When is student debt worth it?

The average graduate in Minnesota with a 4-year degree leaves college with $31,497 in debt. Nearly 70% of graduates in Minnesota have debt.

If you’re comparing the costs of tuition between schools, there are a few things you should look out for, says personal finance expert Liz Weston.

Financial aid offers often don’t include the total cost of attendance, according to Weston. “That’s fairly common that they might just mention tuition and fees, and not mention books and supplies or living expenses,” Weston says. In a city like Manhattan, living costs can dwarf the cost of tuition.

Financial aid packages also blur the lines between loans and actual savings like grants and scholarships. “They pretend, ‘Hey, look at this great award we’ve just given you, and most of it is loans.’ So, they’re not really reducing the cost for attending — they’re just shoving it out into the future and putting it on you.”

Weston says that some, but not all, schools have adopted standardized “shopping lists” that make it easier to compare offers. She also suggests the College Board or CollegeData and Consumer Financial Protection Bureau’s financial aid comparison tool to better compare costs.

But how much is too much for college?

That answer depends on the individual, but Weston says one rule of thumb is, “try to limit the amount that you borrow to the amount you expect to make your first year out of school. So, the total for your undergraduate education is no more than your first job is going to pay you. Now again that’s very general, it’s not going to apply to everyone, but it’s a good start.” (Marketplace)

Today’s Question: When is student debt worth it?