According to the Education Data Initiative, borrowers from middle-class households with student debt owe an average of $46,016. That number should make you pause.

Most families approach college borrowing backwards. They ask themselves, “How much can we get?“, instead of, “How much should we take?”

The difference between these questions can save you decades of financial stress.

Start With Your Future Paycheck

Smart borrowing begins with realistic income projections. Research entry-level salaries in your intended field using sites like the Bureau of Labor Statistics.

Then, apply the 10% rule: your total monthly student loan payments should not exceed 10% of your expected gross monthly income.

If you expect to earn $50,000 annually, that’s roughly $4,167 monthly gross income. Your student loan payments should stay under $417 per month.

This conservative approach accounts for taxes, living expenses, and life’s unexpected costs.

Calculate Your Real Borrowing Limit

Use this simple formula to determine your maximum total debt:

Monthly Payment Limit ÷ Loan Payment Factor = Maximum Debt

For a 10-year repayment at 7% interest, your payment factor is approximately 0.0116. Using our $417 monthly limit: $417 ÷ 0.0116 = $35,948 maximum total debt.

That’s your ceiling, not your target.

Remember, the average college student borrows $37,853 in federal loans alone for their degree. Including private student loans, that total could be over $40,000 on average.  Staying below average often means staying financially healthy.

Why Private Student Loans Make Sense

Federal loans should always come first. But when they fall short, private student loans from credit unions offer distinct advantages over traditional bank loans.

Credit unions operate as member-owned cooperatives, not profit-driven corporations. This fundamental difference translates to better rates, fewer fees, and more flexible terms.

Student Choice partners with credit unions to offer a reusable education line of credit. You apply once and access funds as needed over four years, avoiding annual reapplications and hard credit checks.

This flexibility prevents overborrowing by letting you borrow only what you need each semester.

The Overborrowing Trap

Here’s a sobering reality: 61% of borrowers regret how much they borrowed with student loans.

Overborrowing happens gradually. A few extra thousand each year seems manageable until graduation day arrives with a crushing payment schedule.

Avoid this trap by borrowing semester by semester, not year by year. Reassess your actual costs every few months rather than estimating annual expenses upfront.

Smart Borrowing Strategies

• Exhaust free money first. Apply for scholarships and grants throughout your college career, not just as a high school senior. Many opportunities exist for continuing students.
• Work during school. Even 10-15 hours weekly can significantly reduce borrowing needs while building valuable experience.
• Choose your school strategically. The most expensive option isn’t always the best investment. Research employment rates and starting salaries for graduates in your program.