Forty-three million Americans find themselves in debt to the tune of $1.3 trillion, second only to home mortgage debt. The biggest challenge to taking on student debt is to make sure that as a student you persevere to the end in getting a degree.

According to the labor department, the median earnings for full-time employees that only graduated from high school was $668 per week in 2014. Contrast that with those who have a bachelor’s degree, their average income was $1193 per week. That amounts to over $27,000 more per year for the college graduate. Even with the student loan debt statistics described above, a college student that is motivated to complete a degree should be wise in how much student loan debt to take on.


debtAn important note to remember, not all degrees lead to the highest paid jobs. As an example, according to National Education Association, a degree in elementary education will provide for a starting salary of $36,141 (national average). Unfortunately, that’s slightly more than those with a high school diploma. In the state of Texas, it is $38,091. According to CERI (Michigan State’s Collegiate Employment Research Institute), as quoted in Forbes Magazine November 19th, 2014, an electrical engineer would on average have a starting salary of slightly over $57,000.


Student Loan Debt Relief

Managing or planning for your debt at the beginning is the best way to manage student loan debt.  Here are some important considerations:


  • Attend a public university instead of a private one. The annual cost of attending TCU (Texas Christian University) or Baylor University in Waco, Texas is estimated to cost over $60,000 per year. If you graduate in four years that amounts to 240,000 total cost. If you had to borrow 50% of that amount or $120,000 and borrowed it all from the state of Texas with a 20-year term and 6% interest, your monthly payment for 20 years would be 859.72 a month! That amounts to almost one-third of a starting teacher’s salary. A very heavy burden especially when faced with all the other costs of living. For an electrical engineer, it represents 18% of their starting salary. Consider the difference in attending the University of Texas in Austin, Texas or Texas A & M in College Station, Texas, where the estimated cost of attendance is $25,000 per year. If you had to borrow 50% or $50,000 from the State of Texas your payment over 20 years would be $358.22 per month at 6%. For a teacher that now represents slightly below 12% of their gross starting salary and only 7.5% of an electrical engineer’s starting salary.


  • Attend a community college. To further minimize your debt, go to a community college near your home. For example, attending Collin County Community College in Plano, Texas, staying at home and living within the county your estimated cost of attendance (COA) is $9600 for 2016-2017. If you stay 2 years and then go on to the University of Texas, your 4-year college degree would cost a total of $69,200. If you had to borrow half of that or $34,600, your 20-year payment on that amount at 6% would be $247. 89 or 2974.62 per year. That represents 8.2% of an educators starting salary.


Potential Help in the Near Future

Student Loan DebtStudent loan debt forgiveness is next to impossible since in most instances the Federal or State government is the lender. However, help may be on the way from the Consumer Protection Agency. They are currently working on what is initially being called “The Payback Playbook”. Although debt forgiveness is probably not in the cards on the table, a more transparent student loan, terms, and conditions are.


One of the items in consideration is a ban on “fine print” on student loans you sign up for. No “fine print” will allow a student loan consumer to better understand in advance what they are committing themselves to. Certainly a step in the right direction. However, in my mind controlling the amount of student loan debt you get into in the first place is a better way to manage your ultimate ability to pay off your debt rather than seeking relief or forgiveness after the fact. Quoting William Elliott, the director of the Center of Assets, Education and Inclusion at the University of Kansas, “even small amounts of debt, it can affect long-term money accumulation and can delay having children, having a home and family.” In fact, many studies have shown the negative effect student loan debt has had on wealth accumulation including home equity.


Education is very important in higher incomes and wealth accumulation, so plan ahead and be wise in how much student debt you take on.


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