How to Weigh Student Loan Debt During the College Search

The college application and decision-making process can be a very exciting time as you picture your life on campus and dream about the future. But it can also be a significant source of anxiety, especially when it comes to paying for tuition and related expenses — and thinking about how much you may need to borrow in student loans.

Despite the rising cost of college, the good news is that postsecondary education is still generally a good investment for most people — even when it’s necessary to borrow student loans to cover a portion of your expenses. In general, you should not be afraid to borrow to pay for college if that will allow you to gain the skills and knowledge needed to earn more money and build a career.

[Read: How to Pay for College Using These Overlooked Strategies.]

The best data available consistently shows that more education leads to higher-paying jobs. In fact, according to the U.S. Bureau of Labor Statistics, median weekly earnings in 2019 for workers with a doctoral degree were more than triple the amount earned by those who didn’t earn a high school diploma. Meanwhile, a bachelor’s degree holder earned $1,248, compared with $746 for a worker with only a high school diploma.

While the data is reassuring, it’s equally important to consider whether you personally are making a wise investment when choosing a school and program of study, especially if you need to borrow student loans to finance your education. One reason for this is that some professions simply have more earning potential than others, and the more you earn the easier it likely will be to repay any debt you have after graduation. In addition, some schools do a better job than other of preparing students for a career, which can help you get the job you need to repay your debt.

Therefore, when you consider colleges, you may want to think about whether your degree will be worth the amount of debt that you need to take on to finance your education. Here are four things you should do as you weigh student loan debt during the college search, along with tools to help you make decisions:

— Go beyond sticker price.

— Estimate the full cost of earning a degree.

— Consider if you will be able to afford monthly payments.

— Compare financial aid award letters.

Go Beyond Sticker Price

The sticker price of any given college or university can be quite high. Fortunately, most schools offer financial aid packages that can help lighten the load if you qualify. In fact, you may even be able to qualify for enough financial aid at a more expensive school to make the portion of tuition that you will be responsible to pay comparable to that of a far cheaper school.

Before you rule out a school you love because it seems too expensive, check the school’s net price calculator to see whether you may be able to lower the sticker price with financial assistance from the school.

Net price calculators are available on a college’s website. You can enter information about yourself to find out what students like you paid to attend that college the previous year after taking grants and scholarship aid into account. This estimate can give you a better understanding of the amount that you might expect to pay using savings, student loans or a combination.

[READ: What Does Cost of Attendance Mean and How Does it Affect My Student Loans?]

Once you look at the estimate, check with a financial aid administrator at the college to confirm or give you a more accurate assessment of the aid you may be able to receive. Keep in mind that financial aid packages can change from year to year, so be sure to ask about what you can expect in subsequent years as well.

Estimate the Full Cost of Earning a Degree

When you consider the amount of debt you need to take on to attend a college, assess it in terms of earning a degree rather than just paying for the first year of school. Students and their families often take a semester-by-semester or year-by-year approach to financing higher education, but it’s important to go beyond that so that you don’t end up overborrowing.

One reason for this is that financial aid packages can change. You may not need to borrow as much in your first year as you will in later years. Thinking about all four years starting from the decision-making stage can help you plan for this so that you are not caught off guard.

The U.S. Department of Education maintains College Scorecard, a good tool to use if you want to better understand the cost of earning a degree and more. Simply look up the school that you are considering for insights about financial aid and debt, including the average debt after graduation and an estimate of the typical monthly loan payment. You can also get other useful information about a college, including programs, costs, graduation rates and average salary after completing a degree.

These data points can help you assess individual colleges and compare your projected outcomes across different options.

Consider if You Will Be Able to Afford Monthly Payments

Once you’ve narrowed your choice down to a few schools and have a general idea of how much you may need to borrow, you might want to think about whether you will be able to afford your estimated monthly student loan payments.

The College Scorecard is a good place to start, because it provides an average monthly loan payment associated with a college. The U.S. Department of Education’s online Loan Simulator takes that one step farther and can help you get an idea of what to expect in real terms based on what you estimate you may need to borrow. The tool can’t predict your future payments with 100% accuracy, but it can give you an idea of what to expect.

Simply enter your estimated total federal student debt along with other information about your situation. You can play around with these indicators to see what your monthly repayment amount would be in different scenarios. The tool can use salary data from your college to help you predict your monthly payment amount based on a projected salary.

This tool is still in development, but soon students will also be able to use a feature that simulates borrowing more money and allows them to compare different borrowing situations by seeing how college choice affects how much money in student loans may be needed .

[READ: How the Work-Study Program Can Cut Student Loan Borrowing.]

If federal direct student loans are not enough to meet your borrowing needs, you may want to explore and compare different scenarios to fill the gap. For example, if you have a parent or guardian who is eligible for a federal Parent PLUS loan, you can consider whether this is the right loan for your family or whether you are able to save money by borrowing from a nonprofit or state-based lender that offers a lower interest rate.

Compare Financial Aid Award Letters

Once you have one or more financial aid offers in hand, you’ll have a much more accurate picture of your financial obligation in your first year of college. If you’re still deciding between two or more options, you can use this information to project your real costs and compare plans to pay.

A tool maintained by the U.S. Consumer Financial Protection Bureau can help you understand your financial aid offer and make a plan to cover any remaining costs. For each aid offer, you can estimate how much you’ll need to borrow and whether you can afford that debt.

This tool can help after you have already laid the groundwork by applying to colleges that you think you can afford and that will be a good investment, because it allows you to compare offers from different colleges. That makes it easy to consider student debt as a factor in your final college decision.

More from U.S. News

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Why You Should Look at a College’s Student Loan Default Rate

11 Steps to Minimize Student Loan Debt

How to Weigh Student Loan Debt During the College Search originally appeared on

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