Student Loan Debt: What to Earn to Pay it Back
A 24-year old young man called me who has $50K of student loan debt and a $750 monthly payment that he can’t afford. Although I am not a debt counselor, only pro actively help families and students navigate through and understand the financial aid process, I helped him to understand the potential ramifications if he chose to default on his loans.
I’ve attached a link below that shows a student how much they have to earn in order to pay back a designated amount of a student loan. It also outlines, if you specify what you earn, how much student loan debt you can support. It’s an excellent tool that I feel every family should review prior to deciding how much debt their child or their family should take on.
Use this interactive calculator to determine the following:
- How much you can afford to borrow in student loan funds based on your future expected earnings.
- The salary you will need in order to afford your student loan payments.
If you enter the salary you anticipate earning upon graduation, the calculator will calculate the maximum amount of student loan debt you should borrow. If you enter the current amount borrowed in student loans and the amount you anticipate borrowing throughout your college career, the calculator will return the salary required to make payments on this debt. You can update the interest rate to reflect the interest rate of your loans, if it is not 6.8 percent.
Note: This calculator is based on the recommendation that your student loan payment are no more than 8 percent of your gross earnings. The calculations do not take into consideration a high amount of credit card or other debt.