If you must borrow, accept only what's necessary to cover your college costs (tuition and fees, housing, meals, books, personal expenses, and transportation). Remember, when it's time to repay your student loans, you'll have other financial obligations as well.

Financial professionals recommend that monthly student loan payments be no more than 10% of your monthly income (before taxes). The more you will earn, then, the more you can borrow.

That’s why it’s important to calculate how much you'll be expected to repay on student loans each month and compare that amount to what you think you'll earn after graduation. Ask yourself these two basic questions:

• What percentage of my monthly income is the monthly loan payment likely to be?
• Can I make my loan payments, cover my living expenses, and start saving money?

The costs of borrowing

Interest

It seems simple: You borrow money; you pay it back. But the amount you have to repay is more than the amount you borrowed. Why? Interest.

Interest is what lenders charge for the use of their money and to cover the cost of servicing your loan until it's paid off. The total interest you pay depends on:

• Loan amount
• Interest rate
• Time in repayment

Lowering or shortening any of these factors will save you money.

The interest rate on federal student loans is established when your loan is first disbursed and varies by loan type.

Interest rates on private student loans are variable and are based on the borrower's credit rating and/or that of a cosigner (if applicable).

Fees

You think you're borrowing just the right amount. But when the money arrives, you see it's less.

Fees, which vary by loan program and lender, have been deducted from your loan proceeds. You should learn about the fees associated with each loan to avoid any financial surprises.