A new report from The National Center for Education Statistics finds the average amount of debt that students graduate with is skyrocketing. Inflation adjusted, the average debt load is up 60% for 4-year degrees compared to a decade ago. For other degrees, the amount of borrowing is up almost double from 10 years ago.
Almost 2 in 3 students now borrow to get a degree. This is a real train wreck and it creates a scary burden when you realize you have to face potentially 30 years of paying on that debt. It’s like financially tying a hand behind your back for most of your working years.
There is this idea that a degree is worth it regardless of the financial burden it creates. The truth is that with too much student loan debt, there’s almost no degree that’s worth it. You have to make it your mission to cap how much you borrow during college in order to make a degree work for you.
I use a simple, back of the envelope number when people ask me how much is too much to borrow for college. My rule of thumb is as follows: Cap your borrowing for a 4-year degree at the level of your likely first year earnings. That’s the absolute ceiling of what you should borrow.
Some callers to my show owe more than $100,000 in student loan debt. And for people who go to those for-profit colleges you see advertising on TV, it’s not uncommon for them to tell me they have $40,000 in debt.
As is so often the case in life, getting into trouble with student loan debt is far easier than getting out of it! See my related links below for suggestions on how you can get a college education at a Clark Smart price.