Comparing Salary to Debt
How do you know if you can afford a particular college or how much is too much to take out in student loans? One key indicator recommended by experts is a monthly student loan debt-to-income ratio of 8%–12%. An easier way to think of this is that total student loan debt, for all years of college, should be no more than the expected first-year salary.
Iowa Student Loan’s Student Loan Game Plan is an interactive online tutorial that walks students through this concept, as well as several other important points about borrowing for college, including:
- Stories about the issues faced by real-life borrowers when they took on too much student loan debt.
- Common choices students make that can affect their overall student loan debt level, including how long it takes to graduate, working during college, living arrangements and monthly spending.
- A realistic starting salary and yearly borrowing level for specific college majors.
- The ability to see how making voluntary interest payments during college affects total estimated loan repayment and monthly payment amounts.
- A sample monthly budget for after college that includes income based on the user’s choice of major, student loan payments and national average expenses.
- Tips for reducing expenses and the need to borrow to pay for college costs.
- An action plan to commit to actions students can take before and during college to reduce overall debt levels.
Make your Student Loan Game Plan now.