Expert Suggests Limiting Debt to Earning Potential
Jared Pickens, senior lecturer in finance and Certified Financial Planner, advises that if students must take out loans, they should make sure that their payments will not be more than 5- or 6 percent of the gross salary they can expect to earn after graduation. That means a student who can expect to earn $50,000 after graduation should not take on loans that will cost more than $200 a month in payments.
Pickens said students should carefully research salaries and job markets in the fields they plan to study before deciding how much to borrow.
“Remember, student loans are one of the only debts that you cannot get rid of. They’ll be with you forever — even if you file bankruptcy,” said Pickens, director of the undergraduate program in finance and managerial economics.
High student loan debt also can limit career options, he said.
“Some people have to work high pressure jobs forever because of the loans they took out,” Pickens said. “Student loans will force you to work a certain job. If you’re careful with student loans, then you get to choose the career.”