You've faced reality and realized you'll have to borrow student loans to help finance your education. Before you sign any promissory notes, the first step you should take is to determine how much you should borrow.

How much you should borrow depends on the following factors: cost of attendance as established by your school; loan limits established by the federal government and other lenders; your existing financial commitments, such as car loans or mortgages; other resources you may have, such as savings accounts; and the amount of debt you can afford to repay once you graduate.

By law, you can borrow up to the cost of attendance (as determined by your school), less other aid you might be receiving. Other aid includes such things as scholarships, grants, or work-study. Cost of attendance typically includes tuition, books, fees, room and board, and other miscellaneous living expenses.

Your school develops cost of attendance figures that are meant to apply to a diverse group of students. You may not need to borrow as much as is allowed by your school. Remember it is best to borrow the minimum amount possible in order to reduce your overall financial obligations later. However, if you find that you need more than the school has allotted, you have the right to appeal the decision as long as you do not exceed the maximum amount as established by federal regulations.

Some lenders may place borrowing limits on student loans. For example, the federal government places annual and aggregate borrowing limits on federal student loans. The aggregate limit is the total amount that each student can borrow in the span of his/her education. Check the terms of each loan you plan on borrowing for the annual and aggregate loan limits.

Carefully and honestly assess your current financial status and any financial commitments you've made prior to entering school. Factor in consumer debt, such as auto loans or credit cards, and understand the repayment obligations of each. You will be responsible for these prior obligations in addition to any education debt you take on. Your education loans are not meant to cover these prior obligations.

Another consideration is a realistic determination of your future income. Research the job market and starting salaries in the field you plan to pursue. Remember that you will be paying for your education with your future income. Will you be able to manage your monthly payments, considering your likely starting salary? When choosing a loan program, be sure to investigate loans that offer alternative repayment plans that can help you manage your payments, especially early in your career.

Step 1: Calculate the Amount of Assistance Needed

Construct an in-school budget, identifying your expenses (both education expenses and living expenses) and your resources (including income, other contributions, and other financial aid). Subtract your expenses from your resources. If there is a negative balance, you may need to borrow this amount in student loans. At its Web site, Access Group has budget calculators to help you plan an in-school budget.

Remember--your school will calculate your cost of attendance for the in-school period, which is not usually 12 months. You will need to consider how you will cover your expenses when you are not enrolled in classes.

Step 2: Project Total Student Loan Debt and Monthly Payment Upon Graduation

To project your total student loan debt upon graduation, multiply the amount of assistance needed by the number of years you expect to be in school. Remember that accrued interest will be added which can significantly increase the total you'll have to repay. Also, be sure you understand how much you will be required to pay each month. Access Group has loan repayment calculators to help you estimate your monthly payments, taking into consideration accrued interest.

Step 3: Estimate an Out-of-school Budget

Estimate your expenses once you graduate. Your out-of-school budget will include most of the same components as your in-school budget, minus the education expenses. You likely will have new expenses related to your job, as well as the added expense of your student loan payments.

Next, you should estimate a monthly starting salary. Be conservative with these figures. Check with your school for more current information on average starting salaries for recent graduates. Access Group has budget calculators to help you plan an out-of-school budget.

Step 4: Evaluate the Bottom Line

Subtract your future expenses and anticipated monthly student loan payment from your future monthly income. If you have a surplus, it probably means that you can afford to borrow the amount you had planned. If you have a zero balance, it may mean that you have just enough to cover your future lifestyle. If you have a negative balance, you will need to reevaluate the amount you plan to borrow. To do this, you may be able to reduce your expenses while in school, or find additional non-loan resources to pay for these expenses in order to reduce the amount you must borrow.

Student loans can be a valuable investment, but they are also an obligation. In order to ensure successful loan repayment, be sure to approach borrowing carefully and thoughtfully, and be realistic in your budget and salary projections.