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How much student debt is good debt?

I have to take federal unsubsidized loans. #finance #JULY20

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Zoey’s Answer

Hi Sam! I think this really depends on your situation. Try not to think of loans negatively. After all, they are helping you earn a degree for something that you are hopefully going to really enjoy doing in the future! Also, government loans are not required to be paid back until your degree is completed. This allows you to complete your degree without the stress of a financial burden. There are also so many scholarships online that go unrewarded because they just aren't applied for! I recommend checking some of those out, and apply for as many as you can. The worst that can happen is you may not get it, but you won't be losing anything in the process. I hope this helps, and good luck on your college journey!
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Brendan’s Answer

When taking out student debt you have to consider a few things. First, what type of loan is it and how much? You need to look into your schools tuition and fees and then think about if the investment is worth it? Also take into consideration your future salary and expenses.
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Jackson’s Answer

Hey, it really depends on your situation. Think of student loan debt as borrowing money to start a business - the business is you. You need to think about what the return on investment is from your degree. If your degree will allow you to make a lot more money, then it's probably wise to take out loans. If graduates with your degree have low expected earnings, try to limit debt.

For the question of how much, you'll want to check out your school's net price estimate calculator to see how much you need.
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Samantha’s Answer

As someone who had to take out student debt, I would first do everything in your power not to have to take out debt! First, I would look into whether your test scores qualify you for Bright Futures or any similar scholarships. There are so many scholarships on the web that you should spent time researching and getting familiar with, there is free money that could be yours! Also, if your high school offers AP classes you can pass exams and take less college classes for a fee.

I would also suggest getting a job and/or internships throughout college. Try to pay out of pocket before taking out student loans. If you can, try living at home or renting as cheap as possible.

If you do have to take out student loans, make sure you have a game plan when you graduate. Determine the estimated salary range for your career path and the time it'll take to pay off your student loans. Dave Ramesy is a great inspiration and explains debt in an easy way to understand!
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Doloris’s Answer

This depends on your personal situation and your expected return on your college investment. While it is essential to choose your major based on passion, you should also consider the lifestyle you desire for yourself and your spending habits. Student loan payback is a huge financial responsibility and may significantly impact your personal finances when you begin repayment.
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Yasemin’s Answer

Hi Sam! I think any amount of debt is something to keep in mind but by taking some precautious steps, there shouldn't be too much worry. You wrote that you are taking unsubsidized loans, these are the loans where the interest will accrue while you are in school. I would recommend to take subsidized loans out first, in these loans the interest is paid off as long as you are in school half the time. Definitely try to be careful on private loans, I know many students-including my family member-had to take them out and in these loans the interest is much higher than federal loans. Look for the detailed options and pick the one that gives most flexibility in paying the loans back as well as the lowest interest as well. If you can work part time during college on campus or off campus you can save money and also help pay the interest on your loans so they don't accrue too much. I always think that student loan debt isn't the issue, the interest is; let's say if you take out 5 grand, and you pay the interest to keep it at 5 grand then that loan won't be too burdensome in the future. However if the interest builds on top of the original loan amount then that could be more difficult to manage. Try to exhaust other options like pell grants and scholarships as well as federal loans before taking out larger loans and going into greater debt. You really won't be too aware of your options for financial aid until FAFSA is filled out so definitely do that first. You may already have experience with this but just as a reminder! Lastly speak with your financial aid office, try to find someone who seems genuine and is wanting to help; talk about your options because there are many resources available on college campuses for students in minimizing debt so definitely check them out! Just a quick stop by your financial aid office can give a lot of information.
Hope this helps!
Best of luck!
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Aaron’s Answer

Like many of the other answers it depends on your situation. Consider the return on your investment and be sure to leverage the loans for school. You hear of situations where students take loans so they can live a certain life style. Stay disciplined, consider working while in college and be aware of your total debt. Student loans are not a bad thing as you are investing in yourself, but like any loan it will come due and having the awareness is key.
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Richard’s Answer

The right amount of student debt depends entirely on future earnings. If you intend to be an investment banker, you will be able to service and pay down much more debt than less paid roles. Get out a spreadsheet and calculate exactly what you'll need to pay each year and for how long. You want your passions to dictate the type of work you do, not financial necessity, wherever possible even if doing so is increasingly challenging
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CJ’s Answer

I agree with other that it depends on your what your expected earnings will be after you have graduated college. If the career of your choice is not going to be a high earning job, then it isn't a good idea to get into a hundred thousand into debt when it will take you a lifetime to pay back. You should also look into some companies or government organizations that will pay back some of your debt depending on the job.
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Sarah’s Answer

Hi Sam!

As a few other people have stated it depends on your situation. The rule of thumb that I follow is not to take out more in loans than you will make in your first year out of college. Obviously this cannot be helped sometimes and your education can never be taken away from you so I think it's good to invest in yourself and your future! Some things to look in to could be if there are any employers in your future industry that may help pay back some of your loan balance (teachers and other government employees have access to these benefits and there are also other non-government jobs that have these benefits as well). Also keep in mind that there may be an opportunity for you to refinance your student debt at a lower interest rate once you finish school AND there is a 6 month grace period following your graduation date where payments do not have to be made!
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Sonya’s Answer

Despite the fact that in most cases, Federal college debt is deferred until graduation, it can really add up and be a huge weight on your shoulders when you graduate. I encourage you to live as cheaply as you can while in college and work part-time to cashflow your expenses. There is a book by Anthony ONeal titled Debt-Free Degree that has great pointers. Also, research and apply for as many scholarships as possible. All the best to you!
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