How Much Should You Borrow for a College Education?

Starting in March 2020, when former President Donald Trump announced that the Covid-19 pandemic was a national emergency, Americans with federal student loans did not have to make any payments. But, after more than three years and numerous extensions — by both the Trump and Biden administrations — required payments began earlier this month. That’s generated fresh talk about the nearly $1.8 trillion in student debt that Americans carry. But how much should a person go into debt for college?

In a nationally representative poll commissioned by The Chronicle, people had specific numerical answers. To the question of what the maximum loan debt for a bachelor’s degree should be, the median response was $20,000. That’s a bit less than what, on average, American bachelor’s-degree holders actually borrow to cover their time in college. Among students who earned degrees from public and private nonprofit colleges in 2020-21, 54 percent graduated with debt. Those borrowers took out an average of $29,100 in federal and private loans, according to the College Board. (Students who go to for-profit colleges tend to borrow more, previous College Board research has found.)

Despite the dramatic stories that make the news, usually people have little trouble paying back their student loans, said Sandy Baum, an economist who helped write the College Board’s reports on student aid and college pricing for nearly two decades. But the cost of college clearly weighs on many Americans’ minds. In an open-answer question on The Chronicle’s survey, people were preoccupied with debt.

When asked why respondents would advise a close friend or relative to get a bachelor’s degree or not, many mentioned student loans. The theme came through especially strongly in answers from the minority of respondents (one in five) who would advise someone not to get a bachelor’s degree. “If they want to do something in the STEM or law … a degree is useful. But for many jobs otherwise, a degree is a pointless waste of money and people can be very successful without all that hideous debt,” wrote one respondent. “Degrees have become expensive pieces of paper that trap people into an unfair amount of loans for little to no return on investment,” wrote another.

Among the survey-takers who said college was not worth it, the most commonly cited reasons were cost, debt, the lack of a guarantee that a degree would lead to a good job, and the existence of other avenues to well-paying positions. Only a handful of respondents said they took issue with higher education’s liberal politics or “indoctrination.”

Some demographic groups in The Chronicle’s survey tended to give higher or lower numbers than the overall median reasonable debt. These trends may reflect a group’s own circumstances and inequities in society.

Black survey respondents’ median answer for what’s a reasonable student debt was $10,000. That lower figure was “not necessarily surprising to me,” said Jalil M. Bishop, co-founder of a nonprofit research group called the Equity Research Cooperative. “I think it’s Black borrowers who have experienced the most negative consequences and multigenerational impact of student debt.” Research that Bishop helped conduct suggests that Black borrowers, who face racial inequities in family wealth, hiring, and pay, struggle especially to repay student loans.

Meanwhile, in The Chronicle’s survey, respondents age 65 and older, respondents with household incomes of $100,000 or more, and respondents who had themselves taken out student loans — as opposed to those who had never borrowed for college — had among the highest median answers to the question of how much debt was reasonable.

“Your past experience with debt is going to influence your attitude towards debt,” Baum said. “So if you saw your parents have their house foreclosed on, or you saw them really struggle to pay the rent, you’re going to be much more worried about debt than if — look, if you were Donald Trump’s kid, you really believe in borrowing millions of dollars, right? Because you see that that worked out.”

Of course, the risks and benefits of student debt aren’t really about any specific number. They’re about how the loans fit in with the rest of a person’s life. To get a better understanding of how Americans decide what makes sense for student debt, The Chronicle interviewed survey-takers who agreed to be contacted by a reporter. While each had tapped out some specific number to answer the survey, over the phone they all basically said: It depends.

It depends on what you study and the salary you expect to earn after, in your field.

It depends on how long it takes to pay off the loan.

The Public-Perception Puzzle

This project examines higher ed’s public-perception problem — and the solutions to it — in our reporting and in an independent national survey conducted by The Chronicle with Langer Research Associates. The survey’s aim is to add depth and nuance to the growing body of research on how people perceive higher ed.

Explore the series.

You don’t want a loan to “linger over your head,” said Anthony Beaver, a land surveyor in Mobile, Ala., who never went to college but who has a 19-year-old son who’s interested. About five years seems like a reasonable repayment time to Beaver. Ten or 15 years, too long.

Constance Jiang, an actor in Los Angeles who has a bachelor’s degree in marketing from New York University, has female friends who feel their biological clocks ticking away. To her, an ideal loan pay-off time is just a few years, to allow people to start families by their mid-20s, debt-free. Without student debt, “you have more freedom to kind of think about the next part of your life,” she said.

Neither Jiang, whose parents paid for her college, nor Beaver had taken out student loans themselves. Steven Casarez, a 67-year-old purchasing officer for the state of California, has. He thinks a longer pay-off time for a bachelor’s degree is sensible: 10 years. A first-generation college student, Casarez paid for his education with a combination of grants and loans, which he would dream about many years after he had finished paying them off. He would wake in the night with a start, only to remember: “I made it. I got a career.”

