Often times the key to avoiding too much student loan debt is understanding how much student loan debt you can safely afford to have. Below you will find some helpful tips on student loan debt projection, and how to know when you are borrowing too much. It goes without saying that the least amount of student loans you have to take out, the better, but often times for most students funding college without student loans is not an option.
1. If you’re a current college student, it may be difficult to calculate your projected salary/income for once you finish school. However, you can use salary and job-based websites to get an idea of what a starting salary is for your intended profession. Most financial experts recommend that your monthly student loan payments should not exceed 10% of your expected monthly gross income once you graduate college, and you should never borrow more in student loans (total) than you expect to make your first year out of college.
2. If you’re a parent of a college student, who is taking out PLUS loans to help your child pay for college, most financial experts will recommend that all of your debts (including mortgage payments, credit cards, car loans and education loans) should not use up more than 35% of your gross pay.
3. Once you start borrowing student loans (both private and federal), keep track of your debt. It’s easy to get confused about how much you owe, particularly if you borrow from a number of different student loan lenders.
Avoid taking out anymore student loans then you absolutely need, and avoid spending your private student loans on unrelated expenses. There are plenty of scholarships, grants, and other loan alternatives out there that can help supplement your college costs.
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