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Borrowing for College: How Much is Too Much?
By Sandra Guy
September 04, 2008
Too much of a good thing can be bad, as Shakespeare demonstrated, and the axiom is true of student borrowing for college.
Students may believe it is difficult enough worrying about the big exam next week or whom to take to the spring dance. Yet students must stretch themselves and imagine a much greater consequence, years into the future, when they consider how much money to borrow to pay for a higher education.
After all, the average price of a private college has hit $88,872, and a public college, $23,344, according to the College Board’s “Trends in College Pricing 2006” report. The implications are enormous.
The first step is to try to avoid borrowing in the first place, experts say. “Students should thoroughly explore scholarships, grants and community service awards before they begin borrowing for college,” said Marianne Ragins, author of Winning Scholarships for College and publisher of ScholarshipWorkshop.com, based in Centreville, Virginia.
The next step is to set up a budget based on the salary you’ll likely make after you graduate from college, Ragins said. Students can check average starting salaries in their field at Web sites such as Salary.com and the U.S. Department of Labor’s Occupational Outlook Handbook.
Most importantly, students must view each dollar they borrow for college as a dollar that they will be unable to spend to buy such essentials as a car, a house, or to start a family, and a dollar that they cannot put into a retirement-savings account. “It’s important for families to work that through, to write down numbers and understand what you are signing up for,” said Rita Johnson, a financial advisor at the Millstone Evans Group of Raymond James & Associates, a brokerage firm in Boulder, Colorado.
If there is ever a time for discipline and independence, this is it, experts say. That’s because lenders are in the business of urging students to borrow as much as possible, and won’t warn of the financial consequences.
Also, beware a list of preferred lenders from college financial aid offices. By shopping around for lenders, students and their families may find better deals on their own.
FrankT131
almost 2 years ago
all good comments below. Does anyone who cares bother to read what we are expressing. Every time I apply for scholarships you never hear from them again. If there is SOOOOOOOO much money out there?? How about sharing for the studendts trying to make a difference. I also have great supportive parents that are helping me right now and LOTS of pray
zacheckmann
almost 2 years ago
if only mom and pop were rich
EmilyW878
about 2 years ago
here's a question: how do you know how much you might make after graduation? i mean, even if you already have chosen a major, you might not know what jobs you can get with that or you might not get a job relating to your major. i mean, how much is too much? i can estimate how much debt i will incur, but you can't possibly expect a high school student to be able to know how much they will make when they graduate college. i might be stuck at McDonald's for all i know.
SarahK5
about 2 years ago
What about careers that require a tremendous amount of debt (provided that you are by no means rich)? I want to go to veterinary school, and I know I'm getting myself into a lot of debt, but what other options are there. I have been applying for scholarships like crazy, and to no avail.
jlistsweeney
about 2 years ago
I have also twice read another rule of thumb: do not borrow more than you expect to earn in your first year out of college. For a wild-ballpark of the monthly payment on a student loan, take 1% of the loan amount (e.g. a $30,00 loan = $300) and that's what you'll spend per month. So...$300/month in debt on a student loan is actually WAY too much debt, per the sample first-year-out salary shown in this Fastweb article. (This article says that ALL debt payments (car and housing too) should not exceed 1/3 of your monthly take-home.)
Account Removed
about 2 years ago
I agree with Chad. There was less than a paragraph devoted to actually giving advice on how much is too much.
ChadC138
about 2 years ago
The title is somewhat a misnomer.
JasmineB600
about 2 years ago
I transferred to a community college from a private because I know my dad could not pay. It sucks but parents should not dig a hole because of inability to pay for a certain school. The child should comprimise and possible transfer their junior/senior year.
AleshaP8
over 2 years ago
Ditto! I know parents going into "deep debt" with college funding because they did not want to be embarrassed or tell their child that they could not afford that particular college after receiving financial aid offered. I was so stunned by this! NUTS!!!