Why do colleges cost so much? Large capital spending provide the best facilities, faculty, and sport centers and teams to keep wealth alumni donors happy.  Universities hope to boost their national ranking by spending on high-speed internet access, new gyms, concert halls, and better student housing. Faculty salaries are expensive.   The median salary for a tenure professor is $76,200.  Many colleges are trying to shrink class sizes and reduce class loads so professors can do more research and bring glory to the University.  What type of loans are available?  A Perkins loan offers a 5% fixed interest rate and a maximum borrowed amount of $20,000.  Stanford loan is a variable rate loan capped at 8.25% and a 4% upfront fee.  How much should you borrow? None is the correct answer.   If you don't have money then don't go to college.  Save your money then go to college.  If you yield to temptation and accept a loan then your loan payments once you graduate shouldn't exceed 10% of your expected monthly gross.  You will have 10 years to repay the student loan.   If you earn $40,000 then your payback will be 4,000 a year (10%) or about 340 dollars a month for a $26,000 dollar loan.   The average undergraduate loan is about 26k.   50 percent of the student enrolled in college do not graduate and leave the college with heavy student debt.   If you graduate making less than 40k the loan repayment amount will be overextended in ratio to earnings.    Instead of 10 percent of your wages the loan will represent 15 to 20 percent.   The heavier debt loan increases the risk of default.

Deal with Your Debt: The Right Way to Manage Your Bills and Pay Off What You Owe PDF

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