DecidED recommends taking out no more than $5,500 per year in loans while in college because that is the amount you could reasonably pay off. Research shows you will need to make about $54,600 after you graduate to cover those monthly loan costs and still afford other living expenses.
Hint: However, some students find themselves needing a little more money to cover any gaps in their total college costs. Luckily, many degrees could land you a job making more than $54,600 immediately after college.
Not sure how loans work? Check out our guide Ultimate Guide to Loans for Parents & Students.
Not sure what salary to expect after college? Salary Potential by Payscale
There are a few things you should consider before you decide to take out more loans – Learn more below.
1. MAJORS WITH HIGHER PAY CAN TAKE LONGER TO COMPLETE SCHOOL AND START EARNING MONEY
Medical doctors and lawyers make a lot of money but it can take 8 to 12 years of school before they start earning a salary. Even if you don’t want to be a doctor or a lawyer, the need for graduate school is common in many careers. This means that not only will it take you longer to start working and earning a salary, but you may need additional loans to pay for graduate school.
Hint: Before you decide to take out extra loans to finance your undergraduate costs, make sure you know how many total years of loans you’ll have before you start earning money to pay them back.
2. STUDENTS WHO STOP SCHOOL HAVE TO START REPAYING THEIR LOANS
School can be difficult and life can be unpredictable. For this reason, many students have left school at one point or another in their college journey. However, if you have student loans and leave school for at least six months, you will have to start making your payments – even if you plan to eventually return to school. This can complicate students’ lives further and make it hard to eventually return to college.
3. LOANS ARE MORE COMPLEX AND LESS STUDENT-FRIENDLY THE MORE YOU TAKE
Federal subsidized and unsubsidized student loans are the best loans on the market due to their low-interest rates and forgiving repayment terms.
Once you max out these loans, about $5,500 per year for the first year, then increases depending on what year in college you are. Alternative loan options get more expensive and harder to obtain. You or your parent(s) will have to pass a credit check to be eligible, and the interest rates can be double or even triple those of the federal loans.