How Much College Debt is Too Much?

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It’s difficult to know exactly how much college will cost you. You’ll have to take into account tuition and fees, along with your expected financial aid. You’ll also have to think about variables such as housing costs and the price of textbooks.

Whatever the price tag of your dream school, there’s a good chance you’ll pay less. The average cost of tuition in 2009 was $35,000, but students paid an average of $21,000. That’s only 60 percent of the full cost.

With such a range of costs, most students don’t know what amount they’re actually responsible for until they’ve nearly decided on a school. Until they receive their final financial aid packages, students and their parents can only estimate how much they’ll pay out of pocket.

At this time, even though you only have a ballpark figure to go by, you should begin thinking about how much debt you’re willing to incur for your education. You should be prepared to accept or decline a financial aid offer almost as soon as you receive it. You won’t be given a significant amount of time to consider it and crunch numbers, so you should already know your fiscal limitations.

As a general rule, total student loans should be less than your expected salary immediately after you graduate. As with other estimates, this is a gray area. You may enter college unsure of what you want to do after graduation. And with an ever-changing economy, even if you know your anticipated occupation, you will still have to do some guesswork.

When deciding the maximum amount you’re willing to borrow for school, it’s best to err on the side of caution. In most cases, student loans will follow you for the rest of your life until you pay them off. Unlike personal debts like credit card debt, student loans cannot be negotiated down the road, and not even filing for bankruptcy can get rid of them. But keep in mind that there is the option for student loan debt consolidation.

If you find you can’t afford your monthly student loan payments, the loans will continue to accrue interest and late fees for the rest of your life. Because of this, you need to be absolutely sure that you’ll be able to afford your debt payments regardless of any occupational decisions or economic fluctuations.

If you already know you and your family won’t be able to afford your student loans, consider going to a less expensive school such as a community or state college. Going to a public school for the first two years and then transferring to a private school can save thousands of dollars without compromising your education.

You should also look into getting more scholarships and grants to replace loans. Search online for these forms of financial aid, and ask your teachers to recommend grants. Since scholarships and grants don’t need to be repaid, even the smallest ones can help you pay for college.

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