:max_bytes(150000):strip_icc()/GettyImages-1492599153-c4b6d70cd0344b8696d4649b01e8c934.jpg "My son wants to take out student loans for his dream school. What should I tell him?")
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Key Takeaways
- When evaluating whether your child should take on student debt, try to understand their dreams while planning for their financial reality.
- If your child does decide to take out loans, suggest that they not borrow more than what they’ll make their first year out of college.
- Encourage them to consider attending a community college for the first two years of their degree.
- Discuss the possibility of taking a gap year, which would give them time to build up savings.
A parent posted on Reddit’s StudentLoans forum a question that probably keeps thousands of families up at night: their child wants to take out student loans for their dream school, and they’re unsure what to tell them.
This is a tricky question because student debt can feel like such a burden. The typical student’s average student loan debt may be as high as $42,673. And the damage goes beyond bank accounts. In one survey, 78.7% of respondents said they’ve experienced anxiety due to their student loan debt. One in 16 respondents had suicidal thoughts because of their loans, and for borrowers who were unemployed or made less than $50,000, it was one in eight.
Nobody wants to be the parent who says no to their kid’s dreams. But nobody wants their kid drowning in debt, either.
A Few Rules to Remember
Financial planners have a guideline: your total student loans shouldn’t exceed your first-year salary.
So if an engineering grad lands a job making $78,000 per year (which is, on average, about what an engineer just out of college will make), they can handle loan payments on up to $78,000 of debt.
On the other hand, a communications grad making $60,000 per year (again, the average salary for a recent college grad with that major) would feel overwhelmed if they took out $80,000 in student loans, because the monthly payment would be more than what’s considered manageable (8% to 10% of a new grad’s gross income).
Fast Fact
For the 2025-26 school year, undergraduate federal loans have an interest rate of 6.39%, while graduate loans are 7.94% and parent and grad PLUS loans are 8.94%. Private loans can be anywhere from 3.39% to 17.99%.
It’s typically best to go federal, rather than private, if you’re taking out student loans. Federal loans’ interest rates are fixed, while private loans’ interest rates can be fixed or variable. Plus, with a federal student loan, you have the option to do an income-driven repayment plan. From a parent’s perspective, private loans can be risky. Private loans need co-signers over 90% of the time, and many of those co-signers—usually parents—wind up making the payments.
A Few Ways to Make College More Affordable
Consider encouraging your child to start their degree at a community college. Then they can transfer to a university after two years. They’ll pay roughly half what they would’ve spent on four years at a university. It’s the same diploma at the end, with potentially thousands less in debt.
You can also ask your child to appeal their financial aid package. Maybe they received a better offer from another college. They can ask their dream college if they’ll match that offer. Just don’t wait too long.
Your child may also consider taking a gap year after graduating from high school. AmeriCorps, for example, pays a living stipend and provides thousands of dollars for further education afterward. Or they could find a job and continue living in your home. That way, they could save money, take some time to figure out what they really want to study, and show up to their dream school a year later without panicking about loans.
Ultimately, try to remember that you’re not crushing your child’s dreams. You’re making sure the next decade (or more) of their life isn’t crushed by debt payments.
