How Much Student Loan Debt Is Too Much? 9 Tips to Avoid It

While student loans can be a useful tool for paying for college, they can become burdensome if you borrow too much. So when it comes to student loans, how much college debt is too much?

While the answer to how much college debt is too much will vary for everyone, there are steps you can take to estimate your personal student loan limits and keep debt at a minimum.

If you’re wondering how to avoid a burdensome amount of student loan debt, consider these nine tips:

1. Research average starting salaries for your major
2. Learn about your repayment plan
3. Consider tuition costs and financial aid, not just ranking
4. Opt for federal loans over private loans
5. Fill out your FAFSA early each year
6. Search for as much money as you can get
7. Learn about careers that offer loan forgiveness or assistance
8. Find a part-time job during college
9. Don’t spend student loan money on other expenses
● Plus: Getting the info you need before taking out student loans

1. Research average starting salaries for your major

There’s a general rule that you shouldn’t borrow more in student loans than you can expect to make in your first year out of college. If you expect to make $30,000 in your first year, for example, cap your student loan borrowing at $30,000.

Of course, you can’t guarantee that you’ll land a job right away, and you might not know what you want to do or major in yet. However, it’s worth doing some research before you take on debt to clarify your career goals and make sure your degree would have a good return on investment.

Here’s a sample of average starting salaries by undergraduate major from the National Association of Colleges and Employers (NACE):

  • Communications: $58,174
  • Business: $58,869
  • Humanities: $59,500
  • Social sciences: $59,919
  • Computer science: $72,173

You can also use sites such as the Bureau of Labor Statistics (BLS) or Glassdoor to learn about starting salaries. Consider asking your school for this information, too.

With the average graduating student in the Class of 2020 who took out loans owing $28,400, it would be beneficial to have a starting salary that at least exceeds that number. This way, you may be better able to handle a 10-year standard repayment plan. With $29,900 in loans at a 3.73% interest rate, for example, you’d pay about $299 a month, according to our student loan payment calculator.

All that said, it’s impossible to predict whether you’ll quickly find full-time employment after graduating, even if you do know your future career path. There is a certain element of risk here, but it can still be helpful to reflect on your interests and goals when deciding how much money to borrow.

2. Learn about your repayment plan

Before taking out student loans, learn the details of your repayment plan. Consider questions such as,

  • How long will you be paying off your loans?
  • What is your interest rate?
  • What will your monthly payments look like?

You can use the Loan Simulator tool from Federal Student Aid or one of our student loan calculators to understand what your loan payments will look like on different repayment plans. By understanding all the numbers, you can make a clear decision about taking out student loans. If you’ll be stuck with an $800 monthly payment, for example, consider taking out less by attending a less expensive school or working a part-time job.

3. Consider tuition costs and financial aid, not just ranking

Some students might feel they should go to highly ranked colleges, but the cost of tuition and availability of financial aid are also important considerations. Rather than automatically choosing the college with the highest ranking, make sure to compare costs among schools.

Along with looking at tuition and fees, check out the schools’ financial aid policies. Some schools are more generous than others, with some even covering a student’s full financial need with gift aid.

When looking at schools, don’t rule out community colleges, either. These institutions can offer a quality education as you earn credit toward a degree. You can lower your expenses, especially if there’s one nearby so that you’re able to cut back on transportation and living costs.

While it might be tempting to attend the school with the best reputation, it might not be worth it if you’ll end up saddled with debt. Even if student loan repayment feels far off in the future, you will have to deal with that monthly bill someday.

4. Opt for federal loans over private loans

Federal student loans typically have lower interest rates than private student loans. Interest rates for undergraduate federal loans range between 3.73% and 6.28%. But private interest rates can creep much higher.

Plus, the government offers more borrower protections than private banks do. For instance, you may qualify for federal loan forgiveness or income-driven repayment plans.

At the same time, the government has a $31,000 borrower limit for dependents. Some students take out private loans to make up the difference. Since banks usually require a good credit score, parents tend to cosign on these loans.

If you’ve hit your federal limit, consider whether taking out more student loans is the right choice. The college experience you’ll get now might not be worth all the additional years of repayment — or the potential burden on your parents.

5. Fill out your FAFSA early each year

Filling out the Free Application for Federal Student Aid (FAFSA) will make you eligible for federal financial aid, including grants and student loans. Get a head start on this important application so you’re not scrambling at the last minute.

Missing the deadline could mean you won’t get some much-needed aid. Besides, if you can maximize your need-based aid, you may not need to take out as many student loans (both federal and private).

Most states open their FAFSA applications around the beginning of October each year, but some states are earlier. Connecticut, for example, has a priority deadline in February.

Give yourself plenty of time since you may need to provide additional paperwork or correct any mistakes on your application.

6. Search for as much money as you can get

One excellent way to reduce the amount you take out in student loans is to get scholarships and grants. Typically, scholarships you don’t have to pay them back.

There are tons of scholarships at both the local and national levels. Websites such as Scholly and College Board help you locate funding opportunities. And this can reduce your reliance on student loans.

7. Learn about careers that offer loan forgiveness or assistance

Both federal and state governments offer loan forgiveness and assistance programs. These programs are for those in certain occupations, such as doctors, nurses and teachers.

To qualify, you typically need to work in a high-need or critical shortage area. Research these programs to see if any match your career goals.

8. Find a part-time job during college

Prevent your student loan debt from ballooning out of control by taking a part-time job during college. By making some income, you won’t have to keep taking out loans to cover living expenses.

If you’re concerned a job could impede your studies, there are work-study opportunities at many colleges that could work around your school schedule. These programs help those with financial need, and you could find work that’s related to your field of study.

To find these opportunities, speak with your school’s financial aid office to see what’s available.

For those who don’t qualify for work-study placements, consider an off-campus, part-time job such as academic tutor or babysitter. These jobs can pay a good deal more than the usual minimum wage options on campus.

9. Don’t spend student loan money on other expenses

Be careful not to spend student loan money on expenses such as monthly bills or going out to eat.

Student loan money comes with strings attached — interest rates. Due to compounding interest, you’ll end up paying way more in the long run.

On that note, create a budget for all your expenses so you’re not spending more than you can afford during college, which could mean you’ll need to borrow more money. Besides, if you get in the habit of budgeting now, you’ll be much more prepared for life post-college, especially when you need to start paying off your student loans.

Getting the info you need before taking out student loans

Student debt can become a huge burden if you take on too much. Many studies show that debt-saddled millennials are waiting longer to get married or buy houses due to the amount they owe.

Before signing on the dotted line, find answers to any and all of your student loan questions. Make sure you understand exactly what your repayment plan will look like.

If you learn how to avoid taking out too much student loan debt, you’ll ease the financial burden on your future self. Once you’ve borrowed, explore different repayment strategies to see if you can pay off your student loans ahead of schedule.

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