Is there such a thing as a manageable amount of student loan debt?
November 8, 2012 10:22 AM   Subscribe

Is there a manageable amount of student loan debt? Am I being paranoid about my own amount or should I avoid additional debt at all costs?

I'm in my last year of undergrad, graduating in the spring. I didn't have to take out loans my first two years of college but due to financial aid cuts and some additional activities I did I now have around $6000 of student loans (the unsubsidized government ones). I likely won't need to take out more loans next semester to pay tuition but there is something I want to do over my winter break that I would probably require an additional $1000 for. It's not a vacation but it is an extra activity that is not really required, although it would be super helpful for things I'm applying for over the year (it's basically additional research and language practice in a critically needed language).
Is ~$7000 in student loans an un-payable amount, or is this a normal amount for an undergrad? I don't know if I'm being terribly irresponsible by wanting to take out loans for what is really an unnecessary activity or if I'm being overly cautious. I realize that the less debt the better but all the horror stories I read about student loans involve sums in the tens of thousands, so I feel like my amount will be manageable. Am I being at least somewhat responsible or will I be kicking myself come May? What are people's normal experiences with student loan debt? FWIW I'm at a liberal arts college, so no job guarantee, but I'm applying for stuff like crazy and am probably in pretty good shape for research grant/Peace Corps/teaching English kind of stuff and don't intend to go to grad school until I have a few years of work experience.
posted by Papagayo to Work & Money (22 answers total)
 
The average student loan debt is $26,500. You're fine.
posted by zug at 10:24 AM on November 8, 2012 [2 favorites]


That is such small potatoes I wouldn't worry. Having to pay them period when you start will not be fun, but that small extra amount won't make a difference. The difference is just the fact that you need to start making payments at all.
posted by UMDirector at 10:26 AM on November 8, 2012


I wish I had only had ~7,000$ in loans out of school. I am slightly better off than the 26,500 Zug's comment talks about but not by much...
posted by Captain_Science at 10:26 AM on November 8, 2012


You are very, very lucky to have as little debt as you do. A lot of folks have ten and twenty and even thirty times as much.

The extra $1,000 is not, in the scheme of things, a ton of money. Since this is related to your field I would probably recommend going for it, although without knowing your field or your job prospects it's difficult to make a concrete recommendation.
posted by gauche at 10:26 AM on November 8, 2012 [2 favorites]


That doesn't sound horrific to me. And I hate debt (what with being up to my eyeballs in it.)

As soon as you graduate, work a lot so you can pay it off quickly.
posted by Ruthless Bunny at 10:26 AM on November 8, 2012


This question is adorable. 7k is fine, assuming you get a job and your interest rate is fairly low.
posted by murfed13 at 10:29 AM on November 8, 2012 [3 favorites]


To clarify, you will be able to clear your debts in a year of working a professional full time job, if you want to. Even a crappy one should pay $30k, and you're probably used to living on something closer to $18k or $20k. Keep living like a student for a year and you'll be debt free.
posted by zug at 10:30 AM on November 8, 2012


Taking a look at this student loan calculator, assuming an interest rate or 6.8% and a repayment schedule of 10 years, that amounts to about 10 dollars more a month (70 vs 80). This is firmly in the expense category of money that gets lost whenever you go get coffee or you eat out for lunch. Also, the sooner you get a job, the less time there is for interest to accrue on your loans, so if you think your winter activity will be helpful in your post-college activities, I would highly recommend it.
posted by ayerarcturus at 10:31 AM on November 8, 2012 [1 favorite]


For reference, I graduated with 24 times that and I still eat every day. (Not recommended).
posted by murfed13 at 10:31 AM on November 8, 2012 [1 favorite]


I graduated with about $5,000 in student loans many years ago, and even though my financial situation was pretty close to the bone for several years after finishing school, the $50/mo set-it-and-forget-it payments were pretty painless.
posted by drlith at 10:48 AM on November 8, 2012 [2 favorites]


