How Much College Loan Debt is Too Much?

The typical student graduates from college with $23,200 in college loan debt.

That figure, which comes from a recent study from the Project on Student Debt, only includes student loan debt. The $23,200 tab does not include money that parents borrowed through the federal PLUS loan program, a home equity line of credit or by dipping into retirement accounts.

Is the $23,200 figure a reasonable amount of student debt? It depends on what type of student loans an ungraduate is using. That level of debt will often be manageable if the student only borrowed through federal student loans. For most students that will mean obtaining federal Stafford loans.

Federal student loans have built-in protections that private student loans, which are also called alternative student loans, don’t.

Federal student loans:

There is a limit, however, to how much cash a student can borrow through a federal Stafford loan. For the 2009-2010 school year, here is the maximum students can borrow:

  • Freshmen: $5,500
  • Sophomores: $6,500
  • Juniors: $7,500
  • Seniors: $7,500

Here’s the bottom line: I’d suggest that when students are considering borrowing for college they should only use federal loans. If they do, there is far less chance of getting into financial trouble after graduation.

Lynn O’Shaughnessy is the author of The College Solution and she also writes a college blog for CBSMoneyWatch. Follow her on Twitter.

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  1. We just paid off a Plus Loan in August 2010 with our daughter…But we’re 10 years older now and have a son going to College.Is it still a good idea at our age(64)and have been on Social Security for a few years, to do it again?

  2. Lynn –

    I spoke with Mary Pilon several weeks ago about the earning potential of grads and student loan debt. Edububble wrote an a good piece about her work here –

    I am also on a campaign (perhaps you’re familiar with it) on Facebook against the College Board. It’s called “Stop Quoting The College Board” ( Edububble makes a reference to the College Board too. I think everyone should be aware that the College Board had their hand in loans. Until quite recently they were lenders, so I think their data shouldn’t be used (i.e., because of how it’s framed). I am not sure why the Dept of Education can’t put out their own figures.

    Cheers from Korea!
    Expat and Advocate for Student Loan Debtors, Ms. C. Cryn Johannsen

    Creator of Education Matters; Senior Advisor on Education, Plexus Consulting –

    1. Hi Stuart,

      Unfortunately, there is no one right answer to the question of how much parents should borrow. I can say this: you certainly shouldn’t jeopardize your retirement savings by taking on a big college debt.

      One way to answer your question is to figure out what your monthly PLUS loan payments would be by using a loan calculator. Here is the link to a Parent Loan Repayment Calculator on the College Board website:

      Good luck.

      Lynn O’Shaughnessy