Last updated: June 15th, 2022

How Much is Too Much in Loans?

Tips on taking out reasonable loans

DecidED recommends taking out no more than $5,500 per year in loans while in college because that is an amount you could reasonably pay off. Research shows you will need to make about $54,600 after you graduate to cover those monthly loan costs and still afford other living expenses.

Tip: Some students find themselves needing more money to cover gaps in their total college costs. Luckily, many degrees could land you a job making more than $54,600 immediately after college.

Not sure what salary to expect after college? Salary Potential by Payscale

Not sure how loans work? Check out our Ultimate Guide to Loans.

There are a few things you should consider before you decide to take out more loans. Check them out below.

1. Some majors may take longer to complete school than others

Medical doctors, lawyers and other majors with a high predicted income may need to complete eight to twelve years of school before graduating and getting a job. Even if you don’t want to be a doctor or a lawyer, the need for graduate school is common in many careers. This means that there may be a delay in when you begin working. You may also need to take out additional loans to pay for graduate school.

Tip: Before you decide to take out extra loans to finance your undergraduate costs, make sure you know how many total years of loans you’ll have before you start earning money to pay them back.

2. Students who stop school still have to repay their loans

School can be difficult and life can be unpredictable. For this reason, many students leave school at one point or another. However, if you have student loans and leave school for at least six months, you will have to start making your payments on those loans, even if you plan to eventually return to school. This can complicate students’ lives further and make it hard to eventually return to college.

3. Taking out lots of loans can become more complex and less student-friendly

Federal subsidized and unsubsidized student loans are the best loans on the market due to their low interest rates and forgiving repayment terms. Once you max out these loans (about $5,500 per year), alternative loan options get more expensive and harder to obtain. You or your family will have to pass a credit check to be eligible for other types of loans. Interest rates can be double or even triple those of the federal loans.