<p>Students or parents, how much is the college student in your family expected to contribute toward their education?</p>
<p>I would not want my kid to have more than 20-22,000 in debt for an undergraduate degree. I would rather have my kid attend a community college and then transfer to an instate 4 year before letting him take on more debt.</p>
<p>I tend to think of debt load in one of these ways.</p>
<p>1) Debt Service: Loan payment / Gross Income
How much will the loan payment be divided by monthly gross income. $1000 per month loan payment has a different significance to a $2000 vs $5000 per month gross income. 1000/2000=50% 1000/5000=20%</p>
<p>2) Debt/Equity:</p>
<p>How much is the total loan in relationship to Net Worth. Student loans are for investments in education.</p>
<p>Student loans/Total Net Worth</p>
<p>Example:
$20,000/ $50,000=40%</p>
<p>$20,000/ $500,000=4%</p>
<p>no more than $20,000 should be in loans for an undergraduate education IMO</p>
<p>So far, we're footing the bill. (Second child still in the process - we'll see.) We gave our kids a limit ($25K/year) and that is what we've agreed to cover. As parents, we've been saving, and have no interest in taking on additional debt at this time.</p>
<p>When planning student debt I think here's one plan for students:</p>
<p>Students: figure out how you would pay it back. </p>
<p>Start by using the calculator here:</p>
<p>Estimate your monthly payments based on various amounts you might borrow. Then works backwards. </p>
<p>Estimate your salary out of college (hint - shoot low). Then try to estimate your living expenses - rent, health insurance, car payment, car insurance, car maintenance, food, clothes, taxes, etc. </p>
<p>Now, do you have ANY money left over for, say, a movie ticket? A vacation? A kid?! (Don't forget, at a minimum, you're apt to be still paying this when you are over 30.)</p>
<p>It really depends on what you expect to make when you get out and how much support you can get at that time. Figure out your monthly payment and find out how much graduates from your school with your major are getting in terms of first jobs. If you are an engineering, accounting, nursing major, the numbers can be higher than if you are sort of majoring a a number of things and will end up scrambling to major in getting out. Someone in that position may want to take additional courses when the first jobs start pointing out some career directions, and you aren't going to be able to do it with too many loans. Also if med school or some professional school is on the horizon of thought, you might not want to load up to federal limits, as it will limit you when it really can count. Also some of those private loans may not be so generous about repayment deferrals if you decide to continue with school. And if mom and dad are not going to be able help out financially, or job prospects at home are lousy, you are going to need more money than someone with family that can help out and live in a city where employment possibilities are better. My son's good friend was loaded with loans, and could not find a decent job where his folks lived, but could not afford to live on his own in areas where there were more opportunities. It's as though debt begets more debt, and can really limit. It's not so much an absolute number that is a limit of what a student should borrow, but what that student can likely support given goals and opportunities when he graduates.</p>