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How much should you borrow for college?

A rule of thumb says you shouldn't borrow more than what you expect to earn in your first year in the working world.

By MSN Money Partner Feb 9, 2012 10:20AM

This post comes from Rob Berger at partner blog The Dough Roller.


The Dough Roller on MSN MoneyI graduated from law school with $55,000 in school loans. It took me nearly 20 years to pay off that debt. And here's the really crazy part of it all: Many in my class had far more in loans, some exceeding $100,000. And this was in the early 1990s.


While my law degree has been very valuable, that experience has caused me to look at a college education very differently than I did years ago.


The other day my daughter informed me that she planned to attend The Ohio State University.Now, I'm a diehard Buckeye. I grew up in Columbus, Ohio, and both of my parents graduated from OSU. I have fond memories of my dad taking me to see the likes of Cornelius Greene and Archie Griffin play in "The Horseshoe." But we don't live in Ohio anymore, and my daughter won't be going to OSU. Why?


The cost of out-of-state tuition, room and board at OSU is $34,974. As much as I love OSU, it ain't worth that kind of money.


And that raises an important question: How much, if any, should you borrow to attend college? With a son about to graduate from high school and a daughter in 11th grade, my wife and I will be answering this very question soon.


So today I want to cover two related issues -- first, a rule of thumb on how much you should borrow for college, and second, a quick look at how much certain degrees are actually worth. Post continues below.

The borrowing rule of thumb

Here it is. According to, the most you should borrow for college should not exceed the amount of your first year of income after graduation. So how did they come up with this benchmark?


Most federal loans give you a standard 10 years to repay the loan. By limiting your borrowing to no more than one year's salary, you are dedicating no more than 10% of your income to school loans. This rule of thumb means that you should consider the type of degree you will obtain.


I'm always amazed when I hear of somebody who spent $200,000 at a private college to get a degree in art history. I'm sure it was a great experience, but let's get real. On the other hand, if there is no doubt in your mind that you are going to be a nuclear physicist (just saying) then you can clearly increase your borrowing total.


And that brings us to the highest-paying and lowest-paying degrees.


Some degrees aren't worth the money

If you already know you are going to bite the bullet and look into student loans, you will need to give serious consideration to the amount of the loan as it relates to the value of the education. Some areas of study will not net you a high-paying career. Be sure to do some research into different occupations and what they pay.


When choosing a field with a potentially high income, you don't want just any school. Let's say you know you want to be an engineer. Look at the schools that are highly rated in that field. Don't go to a school that doesn't have a respected engineering department.


On the flip side, if you have always wanted to work in child welfare or social work, then know that many of those jobs are with nonprofit agencies and typically don't pay high salaries. For many, the reward here is not the income potential, but rather the value of what they're doing. That being said, you should consider a good state school rather than a private school with a crazy high tuition that will pile up your debt. Staying in-state will always give you the biggest value.


Here are the top worst-paying college degrees in 2011, according to PayScale:

  1. Child and family studies. Average starting salary $29,600.
  2. Elementary education. Average starting salary $32,400.
  3. Social work. Average starting salary $32,200.

Here are the highest-paid bachelor's degrees for 2011:

  • Petroleum engineering. Average starting salary $80,849.
  • Chemical engineering. Average starting salary $65,618.
  • Computer engineering. Average starting salary $64,499.

If you are unsure what you want to do "when you grow up," attending a community college is a good option and will likely give you some direction. Often attending for two years and transferring to a four-year college will allow you to complete your required courses at a lower cost per credit hour. Just be sure the program is accredited and that your credits will transfer.


And if you want to know what your desired job might pay, check out PayScale.


More on The Dough Roller and MSN Money:



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