Unless you’re spawned from Bill Gates himself, the chances are good that you will need to finance your education. While this is common practice and a plethora of loans may be at your immediate disposal, there are mistakes that must be avoided; otherwise, you will find yourself buried in a pile of debt for years after graduating and, if you have landed a position in a mediocre-paying job, there is no shovel large enough to help dig you out!

Let’s talk good financial sense! If your earned income totals $2,000 a month, you are not likely to take out loans that total $1900 a month. That would leave you with $100 to live on. Let’s face it – your local gas station will bleed you of that $100 quicker than you can yell ‘highway robbery!’ So we can reason that you’ve made a poor financial decision. Let’s avoid another one by crunching some common numbers and using good sense.

Good sense will tell you that a high school teacher cannot reasonably afford to pay off hundreds-of-thousands-of-dollars worth of debt over a lifetime, nor does a high school teacher need a hundred-thousand dollar education! With a standard curriculum in place, education majors will benefit from most any accredited program that has a reputable faculty, so if your college to-do list includes contacting Harvard and inquiring about their education program, grab an eraser and make quick work of crossing them off the list! Look into a local State College instead, and pat yourself on the back for making a good financial decision!

The ‘number crunch’ formula is a productive and vital practice if you are a prospective student, and it should be applied to any major and degree program that you are expressing interest in. As a general rule of thumb, your student loans should account for anywhere between 8% and 12% of your gross income. Very simply, estimate the starting salary of the job which you are pursuing and multiply it by .08 to .12, then divide that number by 12. This is the total amount you should be paying per month after you graduate and enter the workforce. For example:

• Average starting salary for a high school teacher = $32,000
• Percentage of my gross income I will contribute to loans = 9% (.09)
• Divide that number by 12 to get a monthly payment
• (32,000 x .09 = 2880)
• (2880/12 = $240 per month)

Using the example above, it would not make sense for a high school teacher to take out $50,000 in student loans. Why? Because your monthly payment on $50,000 for a 15 year loan at 12% would equal $311.00 per month (50000 x .12 = 56000/15 years = 3733/12 months = $311 per month). That is, obviously, higher than your sensibly allowed amount. The amount you can afford to pay monthly towards student loans will vary greatly depending on the career you are pursuing, so use the ‘number crunch’ formula to find your good-sense loan amount.

Give it a try! Check out our article titled ‘Highest Paid College Degrees’ or do some salary research of your own. Apply the ‘number crunch’ formula and apply to schools that make good financial sense!