Experts on student loans are divided on whether people should be so wary of taking on college debt. Baum, for example, thought debt loads that are higher than what many survey-takers said was reasonable nevertheless could make sense for students, considering how much more people tend to earn with a bachelor’s degree. In 2021, the median annual income of young adults with bachelor’s degrees was $21,900 more than that of their peers with only a high-school diploma, although there were significant overlaps, too, where people with less education outearn some number of people with more education.

One survey respondent The Chronicle interviewed was acutely aware of the typical earnings difference. Randolph Shipwash, a retiree in rural Pennsylvania who had worked as an excavator and a truck driver for a living, thinks $100,000 is a reasonable student debt, much higher than the average answer. He calculated that number from the salary difference he saw in postings for management positions that require a bachelor’s degree, multiplied over 10 years.

Baum had another important reason for suggesting that higher debt could be worthwhile. In August, the Biden administration announced a new income-based repayment plan, Saving on a Valuable Education, or SAVE. SAVE lowers the monthly payments required from many borrowers, requires no payments from lower-income borrowers, and erases people’s remaining debts after 20 or 25 years of payments. With this new plan available, Baum said: “You almost feel irresponsible advising people to borrow only a little bit because if it doesn’t work out, they won’t have to repay it, right?” [Update, July 21, 2024: The SAVE plan was temporarily blocked by a federal appeals court.]

Not all borrowers, however, may find income-based repayment to be a good path. In a survey of Black borrowers, many interviewees told Bishop and his co-author, Jonathan C.W. Davis, that income-dependent plans in particular were a “trap,” “scam,” and “shackles on their ankle,” because of how long they lasted. Income-driven plans, including SAVE and older ones that the Department of Education offers, extend the usual payback time on student loans from 10 years to 20 or 25 years. In the meantime, having the debt on their credit reports could affect borrowers’ ability to get favorable terms on other loans, such as mortgages. Finally, Bishop and Davis’s interviewees reported having trouble getting their debts forgiven at the end of their purported repayment time. “I think folks have the right to be worried about those plans,” Bishop said.

One borrower The Chronicle interviewed, who is not currently paying on her student debt because of her income, didn’t seem too worried about her loans. “They’re good,” said Te’Asiah McRath, 22, of Indianapolis. “My college, it wasn’t really expensive.” McRath took out some tens of thousands of dollars in loans to get her associate degree through an all-online medical administrative-assistant program offered by Ultimate Medical Academy, a nonprofit allied-health college. To her, the problem is not so much the debt but the fact that she didn’t get a job in her field after she graduated. She works for an insurance company instead.

“It’s not a job that aligns with the degree that I got, so I kind of feel like I have been scammed,” she said. “It makes me not want to go back to get my bachelor’s degree.”

A comfortable majority of respondents to The Chronicle’s survey, 79 percent, said their associate or bachelor’s degrees had been worth it, however they paid for them. Some interviewees described multigenerational trajectories that seemed to have been transformed by higher education. Danny Berry’s mother had been a homemaker and his father a sanitation worker in New York City. At his father’s encouragement, Berry got a bachelor’s degree from York College of Pennsylvania. He became a police officer, where his credential qualified him for promotions. Although he had taken out student loans for himself — he still remembers his payments, $41.27 a month for 10 years — he’s proud that he earned and saved enough to be able to send two sons to college debt-free. “Everything fell into place for me,” he said.

Alfonso Aguilera, 44, was the child of farmworkers in California’s Central Valley. “Tired of being broke and poor,” he decided to try to go to college, despite being “scared as shit” of the idea. He went first to a community college, and then to San José State University. A Cal Grant, a state scholarship for residents with financial need, paid for his first few years. He covered the remaining with loans that he was able to pay off quickly. Later, he discovered he had a way with numbers, so he went to Santa Clara University for an MBA.

“I wouldn’t have gotten out of the situation I grew up in without an education,” he said. He still owes money for his MBA but feels OK about having to start repaying again: “I don’t mind.”

What happens when a loan doesn’t pay off? Interviewees laid responsibility on a variety of culprits. Some blamed students for not thinking through how they plan to pay for college loans after they graduate. Some blamed colleges for how much they charge. Aguilera disagrees with the latter. “The cost of anything goes up over time,” he said. He thinks the government should subsidize the cost of college for people going into lower-paying, but needed, professions, such as teaching and social work. S. Matthew Aod, of Sioux Falls, S.D., blames the government for giving out huge student loans in the first place.

McRath, who felt scammed because she is not using her degree in her job, saw fault in more than one place. Perhaps a student doesn’t endeavor to find a related job. But also: “Colleges should do more, put more effort into making sure that that student gets the job that they want with the degree they received.”

Bishop and Davis argue that higher education should be funded less by loans and more by grants. It’s the loan load, Bishop said, that forces people to think about the worth of college primarily or purely in terms of money, of return on investment. Bishop thinks college could and does do more, including developing young adults and preparing citizens of a democracy. But so long as college costs so much that people must take on burdensome, long-term debt, they’ll count its worth by the bang they think they’ll get for their buck in the marketplace.