Possibly the single biggest factor in deciding which college to attend is price. It doesn’t matter how small the classes are, or how many research opportunities are available, or how close the college is to Chipotle, if you’d need to win the lottery to even afford to press your nose against the window to look in on a class. (Pro tip: Don’t go to a college that charges Prospies to do this.) At the same time, lowest price isn’t always the best option. It would be [immediately] cheaper not to go to college at all, but you’d be missing out. In the same vein, picking a college where you won’t need to take out any loans at all might not always be the best option, depending on the schools involved. Regardless, you’ll want an upper bound for how much in loans you’ll consider taking out for a school that is truly worth it.
Based on the School
Is the school truly worth it? Taking out loans to attend clown college is one thing (and not a bad thing, certainly, if this is what you want). Taking out loans to attend, say, Stanford might be a different story. So when determining an upper bound for the amount of loans you’d be willing to take out to attend, you might want to consider the college itself, since almost all college students need loans.
An interesting resource may be the College Scorecard. Just look up your college, and it will tell you the median salary of alumni ten years after graduation. I, for example, attend the University of Rochester, so I might expect to make roughly $55,000 per year, ten years after college. A good rule of thumb, according to Forbes, is to take out less than what you expect to make in your first year. So, my upper bound–which is based on a number that is probably higher than what I’d make in my first year–would be around $13,750/year.
Based on Your Career Path
What do you expect to make when you leave college? This is a good place to look for average salary statistics. I, for example, want to be a mathematician, the median salary for which is $103,720. Again, using our good friend Forbes, I shouldn’t take out more than $25,930/year, though we should again consider that entry-level pay will probably be less.
A word of caution: Not everyone who goes to college wanting to be a doctor becomes a doctor. Not everyone makes it on Wall Street. I’m not saying that you won’t do what you want to do, but you need to consider the likelihood of that happening before making any decisions.
Based on Your Personal Financial Situation
Even though it is third in this list, let me emphasize this: Always, always consider your personal financial situation before looking at any of this other statistical nonsense. There are no guarantees about your life after college, so you can’t expect to make the average salary of alumni from the same school, or to make the average salary of a person in your desired career. You don’t even know if you’ll have a job in the field. Loans are a gamble, but you’ll want to know that you have something to fall back on.
Can you get away with not taking out loans? If you had to get a job RIGHT NOW to pay back loans, would you be able to keep up with interest? Are your parents willing to help you? (This is a conversation you’ll likely need to have to have with them.) Together, you can hash out a ballpark for your upper bound for loans.
Based on Your Gut
Okay, this isn’t the best advice, but listen: If the number scares you, then it’s above your upper bound. If it doesn’t–and if it, multiplied by four and plus a little, doesn’t–then it might be all right. I was accepted to a school which met 100% of my need…but required me to take out more than $20,000 in loans every year. Nope. Too much. I’m taking out loans to go to this, my dream school, but the numbers were small enough that I didn’t spontaneously combust. If you want exact numbers, this isn’t the method for you–and, in fact, I strongly suggest not looking at your gut to tell you how to spend money (wasn’t it your gut that told you to buy those really pretty shoes sitting unworn in your closet?)–but this, in combination with the other resources, is a good guide.