By Kathryn Flynn
Guest post – Naaree.com
Whether you’re looking to start a new career or trying to climb the corporate ladder, a college degree can help you get there. But, degrees are expensive, especially for someone trying to advance in their current role. In fact, more than half of graduate school recipients borrow student loans to help pay for their degree. Is the cost really worth it?
Yes, according to the U.S. Department of Labor. Data from 2017 shows that on average, women who hold a bachelor’s degree earned 68% more in weekly earnings than women with only a highs school diploma (no college). Women with advanced degrees earned 27% more than women with bachelor’s degrees.
Furthering your education can often lead to a bigger paycheck, more job security and better benefits. Student loans are a helpful tool that can put a quality education within reach for almost any woman. The key is to borrow responsibly so that you’ll be able to afford your degree and pay off your debt in a timely manner.
Here are some tips on how to best use student loans and achieve success in your career.
Step 1. Find Out How Much Your Degree Will Cost
The cost of your education depends on where you go to school and the type of degree you want to earn. A private university is more expensive than a public state college, and a master’s degree costs significantly more than a bachelor’s degree.
The College Board reported the following average published sticker prices for the 2020-21 academic year:
Cost of tuition and fees (2020-21 academic year)
| Bachelor’s Degree | Master’s Degree | Doctoral | |
| Public 4-Year |
$8,760 |
$8,950 |
$11,440 |
| Private 4-Year |
$37,500 |
$29,670 |
$44,910 |
Step 2: Determine How Much You Can Afford to Borrow
Before you decide where you want to attend school, consider how much you expect to earn when you graduate. As a general rule of thumb, your total student loan debt should be less than your expected salary after graduation.
If you’re studying to be a physical therapist, you should research the average starting salary for that job in your city. If you find that you’ll earn somewhere around $65,000, that should be the maximum amount you borrow in student loans.
Things might be a little more complicated for women who are returning to school to further their education. You’ll still need consider your future income when deciding how much to borrow. But, it might make sense to also look at your monthly income, and what you’ll have available after all obligations are paid.
Here’s an example. If you borrow the amount of your expected new salary of $65,000, your monthly payment will be around $679 (assuming a 4.66% interest rate with a 10-year term). Will the payment fit into your monthly budget?
Consider your debt-to-income (DTI) ratio, which is what lenders use to determine your creditworthiness. To calculate your DTI, divide your total monthly debt payments by your gross monthly income. Generally, you’ll need a DTI of 43% or less to be approved for a mortgage or other loan.
(Of course, you don’t have to borrow the maximum amount you can afford. You should always try to pay for as much as you can with scholarships, income and savings.)
Step 3. Explore Student Loan Options
Once you know how much you want to borrow, it’s time to research your loan options. There are two main types of student loans – federal student loans and private student loans. You’ll want to start with federal loans, since they typically offer lower interest rates and better repayment options.
You can apply for a federal student loan, such as a grad PLUS loan, by completing the Free Application for Federal Student Aid (FAFSA) online. You’ll then receive a financial aid award letter from your school that explains the amount of federal student loans that you’re eligible for. The letter will also include the amount of grants and other need-based aid you can receive.
If you need to borrow more than your maximum federal loan amount, consider a private student loan. Private student loans are typically offered through banks, credit unions or an online lender. There are many free tools available online to help you compare interest rates, customer service and other features of private lenders.
Step 3. Put Together a Repayment Strategy
Student loans can help you succeed at work, but they can become a serious issue if you’re not able to make payments. This is especially important for women to remember, since women hold two-thirds of the total student debt in the U.S.
Women take approximately two years longer than men to pay off their debt and are more likely to default on student loans. To avoid having your loans become unmanageable, it’s important to set a realistic repayment strategy.
It’s recommended to keep your student loan repayment term at the standard 10-year length. You may be able to extend your term with a private loan or consolidation, but this should only be done as a last resort if you’re having trouble making payments.
If your job requires further education for you to succeed, student loans may be a smart option. But, borrowing money is a major financial decision that can affect your lifestyle for years to come. When it comes to student loans, be sure to carefully consider all of your options. After all, an education is one of the best ways to invest in yourself.
