How much should you take out in student loans?

Answer: it depends.

More specifically, it predominantly depends on what you’ll likely be earning after graduation and the sort of lifestyle you want and with which you can be comfortable.

What’s the average starting salary for your major or career path? (A number of online resources make these numbers available – literally Google “average starting salary (your) major” for a start.) Take the average and decrease it by 10% to be conservative. Then divide that number by twelve to get your gross monthly pay. Multiply that number by 73-85% (depending on your tax bracket) to get your income after taxes. Now multiply that number by 15%. That’s the amount of your net monthly pay that you can comfortably allocate to student loan payments.

(When I first graduated, my student loan payments were just over 20% of my after-tax take-home pay, which was realistic and manageable with a few budget adjustments – like spending a lot less on transportation. I was comfortable giving up driving, but many wouldn’t be. It’s all personal preference.)

What if it looks like your student loan payments are going to be more than 15-20% of your pay?

You have two options:

First, if you’re pursuing a field you love that doesn’t pay a lot, and don’t want to leave it just to chase a salary, consider a more affordable education – either by transferring to a less expensive program, picking up student work or earning scholarships.

The second option is to consider pursuing a more lucrative career. Remember that resource you used to research the starting salary for your major? Explore other fields and compare numbers. If it makes sense, choose one that provides an income that would more comfortably support your loan repayment.

Whatever you choose, just don’t be like an author I once chanced upon, who wrote an entire book about her financial strain during her twenties after studying English at Harvard. She wrote several hundred pages blaming the school, her industry, and her employee for making her broke.

Average debt of a Harvard grad? About $100,000

Average starting salary for English majors? Just under $38,000

(That works out to $2,700 in monthly income to cover $1,200 in student loan payments each month. Honey, the odds were really against you from the get go. Do your research.)

Need a little help making these calculations easier?

Try this