How much student debt is too much

Learn things that must be consider while taking a student loan. Like calculation of loan payments and plan how to use debt to income ratio to overcome debt. To know how much student loan is too much.

Updated by Gowtham Ramesh on 9th June 2019

The student loans make a significant role in whether they are going to get a college degree or unable to go for the college at all.

Besides the access to the student loan gives it also comes with an enormous debt that will hunt you down for up to 25+ years even after graduation with accompanying the loans that your parents took on your studies behalf of you.

Certain steps are available to measure your student loan limits and keep it monitored the debt low.

Down the lane of time, America has been surrounded by tons of Student loan debts. It's very obvious to see that everyone is accepting the fact that it has gone out of hands at some places in America. You may come across a lot of solutions provided to overcome it. Now, student loan debt issues have been tremendous default rates and with monthly payments. Well, how much student loan debt is too much?

Table of Contents

How to get all your college needs without taking out much debt

prep work will help you in getting things corrected. The student loan will help and effective in paying for college.

While looking for what to borrow bring it out with a researcher mind which includes all your plans and gets a focused mindset to get all the data of the college you like and do a comparative price analysis on it.

To support the financial aid that you are going to get keep all this and do complete research.

By which to find the college which will go with your desired academic and career-oriented goals with a more affordable rate to get you done without much burden.

Is it good to take a student loan?

A student loan is good and if the student loan can help a student to go for college. Student loan debt is not like your regular debt where you purchase or consume it. well, its an investment on you for your future. If you are getting money to go for college for a degree which will bring you all the physical and mental benefits which come with it. Then its an investment of course.

Well, all student loans are more of the same. To get a more notified decision you need to understand these basics the expected income that you get with the term of your student loan. Understanding these will help you determine the affordability of the loan.

How to calculate student loan payment?

With the information derived from your goals and budget, Assuming an earning income that you will be paying at each month.

Let's see what your expected salaries that you get after completing the graduation.

You can head to The Bureau of Labour Statistics Occupational Outlook Handbook which is a great online platform to look on the career that is there and whats moving up and heading down with their average salary figure. By looking at this you can decide on what to take and move with it.

After getting your expected salaries the next is to get a calculation of the amount that you are borrowing and the money that you will be earning.

For all your other expenses and debt, you need a standard debt to income ration which you need put down your monthly student loan payment to 8% of your total monthly income.


If your total monthly income is said to be around $3300 then your monthly loan payment should not be more than $267.

Never allocate more than 20% of discretionary income to the student loans. The main action to follow these steps is to maintain the student loan debt and pay it back within a specified timeline.

How much student loan debt is too much?

Well, how much debt is too much in student loans will be based on their family circumstances. Knowing what can you afford with a narrow down of schools which are providing you the best financial support within your budget and where to reach. Will help you in the debt

There are several types of loans available under the student loan category finding the best which suits you accordingly to provide help and support in the long run.

These types of loans are

  • Federal Subsidized

  • Federal Unsubsidized (or) Private loans

As a parent, there are a lot of things to take care and look after things like Retirement, Paying off a home loan, and Looking after kids.

How much more finances they need to provide?

Providing their first child education and bringing them through the college with the impact that it might have on their other children. Look for the Big picture with everyone in account while getting down with any finance. Working out the details of the loan with its future track of duration and payments will help you understand better.

The key point to remember about the Federal Direct PLUS loan is after you have received approval on the loan. Here they never look into your debt to income ratio or the FICO score of yours. They will just look at your credit and they don't look for an unfavorable credit at all.

Currently looking at the PLUs loan might look like a more manageable but the interest rate is at 7% it will be over the timeline of 25-30 years which can be twice of what you have initially borrowed.

How to avoid overwhelming debt?

Discussing the key point on how to avoid overwhelming debt is advisable. The federal direct loan only gives a student to borrow $27,000 for 4 years on their own.  Anything more the specified amount you need a cosigner from the parents either through the federal Direct PLUS loan or the private loans. Well, it's in the hands of parents to interpret on what to choose and look.

