Blog | Min Read 2

Student loans are scary: How much can a family afford?

Do you know what is scary?! We’re not talking zombies, ghosts, or witches. We’re talking scary student loans! How about these facts?

While those facts may not make parents hide behind their pillow as if they just saw Freddy Krueger, these stats probably will up the worry level for the future college-bound student.

What is a parent to do?

We’ve talked about these facts before, and we truly are not trying to scare anyone (well, maybe a little bit). We want families to give serious thought to their plan BEFORE they start visiting colleges. As financial advisors, we are all on a mission to end the student debt crisis one family at a time–for families to make informed college decisions to “know before you go.”

In our experience, parents have a hard time saying no to their kids when it comes to college choice, and they will “do whatever it takes” to send their child to a college they simply cannot afford. The above statistics prove that point. This pattern has to stop. With over 2,000 colleges in the United States, families can find an excellent school that their child will love.

What parents sometimes don’t realize is the impact on their child’s future when setting a budget becomes secondary in the thought process.

  • It isn’t just about the money.
  • Students need to understand the burden of that debt.
  • Debt saddles graduates for decades to come.
  • Student loans hold people back from being their best and following their dreams–choosing jobs because of salary, keeping them from buying a home, saving for retirement, or getting married and starting a family.

We realize debt free college just isn’t realistic for most families.

Our philosophy is the level of debt should be commiserate with the future income potential–no more than 1x the projected annual salary upon graduation. For every $10,000 owed in loans, the graduate will pay roughly $100 per month on the standard 10 year repayment. If the debt load is $30,000, they’ll pay roughly $300 month and $3,600 for the year. If they make $36,000 per year, their total payments for the year will be roughly 10% of their gross salary. (The federal government’s income based repayment plans require 10% of your discretionary income—not a coincidence.)

You can find estimated annual salaries by careers on PayScale.

We know the facts can be scary. We know debt free college is often not a reality. But we also know how to scare away that monster hiding under the bed and shine a light on a sound college funding plan.

Originally published 10/2018
Updated 10/2020

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