Borrowing Money for College: How Much is too Much?

If paying for college means taking on debt, you’re not alone.  More than 44 million Americans are paying off student loans. But the million-dollar question is: How much debt is too much debt?

To answer that question, many financial professionals recommend starting with one simple guideline:  Don’t borrow more than you expect to earn the first year after you graduate.   

For example, following are three career fields. Each shows the average amount students borrowed in their respective field and their average starting salary.

  • Computer and Information Science:
    • Average borrowed: $35,000.1 
    • Average starting salary: $73,768.2
  • Emergency Care Attendant (EMT Ambulance):
    • Average borrowed: $8,770.3
    • Average starting salary: $30,846.4
  • Nursing (RN):
    • Average debt: $40,000-$54,999.5
    • Average starting salary: $56,9006

Of course what you end up borrowing will depend on the cost of the school you attend vs how much you and your family can afford to cover from savings and income. These average debt amounts are just that – averages used for illustration. In each of the examples above, the average debt does not exceed the average first year income.

To see the average starting salary of the fields you’re interested in, visit the bureau of labor statistics or use one of the following tools:

  • TheHamiltonProject.org provides an easy and accurate way to compare career earnings by college major.  Another resource is Payscale.com. It provides a list of salaries by major with a breakdown by early- and mid-career salaries. 
  • Salary.com or Glassdoor can provide an average median salary for different careers. But don’t forget to include “entry-level” in your search along with a specific city or region. This will provide more accurate (and realistic) results.

Tips to avoid taking on too much debt

Following the debt vs. income guideline can help you borrow responsibly. So, it’s important to research your expected starting salary. But what if you find your debt may exceed your income? Or if you don’t have a clue what you’d like to major in?

Here are some tips to help you make a wise choice about college.

  • Explore different schools that fit your requirements
    • The College Search & Cost Comparison tool can help you find schools that fit what you’re looking for, including degree type and major, cost, location, public vs. private, size and graduation rate. If your family can afford a school with a cost of “X,” then search for schools that have a net price that falls within that range.
    • Another tool that can help you get a handle on what it might cost you to attend a specific college is the net price calculator. There is a net price calculator on virtually every school’s website. Plug in a few numbers to get an estimate of what it might cost you to attend each school that piques your interest. You might be surprised – sometimes schools with very large published prices can be affordable after grants and scholarships are subtracted from the cost.
  • Take a gap year to earn more money to help pay for college. Many people take a gap year to travel, volunteer, explore their passions, or just take a break from school. Why not consider working full-time to save for your college education? The more you have saved, the less you will have to borrow.
  • Consider different majors: If you’re undecided about what to study, consider a major that interests you – but won’t exceed your student loan debt limit. Research career options using resources like:
    • The U.S. Department of Labor’s Occupational Outlook Handbook. Find out if a career field you’re considering is shrinking or growing, and get information about pay, education and training.  
    • Your college’s career office. The office can connect you with alumni who graduated in a field you’re interested in. Talk with them to get personal and professional insights.
    • A Career Assessment tool can help you choose a college major and point you toward a career track that best fits your personality.

According to a 2016 NerdWallet study, nearly half of surveyed college grads with student loans said they could have borrowed less and still afforded their educations. Twenty-seven percent said they most regretted going to a school that required them to take out loans to afford it.

Doing some research now can help you avoid taking on too much debt so you can have more financial freedom after you graduate. Be sure to try out our College Search & Cost Comparison tool to help you compare colleges and their affordability.  


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