Here’s how much to borrow in student loans

More … than 44 million Americans currently have payday loans with an average debt hovering around $ 33,000. Of course, you probably know at least one person who’s taken a lot more than that.

While the majority of students have between $ 25,000 and $ 50,000 in payday loans there are still around 600,000 people who owe more than $ 200,000 in student debt, according to ValuePenguin.

And the trend of graduating with student debt shows no signs of slowing down. About 60% of current students aged 18-24 say they are responsible for covering more than half the cost of their studies, according to the Ascent Student Loans survey.

But for high school kids and their parents, it can be intimidating trying to figure out what the right amount is. There is a simple rule of thumb you should keep in mind, says Carrie Schwab-Pomerantz, financial advisor, chair of the board and chair of the Charles Schwab Foundation. CNBC do it.

“You should never take out more student loans than you think your freshman’s salary is,” she says. So if you think you’re going to make $ 50,000 right out of college, you shouldn’t have more than $ 50,000 in student loans in total.

And while student debt is considered “good debt” because it is usually low interest rate and helps increase your earning potential in the future, too much can really hurt your financial stability after graduation. ‘university.

“Good debt is bad debt when you drown yourself in it,” says Schwab-Pomerantz. She adds that while she understands that many people need payday loans to fund their college dreams, it’s important to keep debt manageable so you don’t run into financial difficulties later.

“I understand people want to stretch, but you don’t want to drown yourself in debt,” she says. If you end up taking out huge loans, you might be forced to take on credit card debt for everyday expenses like groceries and rent. In fact, millennials between the ages of 25 and 34 have an average of $ 42,000 in personal debt each, excluding mortgages, according to Northwestern Mutual 2018 Planning and Progress Study.

The biggest source? Credit card debt. According to Northwestern Mutual, card balances are a quarter of the average Millennial senior, while student debt was around 16%. In addition, millennials between the ages of 25 and 34 are also the most in debt compared to other generations.

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