03/20/2023
I am so proud to see Nancy Goodman, founder of College Money Matters quoted in the latest issue of U.S.News & World Report. It has been a privilege to work with Nancy on the College Money Matters brand, website and all marketing efforts. I am so proud to be on Nancy's team and see the fantastic impact the organization has on students and their family. What a great mission!
Read an excerpt below:
An Imperfect Rule of Thumb
Every situation is different, so it's difficult to provide a one-size-fits-all answer to the question of how much student loan debt is too much.
One rule of thumb some experts recommend is to avoid borrowing more than your post-graduation starting salary. If you know what you want your career path to be, you can use the U.S. Bureau of Labor Statistics Occupational Employment and Wage Statistics database to get an idea of what you can expect.
But like all rules of thumb, this approach is just a starting point to determine how much debt is too much for you.
You May Not Know What You Want
"When we met with 18-year-olds and asked them about this, they laughed in our faces," says Nancy Goodman, founder of College Money Matters, a nonprofit that provides resources to help students and their families make informed decisions about paying for college. "Many don't know what they want to be when they grow up."
Even if you do know what you want, that still doesn't mean it's set in stone. "The job market might change, or your interests may shift to another field," says Jay Fleischman, a student loan lawyer at MoneyWise Law.
The Future Is Uncertain
There's no guarantee that you'll land the job you want, and even if you do, monthly payments can still feel oppressive if your debt burden matches your salary.
For example, let's say your first job out of college offers $30,000, and you borrow that same amount at an average interest rate of 4% – the average of federal student loan interest rates over the last four years. On the standard 10-year repayment plan, that gives you a monthly payment of about $304.
That comes to about 12% of your gross income of $2,500 per month. But with federal and state taxes, your monthly take-home pay may be closer to $2,100 if you're single – leaving you with about $1,800 per month for rent, utilities, groceries and other living expenses. Depending on where you choose to live, your student loan debt could leave you living paycheck to paycheck or worse.
"One shouldn't borrow based on an uncertain future expectation," says Fadl Al Tarzi, CEO of Nexford University, an online school. "Also, the pressure of having to pay back loans can impact one's career trajectory. Graduates are pressured to accept certain roles, and even pursue certain career paths, out of pressure to pay back their loans."
Read the full article: https://money.usnews.com/.../how-much-student-loan-debt...
For more information about College Money Matters go to: https://collegemoneymatters.org/