Oh my God you're totally fine. I had four times that amount and I was totally fine paying it off, even with a somewhat shaky first couple years and then a somewhat shaky last couple years.
posted by EmpressCallipygos at 10:53 AM on November 8, 2012 [1 favorite]


Yeah, that's really not bad at all. I have just under $20K in undergrad debt (down from $25K when I first graduated) and I'm doubling it with grad school.
posted by anotheraccount at 10:56 AM on November 8, 2012


I had about that amount after I graduated undergrad, from a semester abroad. Granted, the economy was a bit better a decade ago, but I had it paid off in a few years. Really, really manageable.
posted by peacrow at 10:57 AM on November 8, 2012


I had about that amount, too. It really wasn't a big deal to pay off. I mean, not my favorite thing in the entire world, but not devastating like so many large loans are.
posted by BlahLaLa at 11:01 AM on November 8, 2012


another vote in the 'you're fine' chorus - I had twice that and paid it off in less than three years.
posted by par court at 1:23 PM on November 8, 2012


Yep, extremely manageable, and remember those federal unsubsidized loans have a 6-month grace period after graduating before you have to start making your monthly payments - plus even once you start paying them off, you can choose a graduated or income-sensitive repayment plan that will start you off at a lower monthly payment (when I did this, my initial monthly payments for my similarly-sized loan were like $90 or something) while you get settled in adult life.

As others have said, there is not a significant difference between $6,000 and $7,000 in loans - if the activity will be helpful to you (or, hell, if it'll be something you remember fondly in the future) go for it.

Enjoy the rest of college!
posted by superfluousm at 1:48 PM on November 8, 2012


I am generally against student loan debt because it can limit your ability to try things until you find a good fit after graduation. That's of particular concern for liberal arts majors who don't seem to have much clue as to what they are going to do after graduating.

Even so, I think less than $10K in student loan debt is quite manageable, so another $1K isn't a deal-breaker. Look into what your payments are going to be once you graduate. Payments on that kind of debt should be the sort of thing you can fit into your budget with an entry-level job that covers your other expenses. It isn't the sort of thing that requires you remain in, say, an engineering job when you realize you'd be much happier doing, say, ethnographic research, or something.
posted by Good Brain at 2:58 PM on November 8, 2012


Do it. The extra $1k isn't going to make or break you financially, but it sounds like it'll grow you in important ways.

The total debt you've accumulated is going to cost you less than the average cable bill. Don't sweat it. You'll be able to service that debt even if you spend a few years doing things that aren't primarily motivated by money.
posted by grudgebgon at 3:01 PM on November 8, 2012 [1 favorite]


You're just posting this for the lulz, aren't you?

$7k is fine. You could take a second part time minimum wage job and pay that off in a year whereas I might possibly consider killing someone to lower my student debt to a mere $7k. This is nothing, especially if you are considering grad school.
posted by Hylas at 3:57 PM on November 8, 2012 [2 favorites]


I've had $7k in student loan debt basically since my first year of college (1996). I had a lot of other debt, so it was no problem (these are not private loans, FWIW) to defer payments on them due to other debt and low income. Now they are almost paid off. It's not been stressful at all.
posted by getawaysticks at 6:58 AM on November 9, 2012


I had ~$3k of debt and I had it paid off within 3 months of graduating, on a 30k/yr salary, in one of the most expensive cities in Canada, while still living a lifestyle that I felt was pretty extravagant (as an ex-low-income student). If you can hold down a $30k job for a year I don't think you'd have any problems paying it off in that time.
posted by purplecrackers at 9:22 AM on November 9, 2012


Haha no I'm not posting this for the lulz! But I see now that it's maybe not as huge of a deal as I thought and that I'm maybe seeing this through broke college student eyes, where $7k looks like the biggest amount of money ever. Thanks for making me feel less stressed about the loans, looks like I'll be going abroad in January then! :)
posted by Papagayo at 9:16 PM on November 9, 2012 [1 favorite]


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