In late October 2015, The Institute of College Access and Success released their report, Student Debt and the Class of 2014. In 2014, 53% of Nebraska college students had an average of $26,278 in student loan debt (our state ranked 26th highest in average debt). That’s a lot of money – just a bit more than the entry salary wage of a truck driver in Nebraska (check out other H3 – high wage, high demand, high-skill jobs at h3.ne.gov). So how much student debt is too much?Student loan ball and chain

A variety of sources cite different advice, but one I’ve seen proposed over and over again is fairly easy to remember: Your total debt at graduation should be less than your starting annual salary at an anticipated job in your field. That should allow you to pay back your debt in 10 years. For example, let’s say you plan to earn a bachelor’s degree in business and finance. And you think you might work as a personal banker, with a starting salary of roughly $34,000. This means you shouldn’t take out more than $34,000 in loans over the course of your entire college career.

Another example that I found helpful comes from Columbia College in Missouri. Their chart estimates your likely monthly payment based on your total student loan debt, and recommends a minimum annual income needed to afford that monthly payment. So, according to their math, if you take out $20,000 in student loans, expect to pay roughly $230 per month over the course of 12 years. But they encourage you to up your income – at $35,000 minimum for that amount of loan debt. But if you want to get even more specific to your situation, use the Federal Student Aid repayment estimator to investigate how much you can take out in loans.

All this talk about how much to borrow is likely leading you to wonder: how do I borrow it? How do you know which loan is right for you? There are a variety of loan options available to students and parents, some with limits, fees, and different interest amounts. Federal loans should be your first priority (they have the lowest interest rate) before seeking out alternative loans, like from a private bank.

How can you set yourself up to take out LESS student loans in the future?

  1. Take dual credit courses as a high school senior. Colleges typically offer classes at a reduced rate to high school seniors. There are current college students graduating a semester early because they pushed themselves to earn college credit in high school.
  2. Get a part-time job – and save as much as you can for college.
  3. Apply for scholarships. ScholarshipQuest is a database containing over 2,000 Nebraska-based scholarships. Create a free account and see what you can apply for!
  4. Educate yourself about types of financial aid – especially student loans. Know all your options – and make sure to apply for aid.

Many students do take out loans – which isn’t all bad! I paid roughly $200 a month on my student loans before I learned about the loan forgiveness program for certain public service professions (cha-ching! and woohoo!). Here’s a list of tips for how to manage student loan debt once you are in the same boat as many of your fellow students.

Good luck!