Look for the interest rate, What is their fees? What are the repayment options, and how easy are they? to get the best from the lender private or a federal go for the shortest repayment term. Some tips to be secured from debt are as follows:

1) Be careful about the interest rates

2) Never go above your annual salary

3) Research Majors and Careers

4) Understand the Repayment plan

5) Go for federal loans than the Private Ones

6) Look for Scholarships and Grants

7) Career oriented loan forgiveness

9) Don't spend money from student loan


Paying attention to the interest with the federal loans as loans are unsubsidized and the interest is said to accrue. For parents who say that they are not going to pay for the student loan until they are done with the college.

The loan will move high even though you are not paying, check whether at least you can pay the monthly interest.

If you couldn't pay for the interest of the loans that you are obtaining at the time your kid is in college then you need to consider and if you are planning to repay it while in college, be careful not to have any pre-payment penalties.

Never go above your annual salary

Generally, advisors warn the students who take loans more than what they can earn in their initial first-year salaries after graduation. If the average student loan debt is $37,172 then the starting salaries should match or more than that number.

Till the salaries are more than your debt and it's good and can be handled for a 10-year repayment plan. where $37,172 loan with an interest rate of 5.7% which will give you about $407 per month for the following 10 years.

If the salaries get a fall then you are in total trouble of handling your debt and monthly payments.

Never borrow more than what you make in the starting of your job for the first year of college. Let's assume that you make $35,000 as an entry-level job after completion of your college then doesn't take more than $35,000 in total for your student loan.

Research Majors and Careers

You are in need of getting an estimated starting salary to work on your borrowing but if you are not clear on what job you are going to take after the completion of college and no clue on the future career then you cannot able to get whether  or not you will get a job as soon as completion.

There are always risk elements available in your career and you don't have any clue or idea about it. Before jumping into the student loans get on the interest area of yours look into sites as Bureau of labor statistics and get an idea about the salaries and growth of the jobs that you prefer.

You can opt for a college major which will be giving you high on return.


Computer engineers have an average salary of $70,000

Liberal arts major has an average salary of $40,000

Don't always go the higher salaries if your passion or interest in the liberal arts but make sure not to take more than $40,000 as a loan to pay for college or school.

Understand the Repayment plan

Before getting into a student loan understand about a repayment plan such as:

  • What is an Interest rate on your loan?

  • What is my expected or total monthly payment will be?

  • What's the term of my loan?

  • How much time you will be paying off loans?

Students are always in a feeling to go for the highly ranked colleges but in the run, they forget to think about the tuition fee cost an important thing to remember.

Get a better understanding of the numbers and strong decision in student loan. If you end up with a $700 monthly payment, Go for the less expensive schools.

Go for federal loans than the Private Ones

Federal loans generally have a lesser interest rate than private student loans.  The interest rate for the graduates is between 3.4% to 6.8%. But, in the case of private loans, it might be much higher.

Further, Governments provides more protection to the borrowers comparative than the private banks. Loan Forgiveness or Income-driven repayment options are available with federal student loans.

Similarly, the government limits the borrower for dependents of $31,000. While students can go for private loans to get the difference. As banks generally require a good credit score, parents as a cosigner on the loans.

If you have crossed the federal limit consider whether student loans are going to be the right choice. The experience from the college may not be worth the additional years of repayment that you are going to get or a big burden on your parents.

Look for Scholarships and Grants

A great to lower the amount that you took a student loan is going for the Scholarships and grants. It's essentially free money which is offered to you which you don't need to repay it.

There are plenty of scholarships available at the local and national level. A lot of websites provide you scholarships and helps you on the funding possibility which will reduce the reliance on student loans.

