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8 Tips For Taking Out Student Loans

If you or your child is applying to college, then your main worry right now is most likely getting into the top choice school.

But considering that the average student loan borrower graduates with more than $26,000 in debt, you probably want to reserve worry for something else: the price tag.

The rising cost of tuition - and student loan debt, which reached $1 trillion a couple years ago - prompted Pres. Barack Obama this summer to lay out a comprehensive plan to fight rising college costs and student loan debt. However, the particulars of that proposal - which include income-driven repayment plans and tying financial aid to college performance - won't be in place before you or your child enrolls next year, which means you need to think about cutting costs and how student loan debt could affect your or your child's quality of life after graduation.

"Every dollar for student loans is a dollar less for other priorities like buying a car, buying a house, getting married, having children," says Mark Kantrowitz, senior vice president and publisher of edvisors.com, publishers of more than a dozen websites about planning and paying for college. "All that costs money and you'll have tighter finances if you're paying your student loans."

Here are eight rules to help you reduce the burden:

1. Don't take on debt that's more than your expected first year's salary.

Calculate your total debt for all years of school. To get a ballpark estimate, multiply your first-year loan by the number of years of your program - for instance, multiply by four if you're earning a bachelor's degree. That should get you to within 15% of your total loan debt. To find salary information, check out websites such as salary.com, payscale.com or glassdoor.com.

Ideally, your total debt should be a lot less than your expected starting salary so you can pay your debt in 10 years or less. (If your debt will be higher, don't despair. In certain situations, this rule doesn't apply. More on that below.)

"If you devote more than 15% of your monthly gross income for those student loans, you're going to be struggling to make those loan payments or you're going to be adopting a very austere lifestyle or you're going to be working two jobs to help you pay back the debt," says Kantrowitz. "You could do a deeper analysis with a budget of all four years for where you are getting your money from - how much from savings, how much from education tax benefits, how much from parent help - but often times, that will likely not be more accurate [than the ballpark estimate] because circumstances change."

2. Start looking for free money now.

While student loans are extremely helpful, they have to be paid back. Grants and scholarships, on the other hand, don't. Check out free scholarship-matching sites such as fastweb.com, studentscholarshipsearch.com and collegescholarship.org. According to Sallie Mae's How America Pays for College 2013 report, "free money" now funds 30% of college costs, up from 25% four years ago.

"Too often students wait until the spring of their senior year to start figuring out how to pay for college, and by then they've missed half the deadlines that year alone," says Kantrowitz. He even adds that it's possible to win college scholarships as early as elementary school through activities like the National Spelling Bee, community service, Doodle 4 Google, and even companies like Jif peanut butter. Or, maybe your parent's employers offer scholarships, or you can find one related to your ethnic heritage.

But don't get too optimistic. Only about one in eight students in four-your education programs uses a scholarship to pay for school, he says, and the average amount is $2,800 a year, which won't cover tuition at most colleges. As for completely free rides? Those go to less than 0.3% of undergraduate students, says Kantrowitz.