So if you’re going to owe $1,200 a month in student loans, you’re going to need to bring home $120,000 a year
- Where will you live? How much will housing and transportation cost?
You could stretch to 15%, in which case you would need to earn $80,000 to afford the $1,200 a month payment.
Okay, is anybody laughing at me? Chances are some of you have student loan payments just from undergrad degrees that far exceed 10% of your annual income.
This is perhaps the biggest reason why twentysomethings today can’t get ahead. It’s not necessarily your fault-tuition inflation, stagnant wages, and the failure of colleges and lenders to educate students about the cost of borrowing have contributed to this crisis.
BUT, if you’re considering going back to graduate school, you’ll want to consider how affordable your loans will be after you graduate.
So if you’re going to owe $1,200 a month in student loans, you’re going to need to bring home $120,000 a year
- First, you want to make sure that borrowing the cost of tuition will enable you to get a job in which you can afford to repay your loans.
- Second, you’ll need to consider how much you’ll borrow for living expenses.
Let’s say that you currently earn $50,000 a year and bring home about $36,000 after taxes. If you go back to school and do not want to work part time OR reduce your lifestyle, you’ll need to borrow $36,000 a year in addition to tuition just to live on.
Let’s say you’re going to law school for three years. $36,000 a year for living expenses totals $108,000 over three years. Yikes! If you’re going to repay that over 10 years at 6%, that’s a $1,200 monthly payment JUST FOR LIVING EXPENSES.
Here’s an easy way to estimate how much it costs to borrow money for grad school. Keep in mind that the total interest figures don’t take into account interest that accrues while you’re still in school, so the actual costs will be higher. Lees verder