Career oriented loan forgiveness

The federal and state governments provide you both the loan forgiveness and assistance programs that are available in certain types and areas of occupations. 

occupations which provide Career oriented loan forgiveness are as follows:

  • Federal agency employee

  • Public service worker

  • Doctors or Physicians

  • Lawyer

  • Automotive professionals: SEMA Loan Forgiveness Program

  • Nurse

  • Teacher

  • Ameri Corps, Peace Corps volunteer organization workers

  • Dentist

  • Pharmacist

  • Veterinarian

Part-time jobs from college

Look for part-time jobs that can help you to bottle down the student loan debt from exploding.

By making out some extra income you can step out of the loans that cover your living and part-time jobs are the best way to manage time and keep the credit flowing.

Things to consider before borrowing

1) Well, it's not that much-complicated check and goes through these points for clarity.

2) Research for salaries after completion of college.

3) Look for cheaper alternatives to get a degree.

4) Don't borrow more than what you can make in the first year.

5) Estimate your payments and never exceed your 10% of monthly total income.

6) Borrow when you are really in need of educational expenses.

7) Make use of all the resources from the federal financial aid by the parent and student before going for a  private student loan.

8) Where federal financial aid is easy and has more options like repayment.

9) where it gives options buts never use it as exploitatively on getting more money.

Discuss with both parents and students to go for a flexible one rather struggling one where the debt for 25 years in the future. Going for a smart choice move will help you with the graduate with a degree and a budgeted student loan. If you cannot the dreams might be haunting you in the form of debts for a long period.


  How much debt is acceptable for a college student?

Generally, it depends on the student's eligibility, from the federal government's loans. on which 20 term years where the payment will be around $150 per month. A look into the Bureau of Labour statistics unveiled that it's the same amount a household pays for their used car. which can be slightly more than 1/10 of average housing expenses.

  How much debt can I have?

The main point to consider here is the debt to income ratio with the percentage of your income that you have in the form of debt. A general rule of thumb is that the total debt should not be more than 10 %-15% of what's your take home money(excluding all the taxes).

  How much student loan debt is normal?

Well, as listed in the Forbes than around 44 million borrowers have a total collective of $1.5 trillion owe in the form of student loan debt here in the U.S. With an average of $37,172 for the classes of 2016.

  How much is a lot of debt?

The total monthly income is a total of every month rate before taxes, insurance, social securities, etc. well these are deducted from the paycheck of yours. Let's see you pay $1000 on the mortgage, $500 on the student loan, $1000 on credit cards and $500 on the cars loans which give you a total recurring debt of $3,000 per month.

  How much money can I borrow for college?

The maximum and highest amount that you can take is with all the factors considered depending on whether its a private or federal loan and the years you in school. Undergraduates can get up to$12,500 as annually and $57,500 in total for federal student loans. Graduate students can get a borrow up to $20,500 as annually and $138,500 in total.

  What is a good Income to debt ratio?

A good debt to income ratio should be equal or below than 36%. 36% rules the states that Your debt to income should never cross 36%. Where a 36% can give enough room than debt to income of 43% where leaves you less vulnerable to change from your income and expenses. If you can manage it efficiently then debt to income at 18% it's really great.

  What is the 28/36 rule?

The Rule 28/36 is often said in the household of your spending where it should be a maximum of 28% of your total monthly income on the household expenses and should never rise over the 36% on the total debt services that you have which inclusive of housing and other debts like car loans.

  How much can you take out in the student loans per semester?

If you are an undergraduate student then the maximum amount you can borrow for every year on the direct subsidized loan and Direct unsubsidized loan comes from $5,500 to $12,500 each year. Based on what year you are in school and dependency status.

  what happens if you have too much debt?

The delay in bill payments generally arises when you don't have the money to pay for it. If your debts are more than what you can afford for every month you are definitely in a serious of trouble with a lot of debt to deal with. Making delay in payments will make things worse as it might bring you late payments with a higher rate of interest to charge.

  How long are the students in debt after college?

Its approximately around 70% of graduates leave the college with student debt. Which accounts for 44 million American borrowers with a total of 1.4 trillion as student loan debt. A federal student loan with the standard repayment plan expected rate of borrowers to pay off their debt within less than 10 years.