The New York Times editors posted an interesting discussion on the Room for Debate blog last week regarding student loans and higher education.
The responses from five ‘insiders’ chosen to participate are far-ranging and address the questions: How much is too much to carry in student loans? What factors should be weighed? Should a student forgo a top-choice school if it means carrying more debt?
One participant, James Monks (an economist at the Robins School of Business at the University of Richmond), gives sound advice, recognizing that — for many students — the value of a college education is worth taking on a reasonable amount of debt. Monks gives tips that are helpful to assess how much debt is actually considered a “reasonable” amount:
Some financial planners suggest that student loans should not exceed 10 to 15 percent of one’s gross earnings … With a dose of caution and planning students should not be deterred from taking out loans for their college education
More sensible than other participants who suggest students not borrow at all, Monks indicates that it’s possible to invest in an education because “assuming a reasonable level of student loans is well worth the investment.”
Planning before borrowing and knowing how to manage your debt are financial traits that, like higher education, can prove to be extremely worthwhile in the long run.
