We have been told by our parents, grandparents, aunts, uncles, and friends that college is a necessary part of life if you want to succeed.
Whether you agree with that or not, chances are that you are attending college just in case. The second dilemma you should be contemplating is your future debt load.
I have heard countless stories (and I’m sure you have too) about students that graduate from college with a worthless degree and have amassed tens of thousands of dollars in student loan debt in order to get it! Now that they’ve graduated, they have no job, no money, and absolutely no way to pay back those loans. So should you even take on student loans? How much is too much?
To Beg For Loans or Not to Beg For Loans? That is the Question.
There are many students that don’t think twice about taking out student loans. They were told that if they get a college degree they will be successful, so why stop to think about student loan debt? Hopefully this is not your mentality. Debt can be a tool for gaining wealth, but is more often than not a disease that will keep you poor. Be very careful with debt, even student loan debt.
So when are student loans ok? Here is how I measure the validity of your student loan usage:
• What is the average yearly salary for your desired position?
• What are the odds of you landing this job?
• Take the average salary and multiply it by the percentage of you landing the job, and then multiply by 50%.
So, if you are going to college to become a teacher, do some research and find out what the average teacher salary is in the first couple years. Let’s say it’s $35,000. Then, what are the odds of you finding a teaching job? With your internships and good grades, you figure that you have a 95% chance of landing a teaching job.
$35,000*0.95*0.50 = $16,625 of student loans
In your four (or five) years that you are in college, you should not exceed a total of $16,625 in student loan debt. By keeping your student loans this low, this will provide you the opportunity to pay off your entire debt within the first five years of work. If you acquire more debt than this, you will no doubt be strapped for cash for many years.
In reality, if you can find a way to get through college with absolutely no debt, this is the best option. Work extra jobs, eat cheap food, live at home – do whatever you can to keep your expenses low and your income high (you know, high for a college student).
If you succeed at earning your degree without any debt whatsoever, you could become a very wealthy individual. While your friends are making house payments, car payments, and student loan payments, you will be smiling at your full bank account. Instead of getting yourself into debt, invest in assets that will produce money for you in the future. This is how you become financially successful in life.
Do you have student loan debt? Do you wish that you would have worked harder to avoid it?
This guest article has been written by Derek Sall from LifeAndMyFinances.com. Derek has a great passion for helping people get out of debt, save up money, and become wealthy!