Great Advice for Parents 2020

Know your resources

If your finances aren’t what they used to be, consider multiple ways to cobble together a college payment. Don’t start by assuming you have to cough up the full price out of pocket, or that you have to take out loans for the full price. Most people use a mix of financial resources to pay for school. This is the optimal order to follow:

• Start with free aid, including grants and scholarships.

• Next, find a work-study job on campus.

• Then, consider what can come from income and savings.

• Finally, turn to student loans.

If you have to borrow, take out federal loans first over private student loans. Federal loans have benefits private ones don’t, like income-driven repayment plans and loan forgiveness.

Does your major matter? No one is saying you have to become a surgeon or study finance if you don’t want to, but we’d be lying if we said your college major won’t affect your lifetime earnings and your ability to repay debt. Learn more about prospective majors and jobs using the U.S. Department of Labor’s Occupational Outlook Handbook. Then find median starting salaries using sites like or Glassdoor. Once you have an idea of future earnings, your best bet is to aim for a student loan payment that will be “manageable.”

Define what ‘manageable’ is

If you have to take on debt, your ultimate goal is to have a payment that won’t exceed 10% of your projected after-tax monthly income your first year out of school. That’s a mouthful, so here’s what that actually looks like: If you earn $45,000 a year, your estimated monthly take-home is just over $2,500. That means you shouldn’t pay more than $250 a month toward student loans. At current rates, that would mean you could borrow $24,200 over four years of college. Use our college affordability calculator to find out how much student debt is reasonable for you to repay, then revisit the net price calculator results. You can afford this. Set reasonable expectations and redefine your dream school as the one that’s not a nightmare to pay for.

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