1 Million Dollars

Wednesday, September 7, 2011

Is student loan debt good or bad?

Yes, or it depends. How is that for an answer? Student loans can be helpful in getting through school yet they can mess up your life for ten to thirty years if you borrow too much. There is a rule of thumb that students should not borrow more than they expect to earn their first year of work but the recession many graduates cannot find work, what then?

You can extend your student loans from 10 years to 30, if you have more than $30,000 worth of debt but that will increase your interest, or you could do graduated repayment but then in the future you will have to pay more per month. If you can't pay the minimum when you graduate, why do you think you can pay more in three to four years?

So how do you decide how much debt, in the form of student loans, you can afford? Of course, you do want the total amount to be less that your first year's wages but what else? Personally, I would try to keep the debt less than $15,080 which is full time at minimum wage or if you are working though school your current annual wage, whichever is more. That would allow you to have some wiggle room when you have graduated, yet is large enough to make a major difference in your finances during school.

What does everyone else think? How much student loans is too much? When does student loan debt change from good debt to bad debt?


  1. I agree with everything you said in your post. I did a couple of posts on my blog about this and this is a very hard subject. I can't believe some people graduate with a couple hundred thousand in debt!

  2. I am also a student so I understand the situation. Get a part-time job, avoid splurging on clothes, minimal night outs, stay on a dorm instead of getting an apartment... the list can go on and on if you are willing and committed to keep your student loan at the minimum.

  3. Y&T, depending on the area, renting a room or sharing an apartment may be cheaper than dorms. It really depends on where you are.