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How much is too much student loan debt?

Student calculating his student loan debt
February 28, 2019

By Maggie Tomasek

Paying for college can be a challenge as tuition costs continue to rise at historic rates. For the 2018-19 school year, the average public university tuition stood at $25,890 per year and private college tuition came with an average price tag of $52,500 per year.

As a result, student loan debt in the United States has tripled in the last 10 years and now stands at about $1.5 trillion (that’s trillion with a “T”). Among the Class of 2018, 69 percent of college students took out student loans, and they graduated with an average debt of $29,800.

Although a college degree can help you earn more and do more with your career, a degree at any cost doesn’t always make sense.

Whether you’re an undergraduate or pondering going back to school for a graduate degree, here are some things to consider when deciding for yourself how much is too much student loan debt to take on.

Rule of thumb for student loan debt

Many experts say the rule of thumb is that your total amount borrowed shouldn’t exceed your estimated starting salary after graduation. According to the National Association of Colleges and Employers, the average starting salary for college graduates in 2017 was $50,516 per year.

You can use a salary calculator, like those found on Glassdoor or PayScale, to estimate what you can expect to earn in your field after graduation. If you’re not sure what career you want to pursue, check out some of the fastest growing professions, which can also help you maximize your salary.

Keep in mind there are also some student loan forgiveness programs, such as those for public service and for teaching, which could help alleviate some student loan debt after you graduate. Like anything else when it comes to paying for college, be sure to do your research on these programs before you rely on them as part of your student loan repayment plan.

Think about your student loan repayment plan

After you graduate, you’ll have to start paying off your student loans. While that may seem far off in the future when you’re paying for college, it’s important to understand up front how your student loan repayment plan will work so you’re not taken by surprise. The three most important things are:

  • Interest rate: Have you shopped around to find a good rate?
  • Term: How long will you be paying off your loans?
  • Monthly payments: The average student loan payment in 2018 was $393 per month.

The federal government’s guidelines say that no more than 15 percent of your income should go toward paying student loan debt. Since you’ve already calculated your estimated salary, you can also do the math on how much of your salary would go toward your student loan payments and weigh whether you can make that work. For example, if it looks like half of your salary will go toward paying off student loans every month, you might want to consider a less expensive school.

Down the road, student loan refinancing could also be an option for you to consolidate your loans and potentially lower your interest rate.

Other financial resources for paying for college

Before applying for student loans, don’t forget to consider the other financial resources you might have available to you when paying for college. Do you have a college fund or will you receive family support? Have you applied for scholarships? Do you plan to work while you’re going to college? Have you looked at financial aid options through the FAFSA form?

Once you have a handle on those resources, you’ll have a better idea of how much you’ll need to borrow.

Ultimately, when deciding how much is too much student loan debt, you’ll want to think about your future. Too much debt could affect your other financial goals, like owning a home or having money to travel. But if taking on student loans will help you pursue a career you’re passionate about and open other doors for you, you may decide it’s completely worth it.


Maggie Tomasek is the Social Media & PR Specialist at Alliant. She began her career as a journalist for newspapers in Utica, N.Y., Des Moines and Cincinnati before moving to Chicago in 2009. Maggie is an eight-time Chicago Marathon finisher and a lifelong creative writer with a passion for comedy. Her mom instilled in her a great sense of fiscal responsibility, and her big sister told her to throw that responsibility out the window every once in a while in the name of life experience. So far, that combination of financial advice has worked out pretty well for her.