Student Loan Borrowing - How much is too much

Student loans are a part of everyday life in the United States. The way the system is gamed right now it's nearly impossible for the average student to go to a four-year school without incurring bags full of student loan debt. But it isn't the borrowing that's the issue with a loan, it's the paying back.

What are you going to do with your Life?

Want stress? Or want added stress? The decisions you make before you go to college will color the rest of your twenties and beyond. At eighteen you're setting the financial wheels of your life in motion. Decisions made then need to be with a clear eye to the future. If you have no idea at eighteen what your career will look like at twenty-five or thirty, it's smart not to borrow against it with abandon, isn't it.

Put another way. If you know being a doctor or a lawyer is destiny then roll the dice and borrow with that in mind. You can assume that once out of school you'll step into a reasonable salary, a salary that won't be impinged by student loan bills. If you're not sure what you want to do or what your future salary might be it makes sense not to have a big student loan bill months after graduation.

All of us want to be successful right out of college. We want to take the diploma, run into our chosen field and make a salary commensurate with the wonderful skills we've amassed in school. We'll get a new apartment overlooking the bay, a shiny car in the garage and eat out wherever Mario Batali happens to be cooking that night. Sadly, life doesn't happen that way.

What you need to do is plan ahead. If your career will not land you a big paycheck off the bat you shouldn't take on a large student loan. Does this mean bagging on the idea of a private school? It could. But many private schools will cut their price for the right student. And there are scholarships and grants that can fill in the holes. What it means is to plan ahead so you're not living in your mother's basement for ten years. She won't mind but you want better.

Take a serious look at what someone with your degree is making now. What are apartment prices? How much does a new car or a nice used car cost? What would your total cost of living be a couple years out of school? Add in your student loan bill and figure out if you can survive. Make a few concessions, like a roommate and eating in more often ‚ real food, not takeout ‚ and juggle the budget. From here you should understand what it will take to live with your student loans and without your parents. This becomes the baseline of costs you can take on. It will focus not where you go to school but how much you can spend. While this may seem like a roadblock, it can also be a negotiating tool. Armed with this information you and University administrators can talk openly about what those four years and beyond are worth.

What we're not trying to do is steer you away from spending a lot of money to go to the school of your dreams but to understand that dreams are dreams and reality has teeth. Figuring out what your bills will be years before they hit the shore will make a big difference in how the years after college are spent. If sharing a room with your younger brother is nirvana then don't worry about it but if you want to make positive steps the moment the diploma hits your palm then plan ahead for that day.

Will you be right? Probably not. Most of us don't know where we're going at eighteen. But that's even more reason why you don't want huge student loan bills. Spend what you believe you'll be able to afford at twenty-five because that's when it matters.

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