How Much Should You Borrow For College?

Igraduated from law school with $55,000 in school loans. It took me nearly 20 years to pay off that debt. And here’s the really crazy part of it all–many in my class had far more in loans, some exceeding $100,000. And this was in the early 1990’s!

While my law degree has been very valuable, this experience has caused me to look at a college education very differently than I did years ago.

The other day my daughter informed me that she planned to attend The Ohio State University. Now I’m a diehard Buckeye. I grew up in Columbus and both of my parents graduated from OSU. I have fond memories of my dad taking me to see the likes of Cornelius Greene and Archie Griffin play in The Horseshoe. But we don’t live in Ohio anymore, and my daughter won’t be going to OSU. Why?

The cost of out of state tuition, room and board at OSU is $34,974. As much as I love OSU, it ain’t worth that kind of money.

And that raises an important question–how much, if any, should you borrow to attend college? With a son about to graduate high school and a daughter in 11th grade, my wife and I will be answering this very question soon.

So today I want to cover two related issues. First, a rule of thumb on how much you should borrow for college. And second, a quick look at how much certain degrees are actually worth.

The Borrowing Rule of Thumb

Here it is. According to, the most you should borrow for college should not exceed the amount of your first year of income after graduation. So how did they come up with this benchmark?

Most federal loans give you a standard 10 years to repay the loan. By limiting your borrowing to no more than one year’s salary, you are dedicating no more than 10% of your income to school loans. This rule of thumb means that you should consider the type of degree you will obtain.

I’m always amazed when I hear of somebody who spent $200,000 at a private college to get a degree in art history. I’m sure it was a great experience, but let’s get real. On the other hand, if there is no doubt in your mind that you are going to be a nuclear physicist (just saying) then you can clearly increase your borrowing total.

And that brings us to the highest paying and lowest paying degrees.

Some Degrees and Schools Just Aren’t Worth The Money

If you already know you are going to bite the bullet and look into student loans, you will need to give serious consideration to the amount of the loan as it relates to the value of the education. Some areas of study will not net you a high paying career. Be sure to do some research into different occupations and what they pay.

When choosing a field with potentially high earning income, you don’t want just any school. Let’s say you know you want to be an engineer. Look at the schools that are highly rated in that field. Don’t go to a school that doesn’t have a respected engineering department.

On the flip side, if you have always wanted to work in child welfare or social work, then know that many of these jobs are with non-profit agencies and typically don’t pay high salaries. For many, the reward here is not the income potential, but rather the value of what you are doing. This being said, you should consider a good state school rather than a private school with a crazy high tuition which will pile up your debt. Staying in-state will always give you the biggest value.

Here are the Top Worst-Paying College Degrees in 2011 according to PayScale:

  1. Child & Family Studies: Average starting salary $29,600
  2. Elementary Education: Average starting salary $32,400
  3. Social Work: Average starting salary $32,200

On the flip side, here are the Highest Paid Bachelors Degree for 2011:

  1. Petroleum Engineering: Average starting salary $80,849
  2. Chemical Engineering: Average starting salary $65,618
  3. Computer Engineering: Average starting salary $64,499

If you are unsure what you want to do “when you grow up,” attending a community college is a good option and will likely give you some direction. Often attending for two years and transferring to a four year college will allow you to complete your required courses at a lower cost per credit hour. Just be sure the program is accredited and that your credits will transfer.

And if you want to know what your desired job might pay, check out PayScale.

Topics: Education

9 Responses to “How Much Should You Borrow For College?”

  1. Great piece, Rob. I like that rule. I got a masters in accounting and left with around $25K in loans (even after having scholarships and grants). My first salary was $36K back in 1999.

    I’d be interested to know how you handled the let down with your daughter. Did she understand? Where is she going to go?

  2. I agree with the rule of thumb of not borrowing more than your expected starting salary in general. Borrowing more than that can make it difficult to handle the debt and makes the whole financial ROI of college questionable.

    However I also don’t think that you need to be afraid of student loans or zero debt is always the ideal answer. Taking out student loans can help you get a high paying job faster. I’d much rather be a 23 year old engineer making $60k with $50k in debt than be a 23 year old working still working for $30k a year and still struggling to save up enough money to go to college without borrowing.

  3. What about foregoing college and opting instead for one of the careers that don’t require a degree? Plumbers and electricians are well paid and you make money instead of taking loans during your apprenticeship. And you can use the skills to start your own business later. Pilots make a good living and get to see the world. Get a jump start on a career as a pilot by joining the Air Force where you will also get paid to learn. If you are entrepreneurial why not start your own business? Many wealthy people go that way by owning their own business. There are numerous other opportunities and with the power of the internet it is easy to research and find other options to college.

  4. Sabrina Hope

    Great article. I currently have $62,777.63 for a BA, MA, and a certificate in Corporate Communications. I tried the PayScale website, and after entering the required information (experience, education, desired workplace and job title, etc.) it calculated my average salary at $63,000 for a Corporate Communications Manager. Which is great and spot on! That means I borrowed the same amount as I can expect to make in my first year. Only problem is I can’t work right now. I have three young children, so I need to stay home with them. And even if I eventually get that $63k job, it’s still going to be 10 years to pay back my student loan. If I could do it all over again? I would have gone to college for a 2 year program.

  5. My friend who graduated with me did exactly the same thing. She was at a state university for the first year and then transferred to an Ivy.

    Great tip on estimating how much debt one could take for college degree. I am including a summary of the article for our readers at

    @Brent I was sacred for a moment until i read your article, do give your kid the option to go to college.

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