you. Depending on rates and repayment scheules, every $100 in loans is likely to cost around $200 by the time you repay. However, borrowing is preferable to forcing yourself to work so many hours while in school that you fail to graduate.

• Find a school that won't set you up for failure. Especially at for-profit colleges, ask for data about graduation rates, job placement rates and average wages. If you're borrowing more than around $45,000 for a bachelor's degree, or $25,000 for an associate's degree, think seriously about finding a cheaper school.

• A good rule of thumb: Don't give yourself more total loan debt than your expected gross salary the year after you graduate. Another: Your total monthly payment on all student debt shouldn't exceed 8 percent to 10 percent of your monthly salary.

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