When Does Student Loan Debt Make Sense?


The past few years have been illuminating for student loan debt levels in the United States.

Followed only by housing debt, student loans account for more than $1.5 trillion in debt in the American economy.

Despite its meteoric rise, many incoming students still reach for the financial vehicle to help them achieve their academic goals.

Although the alarm bells are sounding off by some economists who worry we’re in a loan bubble that’s soon to burst, student loan debt may still make sense for some students.

The Job You Want

When you’re deciding what kind of student loan debt you’re able to handle, it’s important to weigh it against what sort of job you’re looking for.

If you need additional training or a certain degree is necessary to get the job that you want, getting a student loan may make sense to help you achieve those goals.

Medical professionals, lawyers, and engineers, for example, need higher level education in order to enter the field.

Minimize Student Loan Amounts

If you’re thinking of going back to school or are even thinking of going to school for the first time, before you jump into taking on student loans to cover the entire balance of your education, consider applying for scholarships.


In the United States, there are over $100 million in unclaimed scholarships every year. Scholarships are also available for a myriad of reasons, both expected and unexpected — for example, if you’re an avid coffee drinker and use coffee while you study, you may qualify for a scholarship. Apply for as many as you can to reduce your student loan burden.

If you’re able to work while you’re in school, that’s an added bonus. Not all school programs are full-time, which may give you the opportunity to pay your way while you’re learning to avoid student loans.

Finally, don’t take on more student loans than you can afford to repay. A very general rule of thumb is to not take on more debt than you can earn in your first year working. If you expect a starting salary of about $40,000 per year, you shouldn’t take on more than a total of $40,000 in student loan debt.

When It Doesn’t Make Sense

Student loans are readily available, but there are some instances where even if you’re eligible, it’s not advisable to take on debt.

If you have a dream school you want to attend, taking on student loans just to attend because you want the alma mater on your resume may be a poor choice.


If the school won’t afford you unique networking or job opportunities for attending, taking on extra debt is an unwise financial move.

Similarly, just because a close family member attended a particular school and had the time of their life doesn’t mean it’s the right fit for you as well.

FInally, if you’re hoping to just use college to explore a number of different majors, it’s advisable to attend a cheaper state school or find a community college to try things out before committing to taking on debt to pay for the remainder of your education.

Before you take out a student loan, make sure you know the long-term benefits of the decision. If the job you’re pursuing or the education you want will enable you to pay those loans back in a timely manner, they may make sense.


Edukate is a financial wellness benefit that helps employees make smarter decisions with their money. For employers, Edukate offers custom analytics to see which areas of financial stress are most prevalent in the workplace, as well as communication tools and contests to encourage adoption and engagement rates. Learn more at Edukate.com.

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