Student Loans: How Much Should You Borrow?
When it comes to the amount of how much you should borrow for your education, there are many things to consider, the Consumer Financial Protection Bureau says.
First, how much will you be getting from any scholarships or grants that you have applied for? Have you looked into family assistance, or maybe getting a part-time job or a roommate or two?
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Next, you should do some research to see what the starting pay is in the profession you would like to go into. As a rough estimate, you should not accumulate more total student debt than you expect to earn as a starting annual salary upon graduating or you leaving school.
As with any financial planning, the first place to start is to create a budget for not only the current school year but for your total expected time in school.
It goes to follow that with each year you are in school and you take out a student loan, your debt will continue to increase. As a rough estimate, you should try not to accumulate more total student debt than you expect to earn as a starting annual salary when you have completed your studies, or leave school.
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As a good rule to follow, you should allow up to 14 percent of your gross monthly income from your starting annual salary to go towards your student debt. But how can you get an idea of what your annual starting salary will be? Contact your college’s career center. They can assist you in finding resources to determine the salary you might be able to expect when graduating in your major.
You should not borrow the maximum amount just because you can. You should only borrow just enough to cover such items as tuition, books, and room and board. All other expenses should be paid in full by either work earnings or any other sources of income.
You should also keep track of how much you have borrowed in student loans as you continue in your college career. Your source for keeping track of your federal student loans is the National Student Loan Data System (NSLDS).
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If you need to take out private student loans, your school’s financial aid office or the lender will be able to assist you with the information you need.
Just like any financial decision, only you can make the choice on how much debt you can take on.
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