According to the Commerce Department, graduates with bachelor’s degrees had an average salary of $71,817 in 2011. Those with an associate’s degree had an average salary of $51,527 and workers with some college but no degree had an average salary of $48,497.
On the surface, $71,817 sounds like a lot, but this is the average for all graduates—not just new or recent grads. As Forbes.com reported in January, the average salary for 2012 grads was $44,455 which is comfortable but can certainly make it difficult to pay back high student loan balances.
Knowing these averages can really help you pinpoint just how much to limit your student loan debt, but don’t stop there. When deciding how much debt future you can afford to pay back:
- Look at the average salary range for people in the industry you plan to enter after graduation.
- Once you have a better idea of what your specific income might be, use a calculator, such as those found on PaycheckCity.com, to determine what your take home pay is likely to be.
- Based on your estimated take-home pay, figure out a post-graduation budget for your rent, utility bills, car payment, insurance, savings, groceries and so on.
- Now, how much is left to comfortably pay for a student loan repayment? Use that amount to guide how much you borrow.
Another consideration you should make is the likelihood that you will get a job in your chosen industry after graduation. An underemployment report issued by the Center for College Affordability and Productivity released in 2013 showed that roughly 48 percent of college grads are underemployed, which means they are working in positions that don’t require a degree and likely pay less than degreed work—but they still have to pay back those student loans.
Unless you have a super accurate crystal ball, you can’t know whether you’ll be in that 48 percent or not. One thing you can do, however, is limit the amount that you borrow for your education so that whether you make it to a college-level job or not, you can afford your loan payments.