Paying for College: Advice for College Students with Debt

I graduated from college with student loans and credit card debt. I majored in economics in part because I knew I could get a job that would pay enough to help me with my debt. Had I been free to do what I whatever I wanted, I probably would have been an English major. I don’t regret what I did at all. Borrowing money helped me go to the college that I wanted to go to, where I got a great education and made wonderful friends. I totally understand why people want to go to the college of their dreams.

You just have to be smart about it so that your post-college life is great, too. A college degree pays off over a lifetime, but it doesn’t always pay off at graduation. The bad news? Your first loan payment may very well be the same as your last, even 20 years later.

The most important advice I have for any student graduating with debt is to find out what you owe, what the payments will be, and what payment and refinancing options, if any, affect your loans. Your college is supposed to give you counseling on this, but they may not do a great job. Bankrate.com has a nifty calculator that can help. The more money you will have to pay every month, the more money you will need to make upon graduation.

One rule of thumb that’s common in the financial aid world is that you should not borrow more than your first year’s starting salary. If you are going into a field like engineering where starting salaries can be $60,000 or so, you can borrow up to $60,000. If you are going into something like social work or early childhood education, your debt should be less than $30,000. If you can borrow less, obviously, borrow less!

If your debt will be large, then think about what classes you need to take to prepare yourself for a job that will pay you enough to cover your loans. It may mean throwing in some accounting classes, preparing to teach high school history instead of just being a history major, or majoring in economics instead of English.

Maybe you can’t major in something you love. You can still do it as a hobby. I can read novels and talk about them with other people. My bookshelf is stuffed with journals like Granta, The Baffler, Creative Nonfiction, and A Public Space – along with The Economic History Review, because I’m interested in that, too. Your debt may stop you from majoring in art, music, or ministry, but it won’t stop you from painting, performing, or serving at your church. You simply can’t do those full time, at least not right away.

And, hey, being well-rounded is the best thing in life, in the long run.

You may have to be frugal at first. Learn to cook, have friends over instead of meeting at bars, and frequent the library. Frugality is a great skill that comes in handy over and over. And, you may even be able to put extra money into your payments and pay your loan off early.

Beyond getting to go where I wanted to go for college, I found other great advantages to having debt. And they are a little perverse. Because I had to take a corporate job right out of college, I have been participating in a retirement plan since the age of 22. I also worked for a company that offered graduate school tuition as an employee benefit. Both have made a huge difference for me. I gave up some career freedom at age 21 to gain more freedom later. At 46, I have no debt other than a mortgage, and I have some decent savings. That’s the kind of payoff that comes from a degree.

And you can go back to study what you love. You can change careers; I did. I’ve looked into different part-time master of liberal arts and master of fine arts programs. I might very well apply once my kid is out of college.

There’s nothing wrong with a practical major or a practical entry-level job. And it may be necessary for managing your student loan debt. There is a cost to borrowing money, but it does not have to hamper you if you are as smart about your debt as you are about your classes.

Always remember, life is long and strange. Yes, I would have loved it if I could have gone through college without borrowing money, but I can’t say that it was a mistake. The debt made many things possible for me; paying it off gave me even more possibilities.

A white woman with green glasses and gray hairAnn C. Logue

I teach and write about finance. I’m the author of four books in Wiley’s …For Dummies series, a fintech content expert, and an avid traveler. Among other things.

2 Comments

  1. Great great GREAT advice. My son is about to embrace some debt for law school, but he is going into it with his eyes wide open and with his eyes on post-school job options for paying the debt off…And the plan started with not even going to law school unless he got into one of the top schools…

    I am sending this to him, to my other son, who has a job post college (and no debt) and to my daughter who doesn’t get why I want her to major in her favorite arts/drama AND a science/math degree.

  2. I’m thinking that all this sound advice goes unheeded because the typical college student in debt has never had to face up to REAL consequences. Some consequences in life take several years to make their presence known. And then comes having to acknowledge them, get over the denial, the anger, the anxiety, the depression and finally having to settle with the realization that they won’t go away. By that time the college grad is approaching 50.

    A way to speed this up is through dedicated, early on collaboration. Grads should come together soon, pool their debt, pool their resources, launch a business and work the excess proceeds toward paying off the collective debt. Obviously these should be businesses built debt-free. That means sweat equity.

    It’s time for young people to start working on what customers want and not on dreamed of careers that seemed realistic merely by the aura of a rolled up piece of cardboard with a collegiate stamp on it clutched in their carefully manicured hands.

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