Our oldest will be working hard to help cover expenses beyond his scholarship. As it stands, he will use summer savings and a work study job to pay about $3000 for his first year out of pocket. We will cover a similar amount. He will end up with about $4500 in subsidized loans. Knowing that each year will cost a little more, that about $1500-2000 of scholarship is only good for one year, etc - it looks like he should be able to get through with $20-25k in debt. Is this a reasonable amount for an average, frugal and responsible, student?
Yes.
Is this for a freshman? I thought the maximum in subsidized loan for a dependent freshman was $3,500…
How is he getting $4500 in subsidized loans? I thought the limit for subsidized was $3500. Anything above that is unsubsidized.
His can take the following in federal loans each year in his name
Freshman $5500
Sophomore $6500
Junior $7500
Senior $7500
But all of that cannot be subsidized. Freshmen can have $3500 in subsidized and an additional $2000 in unsubsidized.
Anyway…to your question…debt for all four years under $25,000 should be manageable.
Sorry - $3500 unsub, $1000 perkins
I always somehow mess up the question when I finally decide to ask one 
Thanks for the feedback.
It’s ok!
If you qualify to the AOTC https://www.irs.gov/individuals/aotc, you’ll get a $2500 credit on your tax return. We get it and I’m saving it up, it’ll be 10k in 4 years and I’m going to give to the kids to pay down their loans, so they will get out with less than 10k.
@SeeksKnowledge - thanks! It does look like we will qualify. I love saving it to put towards it. In our case, it may be that we save it to put towards the next years cost.
@seekingknowledge - in looking at the AOTC - am I correct that the amount we can claim would be his tuition, fees, and books (bu not room and board) less all his scholarships?
Our D graduated with $20,000 in student loans. She is choosing to live at home to reduce expenses and be able to pay down her loans.
We are happy to provide room and Board while she works long hours, and she is budgeting well and making more than the required minimum payments each month.
She is also putting away some savings and IRA funds. This means she will take longer to pay off debt, but we agree with her plan.
She is looking at five years to pay off her $20,000 student Loan debt.
Our comfort level was $20,000, but if we had gotten to year three and she had to take out more, we probably would have borrowed up to $25,000. Her school experience was great, so we would not have wanted to force her to switch to lower cost school.
If her experience was not so good, we might have tried to persuade her to switch to lower cost school with less debt.
Thanks @powercropper - that is exactly what we have told him. He can move back home if the circumstances/job work and pay down if he wants.
@seekingknowledge - in looking at the AOTC - am I correct that the amount we can claim would be his tuition, fees, and books (bu not room and board) less all his scholarships?
^ Yep that is right. Also money paid with loans count towards your 4k cap you have to pay to get the full $2500 credit, but 529 monies do not count towards the 4k. I really have to make sure I watch that we don’t use all the 529 money cause then we wouldn’t get the credit. Just something to be aware of :-).
Just wanted to add, the first year we took the unsub loans for 2k and when I got my tax money back I right away paid those loans off. I had DD pay the interest monthly, which didn’t amount to anymore than maybe $36 total, but it was just good to make her aware of having loans and needing to pay them. There is a disconnect with kids and realizing they have to pay these loans back. I guess until they actually experience it it’s just an unknown concept to them, so I thought it was a good lesson.
“it looks like he should be able to get through with $20-25k in debt.”
Do you mean total debt for four years?
“Is this a reasonable amount for an average, frugal and responsible, student?”
If this is the total amount for four years, yes (especially if he is in a major that leads to a job after four years).
Agreed. Loans of $28K or less (which is the allowable amount for student loans) should be manageable debt for most graduates.
@DadTwoGirls - yes, he hopes to pay as much as possible along the way to end up with $25k or less in student loans when he graduates. He’s doing CS major.
I think his plan sounds good. He may even make more than $3000 next summer if he either works 40+ hours per week or gets a job that pays more because of his CS skills.
No one wants the loans, but sometimes they are necessary. D#2 will end up with about $15k in loans. D#1 will be at the $20+k level, but it’s the only way she could continue in school.
With a CS major, I’d think he’d be fine with that much debt. In many cases there is really no alternative to taking the maximum amount of offered federal loans or close to it, and I would not hesitate to do that if I needed to.