I was a college student for Halloween this year.
And not just any student—my former college roommate and I actually went to a costume party this year dressed as ourselves as freshmen, circa 1989.
“Why?” You may ask. Is there something particularly scary about a college student from the late ’80s?
Frankly, I think the picture speaks for itself.
And really, poodle-perm wigs and gigantic earrings aside, being a college student IS kinda scary. The unknown is often scary, and in college so much about your future is a question mark—especially when it comes to finances. You probably don’t know where you’ll work, how much money you’ll make, what your expenses will be, or how much debt you’ll be in when you get out. It can be pretty unnerving.
But there is a way to start getting a handle on it. A few quick calculations can help you figure out if you’re taking on a manageable amount of debt. The experts recommend that your monthly loan payments should be no more than 10% of your net monthly income.
So what will your monthly student loan payments be? Time to do some math. Here’s a calculator to help you figure out what your monthly payments will be on your Federal Stafford Loans . And if you have private student loans, use this calculator to help you get an idea what those payments will be.
Now that you have an idea of what you might owe per month, does it match up with your salary expectations?
If you haven’t already begun researching starting salaries in your field, your academic adviser might be able to help, or check out this salary calculator . Once you’ve got a ballpark idea of your starting salary, subtract about 20% for taxes (I know—ouch!), and you’ll have a rough estimate of your net annual income.
Don’t panic if it looks like your loan payments are going to be higher than 10% of your monthly income. When it comes to repaying federal loans, there are many options available to help you manage your payments. However, it might be time to keep an eye on your spending—borrow only what you really need in student loans, and try not to run up your credit card balance .