How much should students borrow for college?

As the deadline nears for sending deposits for college in the fall, many high school seniors are weighing their options on which— and if and how much to borrow.

Is it better to attend a more prestigious school, even if it costs significantly more? Should students choose based their heart or their pocketbook? And how much college debt is too much? school to attend, A big part of that for many families is the cost.

Among Michigan residents, 59 percent of those graduating college in 2008 took out student loans and the average debt was $23,489, according the Project on Student Debt, a national nonprofit. Those numbers do not include loans taken out by parents.

Based on 6.8 percent interest, the rate charged for federal Stafford loans, repaying $23,500 would require monthly payments of $270 for 10 years, according to a calculator on

The conventional wisdom about college loans is that the debt incurred should be viewed as an investment versus “real” debt because higher education typically leads to higher earnings. According to the U.S. Census, average annual earnings for a high-school graduate was $31,286 in 2007, compared to $57,181 for those with a bachelor’s degree. From that standpoint, it makes far more sense to borrow $23,000 for college as compared to taking out, say, a car loan for that amount.

But there’s another side to the story. Especially in recent years as college costs have soared and the job market has tanked, many college graduates find themselves with large school loans and lack of sufficient income to pay them off.

“So now we have the educated poor, with student loan debt leaving ever more college graduates and young professionals unable to buy a house or start a family or a small business,” Robert Appelbaum, a lawyer and founder of, wrote for a New York Times blog discussion last year.

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