How do I know if I have too much student debt?

Calculating a Safe Amount of Student Debt

Consider your expected income upon graduation. A first-year K-12 teacher can hope to bring in about $30,000.
Consider your expected income upon graduation. A first-year K-12 teacher can hope to bring in about $30,000.
© 2009 Jupiterimages Corporation

While it's tempting to borrow as much as you can to pay for school, that's not always the smartest path. It's actually seldom the smartest path, since private loans can subsidize federal aid to astronomical, higher-interest levels that can leave you paying off student loans for the rest of your life.

Job one, then, is to avoid private loans if you can realistically squeak by on federal loans and grants, which often have lower interest rates. Job two is to figure out how much you can afford to borrow from the government.

In general, if you're going to have to put more than 10 percent of your pretax, post-graduation income toward loan repayment, you've borrowed too much [source: Clark]. To decide how much you can safely borrow for school, start by considering these factors:

First, how much will you be making after you graduate? It's not always easy to predict this, but you can usually at least get a ballpark estimate through industry standards and online salary calculators. According to the Web site PayScale, a first-year K-12 teacher can expect about $30,000 per year; a starting civil engineer can look forward to about $50,000; and an information-technology specialist might begin around $40,000. Then compare your projected salary to expert loan guidelines. Columbia College, for instance, recommends no more than $25,000 in loans for someone making $36,720 to $45,900 a year, and up to $50,000 for those earning $73,440 to $91,800 [source: CCIS].

Web sites like Mapping Your Future and FinAid offer simple online calculators to help you decide what size loan you can handle.

Any potential borrower should also consider what other financial needs will need to be met in post-graduation life. If he or she can count on special circumstances like caring for a sick parent, supporting a child or having to pay off other debts besides the student loans, the reasonable amount to borrow might decrease.

For those who can't afford to take out enough loan money to cover the schooling they can't afford, there are some other options. Free money in the form of scholarships or grants are available for those who qualify and can beat out other candidates scholastically, athletically or in some other talent area; and part-time school combined with a part-time job can be a good option for those who have the time to extend their quest for a degree.

If worst comes to worst and the monthly payment is simply beyond your means, there are programs that can help. See "Solutions for Borrowers Who are Having Trouble Repaying Education Loans" on the FinAid Web site to learn more.

For more information on student debt and related topics, look over the links below.

Related HowStuffWorks Articles


  • Block, Sandra. "Graduates get option to repay student loans based on income." USA Today. May 19, 2009.
  • Chaker, Anne Marie. "Students Borrow More Than Ever for College." Wall Street Journal. Sept. 4, 2009.
  • Clark, Kim. "How Much Money Should I Borrow for College?" U.S. News & World Report. June 9, 2009.
  • How much student loan debt can I afford? Columbia College Financial Aid.
  • Student Loans. FinAid.
  • Weston, Liz Pulliam. "How much college debt is too much?" MSN Money.