<p>$40k of debt may not be too much for some students. It all depends on the student, family support, marketability, and luck. If a student is coming from a family who is already in financial difficulty and isn’t going to be able to help repay loans, get ready for the job market, it behooves such a student to keep the loans down low. It’s just one more monkey on the back. Do the math on a $40K loan. That’s 10 solid years of payments with probably another 4 in graduated amounts. The student is going to be in his mid 30’s before the loan is discharged. The way the economy and job markets have been in the last few years, kids have been putting off loan payments and will therefore owe more for longer. It can mess up their credit, some job opportunities and cause financial stress for those kids who can least afford this. </p>
<p>My neighbor’s daughter borrowed about $40k to go to a private school that she absolutely wanted. She graduated with an engineering degree and has been employed making a living wage. She still complains and begrudges the loan she is paying, but she can afford it. She has also received aid in terms of clothing, finding an apartment, support during job search, getting a car, household goods, extra checks, help from her parents in these 6 years out of school. She’ll be fine. My friend whose daughter is working part time at a coffee shop while the family has lost their house and is having financial trouble out the whazoo is a whole other story. She can’t pay back any debt right now as she is barely making ends meet and her family can’t help her an iota. In fact, she’s helped them out here and there. </p>
<p>There is no magic number that is too much debt. I use the Stafford and Perkins limits simply because that is what a student can get on his own name. Getting a co signer is really having someone share the credit history and responsibility of that loan. Might as well have the parent get the PLUS if that is the case unless the rates are that much better. The cosigned loans I saw were 9% in interest and no deal, in my opinion.</p>
<p>There are some situations where taking the very high loans is the best avenue. There are such cases. But too many families are taking this route without thinking long and hard about the long term ramifications and the pain of repaying these loans. Students are often naive about this reality. They see the now of the college they want, and are not thinking about the long years of repayment and are wonderfully optimistic of job prospects and life after college. I was listening to a shining eyed young girl who desperately wants to go to a small private college that will cost her family over $60K in loans over the Staffords she can take, and it is absolutely insanity for her to think that she will come out of there with prospects of making anywhere near what the loan payments are for her to go there when she could swing a local state school loan free. No way you can convince her and her parents desperately want her to get what she wants. She’s a great kid and a good student, and her parents have tried to get her all that she wanted and were pretty successful. Now she wants to go away to this college. It’s not like it’s some crazy idea or anything. It’s education. It’s a good school. Lots of kids she knows going there. Beautiful campus. Beats the CUNYs hands down in terms of the college vision they have. I don’t blame them a bit. But can they afford the differential? Is it worth the differential? What is the family and the girl losing in the future to obtain this dream college?</p>