Published in: Student Loans | Dec. 21, 2019

How Much Student Debt Is Too Much?

We are committed to full transparency as part of our mission to make the world smarter, happier, & richer. You should know that offers on The Ascent may be from our partners - it's how we make money. That transparency to you is core to our editorial integrity, which isn’t influenced by compensation.

You don't want to borrow too much for college and get in over your head. Here's how to know where to draw the line. 

It's easy to wind up in over your head with regard to student debt. Given the cost of college today, taking out loads of student loans may seem like a reasonable way to obtain your degree and set yourself up for a lucrative career. But at what point do you say "enough" on the student debt front? How much debt is too much?

A female college graduate holding her diploma and looking serious.

Image source: Getty Images

The danger of overborrowing

Taking on too much student debt can have serious repercussions. For one thing, the more you borrow, the more you'll have to pay back, which could constitute a major strain on your financial resources once you graduate. 

Furthermore, going overboard on student debt could result in a situation where you're forced to delay other important milestones and goals -- things like buying a home, getting married, or even retirement. This could be the case if you spend so many years repaying your debt that you're forced to hold off on funding your nest egg. That's why you must approach your student debt carefully -- and make sure the sum you borrow is an amount you think you'll be capable of paying back

What will your monthly debt payments look like?

The amount of money you're required to pay each month on your student loans is a function of the amount you borrow times the interest rate attached to your loans. As such, it pays to find a useful online calculator and play around with different borrowing scenarios. 

For example, see what your monthly payments will look like if you take out $20,000 in student loans, compared with $30,000, $40,000, and $50,000. You'll also need to play around with interest rates. Get an idea of rates from this list of private student loan lenders and consult this list of current rates for federal loans. 

From there, you'll need to weigh those hypothetical monthly payments against your income potential. And much of that will depend on your major. If you're planning to go into a more lucrative field like finance, engineering, or computer science, then you can perhaps afford to graduate with a higher debt load. But if you're planning to be a teacher or social worker -- professions associated with lower to moderate wages -- then you should proceed with added caution. 

What will that extra debt buy you?

Another point to contemplate when deciding how much student debt to take on is what the loans will actually do for you. Imagine you get into two different colleges that are comparably ranked, but you'll need $20,000 in loans for one and $40,000 for the other. If the quality of education is similar, then there's probably no point in racking up an extra $20,000 in debt. 

On the other hand, if the more expensive school offers you access to a higher quality education and a specialized program that's likely to lead to a thriving career, then it could pay to take on an additional $20,000 in loans.

So how much debt is too much?

Ultimately, there's no definitive point at which student debt crosses into the "too much" territory. If you take out $20,000 in loans but can't manage those payments, then it's easy to argue that $20,000 was too much for you. And on the flip side, you could graduate college with $100,000 in debt and score a fabulous job with a salary that's more than enough to help you pay off those loans in a reasonable timeframe. 

The takeaway? Crunch numbers and use your judgment, and avoid adding to your debt pile unless there's a pressing reason to do so. The less debt you graduate with, the easier it'll be to pay it off, so do your best to determine where you need to draw the line.

Save thousands on student loan interest

Many people are missing out on lower student loan interest rates because they don't take the time to research their refinancing options. Our picks of the best student loan providers can help you save thousands of dollars in interest over time. Click here to uncover the best-in-class student loans providers we could find in 2020.