Factor in loan debt as you choose your major
Dan Brandt still has $32,000 in student loan debt, after earning his bachelor’s degree in marketing, but he’s not worried about paying it back.
That’s because Brandt chose a major and a career with that debt in mind.
“Money is a big deal for a 17-year-old kid that has nothing,” said Brandt, who graduated from Augsburg University in Minneapolis in 2011 with $55,000 in student debt.
“I knew the salary ranges in marketing could make a nice living, but I was more concerned with finding a place I enjoyed working at,” adds Brandt, who is now a marketing manager at Best Buy’s headquarters.
If you, unlike Brandt, don’t know what you want to study, you can choose a major that won’t leave you with student loans you can’t repay.
Here’s how:
Link interest, careers
Start by listing your interests and skills. There may be a clear fit — if you’re adept with numbers, for example, you might consider accounting.
Next, research careers by matching a major to one of the “Occupation Groups” listed in the U.S. Department of Labor’s Occupational Outlook Handbook. Each group lists positions along with descriptions, educational requirements and projected job growth. Consider contacting your college’s career office to link up with alumni who studied what you’re interested in, to see their career path.
Research earnings
Your major could make a big difference in lifetime earnings: The disparity between the lowestand highest-paying majors is $3.4 million, according to a 2015 report by the Georgetown University Center on Education and the Workforce.
“There are people who really want to go to into social work or drama, but money is going to be an issue,” says Brad Hershbein, economist and director of information and communications services at the W.E. Upjohn Institute for Employment Research. “You have to know that, and make an informed decision about what it’s going to be like after you graduate.”
Research median salaries rather than average salaries, Hershbein says.
The average starting salary for the class of 2017 was $50,516, according to the National Association of Colleges and Employers Summer 2018 Salary Survey, but median earnings — where half earn more and half earn less — start at $27,000, according to 2014 research by The Hamilton Project, an economic research group at the Brookings Institution.
Compute salary, debt
Before you take out student loans, submit a Free Application for Federal Student Aid, or FAFSA, to qualify for gift and earned aid, including grants, scholarships and work-study. Find private scholarships with search engines such as the U.S. Department of Labor’s CareerOneStop scholarship finder or Scholarships.com.
If you need loans and you’re not sure how much to borrow for college, you can keep repayments manageable by aiming for a monthly payment that won’t be over 10 percent of your expected after-tax takehome pay each month in your first year after school.
For example, If you expect to make a starting salary of $46,000, then borrowing about $24,000 for college means you can afford a monthly payment of $257.