By now you’ve probably heard that outstanding student loan debt is at more than $1 trillion. You also probably know that college tuition costs keep rising. Many college students have no choice but to borrow to afford to pay for college. This accounts for the rising student loan debt in our society, as does the idea that a higher education is a required milestone for a good job.

Student loans are fairly easy to get (especially if you get federal student loans), and they include the ability to borrow for more than tuition. You can also receive enough in loans to cover the cost of your room and books. In very real ways, students live off their loans, as well as use them to pay their tuition costs.

Before you sign that promissory note, it’s important that you understand what you are getting into.

Your student loan amount is probably bigger than you realize

When you sign your name on the dotted line, it’s hard to comprehend the size of your loan. While $20,000 sounds like a lot of money, it doesn’t really hit home how big that loan is. It’s hard for us to visualize large numbers, and it’s especially difficult when you don’t have to make payments. It’s true that somewhere in the back of your mind you know that you will have to repay the loan, but it’s hard to truly grasp the enormity of the situation.

Rather than just signing the promissory note for the amount offered. Take the time to think about what your payments might be. It’s hard to understand how $20,000 or $50,000 will affect your budget later when it doesn’t have a negative impact on you now. Instead, the enormity of the situation only sets in when you graduate and your loan payments are bigger than you thought they would be.

Use a payment calculator to estimate your likely monthly payments. Breaking it down like that makes the numbers easier to understand, and helps you better visualize how your student loan payments will affect your monthly cash flow later.

Student loan interest can accrue while you are in school

One of the great draws of student loans is that many of them don’t require any payment at all as long as you meet the school requirements. However, just because you aren’t making payments doesn’t mean that interest isn’t accruing. Unsubsidized federal loans begin accruing interest immediately, as well as many private loans. When you graduate and your grace period ends, that accrued interest is added to your principal.

This means that you will not only pay interest on the original principal, but you will also pay interest on accrued interest. If you want to reduce the impact of capitalized interest on your finances, you can start paying your interest while still in school. Interest rates vary depending on when you got your loan, and what rate Congress sets, but you can usually save a decent amount of money in the long run by paying the small interest amount while you are in school.

You don’t have to borrow what they offer you

One of the mistakes I made while going to school was taking the full amount offered to me. I had a full-tuition scholarship and a good job at the university cafeteria. I even had my housing paid for during the last two years of my undergraduate schooling because I was a resident adviser. I still accepted the full loan amount offered to me every year. If I hadn’t, I probably have saved myself close to $20,000 in student debt.

It feels like free money when that student loan check hits your bank account, but it’s not. You’ll eventually have to pay it back with interest. Rather than accepting the full loan amount offered, only borrow what you need. If you have time to save up using a 529 plan, or if you have a scholarship, you might not need as much for your student loan. For the most part, after your tuition and other school fees are covered by your student loan, you have the option to turn down the check they offer you.

Everything feels like a blur while you are getting ready to attend college. There’s a lot to do, and a lot of new information. However, you don’t need to be sucked into taking larger than necessary student loans. Consider the pros and cons of student loans, and take the time to try to fully understand the implications of borrowing that much money.

It may be difficult to visualize a time when you will be out of school and saddled with high student loan payments, but that day will come. Paying attention now, and changing the way you move forward with your student loan, can save you thousands of dollars later.

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