Two-Thirds of College Students Take On Debt, but Amount Is Rising More Slowly

Two-Thirds of College Students Take On Debt, but Amount Is Rising More Slowly

Here are some questions and answers about borrowing for college.

How much money may I borrow for college?

The amount of federal loans that dependent undergraduate students — meaning they rely on their parents for financial support — may borrow each year is limited to $5,500 for freshmen, $6,500 for sophomores, and $7,500 for juniors and seniors, or a total of $27,000 over four years. (The cumulative limit, in case a student takes longer than four years to earn the degree, is $31,000.)

But many families borrow more than that, by taking out federal PLUS loans, available to parents of undergraduates. PLUS loans, which carry higher interest rates, are available up to the total cost of attendance.

Families can also take out private loans from banks and other government lenders. Such loans typically carry fewer borrower protections, and should generally be considered a last resort, Ms. Cochrane said.

How much money should I borrow for a four-year degree?

Students should consider their future earning potential when deciding how much to borrow, said Mark Kantrowitz, publisher and director of research at

“My rule of thumb is that your total student loan debt at graduation should be less than your annual starting salary,” Mr. Kantrowitz said. “Ideally, a lot less.”

The Federal Reserve Bank of New York recently published estimates of typical early-career annual earnings, based on college major. The median was $44,000, but was considerably higher for those with computer engineering degrees ($65,000) and lower for those majoring in elementary education ($35,000).

Where can I see the typical debt held by graduates of a particular college?

Students can check online tools like the College Scorecard, offered by the Education Department, to get that information, Ms. Cochrane said. The scorecard includes only federal loans, not any private loans that students may also have.

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