Sep 20 · 2 min read
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While getting into college is a great accomplishment, it can come with a hefty price tag. Before applying to college and submitting an application for financial aid, you’ll want to think about what colleges you can realistically afford. This requires truly understanding how much college will cost you in the long run.
With various student loan types, interest rates, and fees, it’s often difficult to understand this long term cost. This difficulty leads to most students being advised to take out only as many loans as they need to get the degree, but there’s actually more to it than that.
If you want to be whyze with paying for college and prevent a life of debt after graduation, you’ll want to analyze these two factors:
The first factor you should analyze is how much it costs to attend your college of choice. Start by creating a list of colleges you wish to attend. Next, you’ll want to find out how much it will cost to attend each one. Typically, this can be found with a quick search on the internet or looking directly at a school’s financial aid website. Remember, the cost of tuition will vary for public schools depending on your residency. If you live in the same state as the school you are planning to attend, the cost of tuition is often much cheaper.
Whether you are planning to attend school in or out of state, the cost of attendance will usually be broken down by the cost of one semester or by the cost of one full school year. Although attending college tends to get a little more expensive each year, you can use this value to roughly calculate how much money in total you’ll need to attend each college.
If you already know what scholarships, grants, and work studies will be available to you, make sure to subtract these funds from the overall cost.
Once you’ve listed your potential costs per college, you’ll want to also estimate how much you’ll make after graduation. While you won’t be able to know your exact salary after college, you can estimate a close value.
If you know what occupation you’ll be pursuing, you can find on average how much money you’ll make after college using www.bls.gov, which was created by the Bureau of Labor Statistics, or by a quick search on the internet for average entry-level salaries of your occupation.
Both resources typically show a range of salaries for a specific job so you’ll typically want to use the 10th percentile on bls.gov or the lower-end of any range you find on google. This will give you a little room for error.
Now you’re ready to calculate how much student loan debt you can afford and which colleges are in your price range. As a general rule, you should limit your total student loan debt to roughly 50% or less than your expected annual salary after graduation. This will allow you to pay off your student loans in roughly 10 years.
Compare this 50% value to your list of estimated costs to attend the colleges in which you’re interested. The schools at or below this value are in your price range while those above this value might not be.