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There are only a few months until the college acceptance letters start rolling in and plans for the coming school year are made. Among those plans, students will be faced with a mountain of expenses as well as options for paying those expenses. Factoring in loans and financial awards, students will start to get a clearer picture of how much college is going to cost them.

This is a time of great consideration for the soon-to-be college student as they weigh their options and decide how much debt (if any) that they are willing to take on. It is, essentially, the first major decision of a young person’s life.

And with all the horror stories floating around out there about student debt, it might seem like high school grads are getting ready for an impoverished life impossible to escape. Good news: the majority of the time, student debt is completely manageable. To help plan for the future, the National Association of Student Financial Aid Administrators (NASFAA) shared these six steps for determining the right amount of debt to take on:

Determine The True Cost Of College

The true cost of college often gets lost when universities are discussing tuition payments. In reality, they go far beyond that and vary depending on additional expenses, such as textbooks, food, housing, and travel. Luckily, students have access to financial aid administrators, who can give a general idea of what costs there are beyond tuition. Financial aid admins have the advantage of working with thousands of students each year, so they have their ears close to the ground and the students’ best interests at heart.

One final note: while most students typically finish their bachelor’s degree in four years, some can take much longer, particularly if there is a change of major along the way. I took three and a half years. My wife will be getting out this May after nine. (She had trouble deciding. All the more reason why you need to give serious thought to your major sooner rather than later.)

Make The Calculations

As soon as you have a clear picture of what your college costs are beyond the tuition, start doing the calculations. If you have any kind of financial award to subtract, now is the time to do it. (By financial award, we mean grants and scholarships. Loans have to be paid back.)

Awards could also mean any financial help you get from family and friends, which can be quite substantial in some families. The remaining divides between total cost and total awards is what you’ll need to pick up in way of loans.

Make sure you’re applying for all the scholarships available to you. If you’ve pursued any extracurricular interests beyond the classroom and the sports arena, then see what is available from various organizations at both the federal and state levels. Leave no cushion unturned.

Don’t Borrow More Than You Need

Some students look at loans as if they’re free money. The payoff date, which begins after college is over or as soon as one quits going full time, seems so far away. Big mistake. The more you borrow, the more you obligate yourself to paying back in the years ahead (with interest). It can be tempting to take the full amount of monies offered since financial aid officers are often obligated to offer the full amount of federal loans, but remember that this is no free lunch. Resist the urge, and you will find yourself with a payoff date that comes sooner rather than much, much later.

Anticipate Your Payments

Frugal Dad notes that a student loan payment is often “10 percent of a borrower’s take-home pay” once they’re out of college and in the workforce. This requires one to make projections regarding their salary for careful planning. Some also recommend using online calculators to estimate monthly payments. You can find a good one here.

Setting goals for what you plan to make and where you hope for your career to take you is not daydreaming. It’s a responsible way of managing your debt, and it can also motivate you to work harder and attain more of your goals as you go along.

Carefully Consider Your Loan Options

Don’t simply breeze through this aspect of managing your student debt because it’s a decision you could be living with for the next 10 to 20 years.

Most loans will fall into federal and private categories. If you filled out the Free Application For Federal Student Aid (FAFSA), then you’ll probably be able to attain federal student loans. These provide numerous repayment plan options, borrower protections, and possible loan forgiveness. Private student loans generally come through banks, credit unions, and private lenders. These are not required to carry the same protections and repayment options at this time.

Things you’ll want to look at before deciding on a final repayment plan: interest rates, terms, and conditions. Organizations like NASFAA and, of course, your financial aid administrators, can guide you to the appropriate option.

Keep Tabs On Loan Amounts While You’re In School

When it comes to figuring up the true cost of college, don’t stop with initial projections. Evaluate how much you’re spending during both the first and second semesters. If you see that there is an unused portion, talk to your financial aid administrator about making adjustments to the amount you’re borrowing.

In Summary

Managing student debt may not seem very fun when you’re also trying to make good grades and fulfill your class commitments. After all, isn’t there enough to worry about with picking the right major, tracking down internships, taking professional exams, and figuring out which grad school you’re going to?

We know it can be tough but encourage you to take responsibility and use every means at your disposal to manage debt responsibly. In the end, you’ll be so glad you did.

If you’re feeling overwhelmed by talk of student debt and want access to some pretty great resources for helping you manage it, we suggest that you check out StudentLoans.gov. This is a source from the US Department of Education itself. Best of luck!

[Image via Flickr Creative Commons]