How Much Student Loan Debt Is Too Much? 5 Frameworks to Calculate How Much You Can Borrow

A college degree can be the key to unlocking a rewarding career that pays the bills. But it can also be an expensive decision that traps you in a cycle of debt for decades to come.

According to a 2025 survey by Data for Progress, 42% of borrowers are forced to choose between paying for their basic needs and their student loans, and one in five are currently delinquent or in default on their student loans.

Determining how much you can safely borrow via student loans is a crucial exercise before taking on any debt; thinking through the decision carefully can help avoid a future where you can’t keep up with payments. Below, we’ll cover five strategies to determine how much student loan debt is too much, plus tips to keep the debt manageable.

Table of Contents

1. 1. Borrow less than your anticipated starting salary
2. 2. Calculate the ROI of your student loan
3. 3. Compare anticipated monthly payments vs. monthly income
4. 4. Think about federal and private loan debt differently
5. 5. Speak with your peers and recent graduates
6. Tips for reducing student loan debt

1. Borrow less than your anticipated starting salary

The debt-to-salary rule of thumb is the most popular way to calculate how much student loan debt you can manage.

To use this method, research the average starting salary for the job you anticipate getting out of college, and don’t borrow more than that.

Experts sometimes adjust this rule for those in a graduate program: You can instead borrow 1.5 times your anticipated starting salary. The thinking here is that someone with a graduate degree will eventually make even more money and can afford slightly more debt.

The table below shows various academic categories and the typical starting salary, per data from Indeed. Note that these categories are broad, so you’ll likely see variation depending on the job you take within each category.

While popular, this metric may not work for everyone. For instance, some jobs have such low starting salaries that it would be impossible to abide by the rule; other jobs’ starting salaries may be unpredictable or depend solely on where you live.

Many freshmen may not even know what they plan to do with their degree after school, especially if it’s a more generalized program (like marketing or communications).

This rule of thumb is a good starting place, but take it with a grain of salt.

I often see students borrow based on the amount they are approved for rather than the amount they actually need, and it’s also common to overestimate early-career starting salaries.
Loan balances can grow quickly when borrowing is used to cover living expenses or lifestyle upgrades, which may feel manageable now but can create added financial pressure after graduation.

2. Calculate the ROI of your student loan

Another way to determine how much student loan debt you can safely take on is to estimate the long-term return on investment (ROI).

When you think about it, your education is one of the greatest investments you’ll ever make. By investing in your skills and knowledge, you gain access to more lucrative and challenging career opportunities, poised for growth.

So how can you possibly calculate the actual ROI of a college education?

Technically, you can’t do so using actual numbers (because who knows what you’ll make 20 years from now, or how your field might change before you retire, or what pivots you’ll make along the way?), but you can make some general assumptions:

• How much you’ll make: Determine the average salary you expect to make in your field, and multiply it by the number of years you intend to work. When calculating the salary, consider inflation (an average 3% pay increase each year is a safe bet) and job pivots (occasional larger pay boosts, say, 10%, when getting a promotion or changing companies).
• How much it costs: Calculate the total anticipated cost of your education, whether it’s a two- or four-year program or includes a graduate or professional degree. This includes out-of-pocket expenses and loan expenses, including student loan interest.
• What you don’t make during school: Don’t forget about the opportunity costs, aka the potential wages you’ll lose for the time you’re in school (assuming you don’t work while going to school). For instance, someone who graduates and enters the workforce at 18 will start making money immediately, while you might not start earning until 22, 24, or, in the case of medical or law school, your late 20s. Add this amount of lost wages to the cost you calculated previously.

The ROI of your investment is your lifetime earnings divided by the cost of college, times 100. As an example, assume:

• You’ll make $2 million over the course of your career. According to the Social Security Administration, both men and women with a bachelor’s degree make more than $2 million in their lifetimes.
• Your overall education cost is $500,000, including interest and lost wages. This is a realistic amount for many student loan borrowers, according to the Education Data Initiative.

Thus, the ROI would be 400%.

$2 million / $500,000 x 100 = 400%

It’s up to you to determine what ROI you’re comfortable with. The more debt you take on, especially using private student loans, which might have higher interest rates depending on your or your cosigner’s credit profile and salary, the lower your ROI will be.

