Figuring Out How Much to Borrow for College

Posted by Lindie Johnson on Jul 28, 2014 4:00:00 PM

The cost of college tuition has taken a drastic turn upwards in the past few decades, increasing the amount that most students will have to borrow for college. While there is nothing wrong with taking on some student loan debt as long as it is done responsibly, it is important to be aware of how much you will be making straight out of college, and how much per month you will be paying back on your student loans.

What are your career plans? 

If you do not know exactly what you want to major in or pursue as a career your first year of college, it might be best to err on the side of caution and not take out too much in the way of loans to begin with, especially if you have any reason to believe you may go into a field that typically pays lower wages. General education classes your first year is a great way to feel out what you like and what you don't like, hopefully leading you to make a decision about what you'd like to major in by your second year.


Once you have an idea of what you'd like to do after college, and what you want your major to be, you can start taking a look at some hard numbers to help determine how much you will need to borrow in order to pay your tuition and graduate. Professions that have higher starting salaries can allow you to borrow more money in order to get your degree as opposed to those with smaller starting salaries.

As a general rule, you probably don't want to borrow any more than 90-100% of what your expected starting salary will be once you graduate. By keeping your total amount of money that you will borrow for college under this number, you are keeping your monthly payments low enough that you should be able to afford them on your salary. The payments will be even easier to make the longer you are out of college since you will hopefully be getting promotions and raises which will make the percentage of each paycheck going towards student loan repayments smaller.

How much can I  afford to repay? 

If you do have an idea what you'd like to do as soon as you start school, great! Knowing an approximate starting salary for your desired job will help you make a decision about student loans before you even step foot in the classroom (Calculate your earnings and max borrowing for all years here). When you know what your starting salary should be before starting, you can borrow for college keeping that number in the back of your head. 

In addition to tuition, you will also want to be able to have enough money for room and board, which can sometimes come close to the amount of tuition you pay directly to the school every year. On-campus living can be surprisingly expensive, with your dorm room being pretty comparable in price to an off-campus apartment, and your dining plan will probably not be cheap either. Moving off campus and preparing your own meals may save you a little bit of money, but you will then have increased living expenses in the form of utilities and transportation to campus.

While the majority of students should be able to get under the 90-100% borrowing suggestion, you can help yourself out by getting even a part time job or paid internship during you first year or two of college. This will reduce the amount of money you need to borrow for college, and give you valuable work experience that could help you land a job in the future.

Anyone going into, or already in college, should do some research into how much they can expect to make their first year. This is the best baseline to work with to determine how much you should be borrowing for college, and it can help give you a realistic estimate of what you need to do to become financially secure after you graduate. Start your research here

Topics: Borrowing for College