Great Advice for Parents 2020

3 You’ll get a better return on your investment

The lower your college costs, the better the chance you’ll get a satisfying return on your investment. That means earning enough after graduating to justify the expense of attending school.

To figure out which schools have the best chance of setting you up for success, start with the U.S. Department of Education’s College Scorecard. It has key details including average net price, graduation rates and typical salaries after attending. It also shows you popular majors, which you can use as a starting point to learn more about possible careers. Next, research potential careers and earnings using the U.S. Department of Labor’s Occupational Outlook Handbook. It includes job descriptions, schooling required and potential job growth. Sites like PayScale, and Glassdoor also have information on salary potential.

Using that salary information, aim to keep your payments under 10% of projected after-tax monthly income in your first year out of school.

Say you think you’ll earn $45,000 in your first year out of college and you have only federal loans with the standard 10-year repayment term and 4.53% interest rate. Limiting payments to 10% of your income means a monthly payment of about $250, which would allow you to borrow no more than $24,185. A student loan affordability calculator can show more estimates. Remember to factor in total costs for at least four years of school, too. At Making Waves College and Alumni Program, a nonprofit program geared toward low-income high school graduates in the San Francisco Bay Area, Director of Financial Services Ivette Chavez says she talks to students about the impact of taking out loans year after year. “We break it down to them: If it’s $5,000 this year, but your financial profile stays the same, it will translate to this much after four years,” Chavez says. “Do you really want to start life after college in a deficit?”

Anna Helhoski is a staff writer at NerdWallet, a personal finance website.

The article 3 Reasons to Choose a College Based on Price originally appeared on NerdWallet.

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