3. Compare anticipated monthly payments vs. monthly income

Another resource experts recommend using when determining how much student loan debt you can manage is the 10% rule. With this method, your anticipated monthly student loan payment should not exceed 10% of your anticipated income.

How can you estimate this? Similar to the debt-to-salary rule of thumb, you’ll need to research the estimated starting salary for your job and then divide it by 12. That’s your monthly income.

Then estimate your monthly student loan payment. To do this, you’ll need a broad idea of your total student loan debt when you graduate, as well as the interest rate and repayment term. You can use our student loan payment calculator to determine the monthly payment:

Student Loan Balance

Student Loan Balance

Annual Interest Rate

Loan Term (Years)

Calculator Results

Monthly Payment
Total Interest Paid
Total Cost of Loan

A student loan balance with an average interest rate of paid over a year term will have a monthly payment of . In total, the loan will cost with in interest.

Once you have both numbers, divide the monthly payment by the anticipated monthly income. If the result is greater than 0.10 (or 10%), it’s possible that’s too much student loan debt, and you should explore other ways to pay for school that involve less debt.

4. Think about federal and private loan debt differently

When determining how much student loan debt is too much, think about federal loans and private loans differently. In general, it’s a little safer to take on more federal student loan debt than it is private student loan debt, for a few reasons:

• Unless you have (or your cosigner has) an excellent credit score and a high salary, federal loans typically have lower interest rates than private loans, which makes them less costly in the long run.
• Federal loans are eligible for income-driven repayment. (Note: Starting July 1, 2026, as a part of the One Big Beautiful Bill Act, new federal loans will only be eligible for one income-driven repayment option: the Repayment Assistance Plan.)
• Federal loans have more protections built in, such as student loan deferment.
• Eligible borrowers may have their debt forgiven through Public Service Loan Forgiveness (PSLF).

While there isn’t a hard rule to abide by, you can consider taking on slightly more debt via federal loans than you would otherwise do with private student loans. (Think you might need to consider private loans? Check out our list of the best private student loan lenders.)

5. Speak with your peers and recent graduates

Another way to determine how much student loan debt is too much is simply to talk to your peers and recent college grads:

• Peers: Find fellow future students to gauge how much student loan debt they’re taking on, and talk to them about their plans to pay it off after graduation. Ideally, chat with students who plan to pursue the same degree as you.
• Recent college grads: Connect with recent graduates from the program you plan to enter, and ask how much debt they’re leaving with, how much money they’re making in their first job, and whether the student loan repayment is manageable.

This anecdotal evidence will help you determine whether you’re taking on too much debt or if you can handle the amount you’re about to sign up for.

When I meet with a client who’s overwhelmed by student loans, we begin by reviewing cash flow, focusing on monthly income and expenses. Our first priority is identifying opportunities to reduce or eliminate expenses, followed by discussing ways to increase income where appropriate.
From there, we establish target income and expense levels that support sustainable student loan management, aiming to keep student loan payments at or below 10% of monthly income.

Tips for reducing student loan debt

If you’re hoping to graduate with as little student loan debt as possible (and who isn’t?), consider these tips before taking out a single loan:

1. Apply to many schools: Even if you have a dream school in mind, apply to as many schools as possible. Compare the student aid packages offered and the total cost of attendance. If the programs for your degree are all similar, choose the school with the lowest cost of attendance or the largest scholarships.
2. Work while in school: If you’re able to maintain a high GPA while going to school full-time and working part-time, you can use the income from your job to cover some basic living expenses. This can reduce the amount you need to borrow, and it could even help you pay down some of the interest accruing on your Unsubsidized and private student loans while in school.
3. Graduate early: If you’re able to shave off a semester or two by getting credit for Advanced Placement courses in high school, or by taking an extra course here and there, you can save yourself money in the long run.
4. Live off campus (or at home): Student housing is expensive. If you have a way to get to campus easily, consider renting an apartment with friends off campus, or living at home with your parents or guardians to save even more money.
5. Choose the right profession: While the best life advice is to follow your dreams and work a job you’re passionate about, the financial reality is quite different. Yes, think about jobs that would make you happy, but also consider jobs that pay well or are eligible for PSLF.

And remember: You can always research the best student loan refinancing options if you’re stuck with insurmountable debt. You might be able to refinance to lower your monthly payment or get a lower interest rate.