It should go UNDER the tank....and newspaper is fine. But what you need to keep it from getting too hot is a thermostat. Or at the very least, a rheostat (dimmer switch).

A thermostat is ideal because you set the temperature and it keeps it just where you want it all the time. You can find safe, reliable ones at reptilebasics.com.

A rheostat simply "dims" the amount of power going into the heating pad so it doesn't reach its max heat...you have to really play with it (with a thermometer in the tank) to make sure you get the temperature right...and then it will fluctuate with changing room temps. But if the area that the tank is in maintains a steady ambient temperature 24/7, then a rheostat is a decent (and much less expensive) alternative.