The short answer to that question is: as little as possible. Student loans are a tool to an end–getting a degree or certificate. But once you have received that certificate, you don’t want to be bogged down by debt that saps your income and slows down your pace towards a level of financial stability. College or trade school should help you move into the next stage in your life, but you don’t want debt to hold you back.

While you want to incur as little debt as possible for your education, in the long run, education can lead to a better career, broaden your horizons and give you personal satisfaction. Education is valuable not just for a healthy bank account but for having well-rounded knowledge and feeling like an informed citizen with many options in life. Some amount of student loan debt may be a perfectly wise choice. Your education is an investment in your future, but a loan is money you must repay later. Don’t weigh down your future with too much debt.

The general advice on student loans is–to paraphrase the finance site The Motley Fool–don’t borrow more than you can afford to pay back. Take out just enough to cover your costs, even if you are offered more than you need in loans. 

Before you look at loans, try to get the maximum in scholarships and grants, which are funds that you won’t ever have to pay back. You may qualify for a Pell Grant, scholarships based on your achievements, state education grants, and institutional grants based on your financial need. Different schools may offer different amounts of need-based aid, which can help you minimize your loan amounts.

Further Reading:

College Grants: A Brief Introduction

Make Your College More Affordable With College Scholarships

According to the Consumer Financial Protection Bureau, you should aim to leave school with the total in loans owed being no more than the annual salary you expect to make in your first job. If you think you will make about $50,000 as a starting salary, the total of all your student loans from all your years of school should be less than $50,000. 

Here are some very general estimated starting salaries for graduates with a bachelor’s degree in these subjects by academic discipline:

Broad CategoryProjected Starting Salary*
Computer Sciences$75,900
Math & Sciences$66,760
Social Sciences$61,173
Agriculture & Natural Resources$57,807
Source: National Association of Colleges and Employers

*Salaries projected for Winter 2022

Within each general area, there can be a broad range of expected salaries. For instance, you would earn more if your business degree is in finance rather than human resources, but both fall under the general discipline. Plus, you may not know precisely what you want to do when you graduate. Part of the process of education is to discover more about yourself. But it would help if you had a good idea of your general direction as you enter higher education and invest time and money toward a possible future career. 

With trade schools, make sure your starting salary estimate is realistic for jobs in your area. Some trades pay better than others, and some locations have more demand for particular skills. If you are training for a profession where you will be essentially starting your own business, such as being an independent hairdresser at a salon or working as a plumber, consider what the actual earnings will be after your business costs. Also, when starting a trade, you may only find part-time work when you first get out. Plan ahead and minimize any borrowing so that you can practice the profession that interests you and also have a good life. 

For a professional degree, like law or physician training, your expected salary is higher, and you may therefore incur more debt that will be manageable to pay back. But if you want to become a public defender rather than a corporate lawyer, your expected earnings will be much lower, so take that into account. With master’s degrees and higher, don’t overestimate the salary bump you may see with the degree. If you take out large loans to get the degree, you may struggle even harder to break even if you receive only a modest salary increase.

Calculating Your Student Loan Repayments

One way to think about your future student loan debt is to calculate your payments before you take out more loans. The Federal Student Aid site of the US Department of Education is a trusted place to start your calculations. You can access their loan simulator and click “I want to simulate more borrowing.” Another nonprofit organization with a good calculator is Mapping Your Future.
There are many student loan calculators on the internet, but be cautious, as some may lead you to private student loans, which have a higher interest rate than subsidized or unsubsidized federal student loans. Remember that student loans are unsecured debt; in most cases, you will be responsible for paying off your student loans even if you declare bankruptcy. Not paying back your loans can have serious consequences, and you only want to take out loans with monthly repayment amounts that will be affordable on the income you expect to make.

There are many ways to think about your higher education, and it is easy to get excited and sign on for more debt than you realize. You may be so eager to start school that you don’t pay enough attention to the details. But just as with any significant purchase you will make in your life, spend some time to run the numbers and think through your possible future lifestyle and job options.

Here are some ideas for keeping your student borrowing to a reasonable level for your goals and life:

  • Look for scholarships, grants, and other financial sources that you won’t need to pay back later. Talk to your school’s financial aid office, your family, and consider any additional money you may have to help pay for school.
  • Think about your projected earnings, and make sure the loans you take out will be reasonable for your potential income.
  • Consider the lowest-cost college for your intended major. This may not be the school with the lowest “sticker price,” as some schools with higher tuition may give you a better offer of institutional grants to make paying for the rest of your expenses much more manageable. You can consider attending community college for the first two years of school as long as your credits will transfer to a 4-year college if you intend to get your bachelor’s degree.
  • Plan to be comfortable while studying so that you can concentrate, but don’t spend on extravagances like expensive apartments, cars, or vacations. You should aim for a lifestyle conducive to learning but as free from day-to-day concerns as possible. Don’t use your student loans for anything else. 
  • Take out federal student loans first, and only take on private student loans if necessary. Compare interest rates and terms carefully. Get the advice of trusted family members and talk to the financial aid office for help figuring out all your options.
  • Consider working during your education if you can manage study and work easily. This can help you defray some costs, but be careful not to overextend yourself and lose your focus on your education.

Your situation is specific to you, so look honestly at your expected financial situation before taking out loans. Education is an investment that can pay dividends in higher earnings throughout your life, but student loan debt can interfere with your happiness if you take out more than you can readily pay back. If you do your research and consider your options carefully, you can make an informed decision about your education that will set you up for a successful and satisfying life.

Should I take out the entire loan amount I qualify for?

Not necessarily. You may be offered more than you really need, and it is tempting to use that money for something you want right now. Carefully read your student financial aid letters from colleges, and review the numbers to ensure their estimates of your costs seem on point. Adjust the figures as necessary, and then subtract your grants and scholarships from your total expenses. The amount left is what you need to cover, but you may be able to find other sources of aid without taking out the maximum in loans.

Further Reading

Reading Your College Financial Aid Offer

Will the government excuse my loans if there are problems with the school?

In most cases, the government will not excuse your loans, even if some issues with the college made it difficult to complete or use the degree you signed up for. There are highly publicized cases where a school flagrantly violated the law, and the federal government canceled student loan debt for its students. But this is the exception rather than the rule. Plus, if you took out private education loans, the federal government cannot cancel the debt–you would have to work it out with the lender.