How Much College Debt Do You Think is Reasonable?

[haapai]

Here's one of Liz's article on the subject.
articles.moneycentral.msn.com/CollegeAndFamily/CutCollegeCosts/HowMuchCollegeDebtIsTooMuch.aspx

She gives two general guidelines. The first is to borrow no more than half the (gross) entry-level salary. The second is to limit borrowing to the point that monthly loan repayments are no more than 10% of gross monthly income.

I've heard similar suggestions in other places.

[8 Bit WWBG]

...:::"The first is to borrow no more than half the (gross) entry-level salary. The second is to limit borrowing to the point that monthly loan repayments are no more than 10% of gross monthly income.":::...

Both of which would rule out a LOT of colleges. Going to certain colleges is like living in a HCOL area -- the safe rules of thumb just won't cut it.

I agree that a college that costs $40k/year is not a prudent investment for someone who wants to go into social work. You also never know how things will pan out. I make the same amount of money as some co-workers who spent half or 1/4 as I did on college. I'm sure there are also some graduates from those colleges who might not get access to opportunities that graduates from my alma mater did.

DF has some good sized SL debt, but we are chipping away at it. She is certainly glad to have had the opportunity to go to college.

[haapai]

FWIW, I had to do a double-take when I first saw the half-of-entry-level-gross metric. I've also been hearing double that thrown around as a rule of thumb.

[zibazinski]

I heard that you should only borrow as much as your first years salary will be.

[readsalot]

Our DD will get out of school with a bachelors degree and owe around $20,000.~ we are paying for the rest. Good thing since her double-major is art & journalism!

[zibazinski]

Police are not hiring, period. Same with firefighters. My BFF's son FINALLY got hired as a TSA worker after his 4 year CJ degree and then police school. No jobs ANYWHERE as he was willing to re-locate even.

[Poppet]

Police are not hiring, period

My nephew's a rookie cop. Went though training over the summer.
Oregon was hiring.

[formerexpat]

Police are not hiring, period. Same with firefighters. My BFF's son FINALLY got hired as a TSA worker after his 4 year CJ degree and then police school. No jobs ANYWHERE as he was willing to re-locate even.

[/size]

States and counties will be pretty intent on getting the more expensive public service workers to retire and replace them with the new hires in the next 10 years.

I think the 1x first year salary is a good metric but not hard and fast.

I think personality, objectives in life and career choice needs to be taken into account.

If you're in a soft degree that may result in an unstable working career, I'd lean towards saying yes, 1x is the max you'd like to go.

But, if you're in a field that is always in high demand and are motivated by career success then I'd say you can likely afford more than the 1x first year salary. Mine was 2.5x.

[DVM gone riding]

I was going to say up to 1 yr salary-kind of min in most advance fields I think-or up to what you would expect to make 5yr out. I borrowed 81k for 8 yrs. I made 70k my first full year out. I think it was worth it, but I know people in my field that borrowed closer to 200k-I think they should have chosen a different way or a different field.

[Cookies Galore]

Jan 22, 2011 10:14:13 GMT -5 @readsalot said:

Our DD will get out of school with a bachelors degree and owe around $20,000.~ we are paying for the rest. Good thing since her double-major is art & journalism!

She'll be fine! I majored in journalism and borrowed a little over $19,000 in Stafford and Perkins loans. I'll have the loans paid off in time for my 32nd birthday and the payments have never been difficult. And the degree is being used. ;D

[❤ mollymouser ❤]

ROTC is a great way to get college paid for, if your child is interested in the military.

[motherto2]

If you go the student loan route, learn from my experience. Have your child take out the student loans (subsidized and unsubsidized) that they qualify for, and then if you still need a parent loan, make that the last priority. Hard lessons we all learn with the first child, but DD up and announced that she wanted to join the Army last year. Bitter pill to swallow (but absolutely no one would have ever seen that one coming ) but if the loans for her college had been in her name vice mine, the Army would have paid them off. Even though she was the only child in school, the loans were to the two colleges she attended (first year at private college, 2 years at public university), her SSN and name all over the paperwor, etc. they would not pay them off since they were in my name. Learned from that, and when DS went off to college this last August, anything that I could put in his name, I did. He's been the one that always wanted to go in the military, so at least I had forwarning from the first one.

[cronewitch]

I would look at the starting salary then subtract 30K and then multiply by 5. So say you want to do something that starts at 40K you could afford a 50K loan by living on 30K for 5 years. If your starting salary was 50K you could afford twice as much or if you start at 35K then half as much.

I figure you can make 30K in some parts of the country without college we pay our receptionist that much. Then the expenses of college is to improve earning. So if you don't work 4 years and take on debt you need to earn much more than those without college educations.

[midjd]

I think 1x the (low-end) first year salary for a bachelors and 2x the first year salary for graduate degrees is reasonable.

Of course, you have to be paying attention to potential market bubbles... I entered law school in the fall of 06, when the average starting salary for a first-year associate in NYC was $145,000 to $160,000. Cut to June 2009... about 25% of my class had jobs lined up at graduation (compared to 80-90% in years past), and none of those were the fabled $145,000 gigs. Many of my fellow graduates (and myself) took out $100,000+ in student loans with the idea that we'd quickly be able to pay them back after a few years of firm work. Anyway, the moral of the story is don't base your borrowing on what you THINK you'll be able to make - base it on what you KNOW (as much as you *can* know) you can make.

And try to avoid private loans - if there is any consolation in owing $127,000 in SLs, it's that they're all at a reasonable interest rate and qualify for income-based payments.

[readsalot]

She'll be fine! I majored in journalism and borrowed a little over $19,000 in Stafford and Perkins loans. I'll have the loans paid off in time for my 32nd birthday and the payments have never been difficult. And the degree is being used. ;D

Read more: notmsnmoney.proboards.com/index.cgi?board=finance&action=display&thread=2114#ixzz1Bs35XTAn
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.

Thank-you for the reassuring post!

[Deleted]

The challenge with the student loan to starting salary projections are basing those calculations on the interests of a 17 or 18 year old kid.

Admittedly, I made all of the wrong decisions about borrowing for my education - although I didn't really dig myself into a hole until graduate school, when I had a much better idea what my ultimate profession would be.

But at 17, I thought I wanted to be a physician. What I was borrowing would have been prudent for a future earning potential as a physician. But it turns out, I don't really like sick people, so I chose a different career. I love my work, but it doesn't pay nearly as well.

The OP's son may go into law enforcement - or something completely different. Help your kid to the extent you can afford. Encourage them to take community college courses - at minimum when they are home for the summer if not their full first two years. Make them get a part-time job.

Beyond that, well, sooner or later the student loans get paid off.

[Deleted]

Snerdley, pass attention to the "not guaranteed" part. Parents and grandparents in Alabama have learned the hard way that the fine print means what it says. Rather ironically I bought into PACT two months before they closed it--one year for the oldest grandson (he's 7 now). I'm leaving the $$$ alone for now since that is what his CPA father suggested I do. My only other alternative is a 529 plan with the state since I took a tax deduction.

I KNEW $7000 for one year of college at any state institution (think Univ. of Al, UAB, and Auburn as well as the smaller ones) was a good deal 12 years from now. I am still hoping that it will work out. If he goes to CC and uses this for his 3rd year, he could graduate with a student loan for one year. He lives close to a local state university and 20 minutes from UAB.

I wish I could have done it for all of them (now there are four more), but I guess the state did me a favor closing it. No way I could have afforded $35,000 toward their education. And that's with PACT, which underestimated.