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A College Education Isn’t Priceless
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Updated · 2 min read
How is this page expert verified?
NerdWallet's content is fact-checked for accuracy, timeliness and relevance. It undergoes a thorough review process involving writers and editors to ensure the information is as clear and complete as possible.
Brianna is a former columnist and staff writer for NerdWallet who focused on student loans and money management for 20-somethings. Much of her work helping readers with budgeting and debt is featured in her personal finance advice column, "Ask Brianna," which was syndicated by The Associated Press.
Des Toups was a lead assigning editor who supported the student loans and auto loans teams. He had decades of experience in personal finance journalism, exploring everything from car insurance to bankruptcy to couponing to side hustles.
Lead Assigning Editor
College-bound high school seniors of America: You are about to embark on one of the most formative periods of your life, full of new friendships, personal growth and overcaffeinated conversations on the nature of humanity.
Keep “ruinous student debt” off the list.
At this point, while you’re working on applications and deciding which schools most excite you, you may be hearing that college debt is “good debt.” That an education is priceless, and if you’re going to borrow money for anything, it should be to expand your mind and career options.
That’s only partially true.
It’s OK to borrow some money for school. But a college education does come with a cost — one that becomes very real after graduation if student loan payments affect where you live and work, and how much you can save for the future.
Years from now, college should live as a memory of late-night library runs and lightbulb moments in class, not as a financial decision you regret. Here's how to make that happen.
NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula for student loan products takes into account more than 50 data points across multiple categories, including repayment options, customer service, lender transparency, loan eligibility and underwriting criteria.
Fixed APR
3.47-17.99%
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. (1)All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation. (2)As certified by your school and less any other financial aid you might receive. Minimum $1,000. (3)This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 3/3/2025. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
Variable APR
4.44-17.99%
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. (1)All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation. (2)As certified by your school and less any other financial aid you might receive. Minimum $1,000. (3)This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 3/3/2025. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula for student loan products takes into account more than 50 data points across multiple categories, including repayment options, customer service, lender transparency, loan eligibility and underwriting criteria.
Fixed APR
3.49-15.99%
Lowest rates shown include the auto debit discount. Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment. Advertised APRs are valid as of 4/25/2025. Loan amounts: For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website will be subject to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time. Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. A variable APR may increase over the life of the loan. A fixed APR will not.
Variable APR
4.54-14.71%
Lowest rates shown include the auto debit discount. Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment. Advertised APRs are valid as of 4/25/2025. Loan amounts: For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website will be subject to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time. Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. A variable APR may increase over the life of the loan. A fixed APR will not.
Credible lets you check with multiple student loan lenders to get rates with no impact to your credit score. Visit their website to take the next steps.
Estimate your college costs
The Free Application for Federal Student Aid, known as the FAFSA, opened on Oct. 1, 2019, for the 2020-21 school year. The form gives you access to free federal aid such as Pell Grants, plus low-interest federal student loans. Fill it out as soon as possible if you haven’t already; some aid, such as federal work-study, is first come, first served.
The FAFSA will give you an Expected Family Contribution, the amount of money the government calculates your family can provide for college. Use the net price calculator for each school you’re interested in to see how much you’ll likely pay per year based on your family’s income. These two numbers should give you a picture of the schools that will require massive yearly student loan borrowing, and those that are more affordable.
It isn’t easy to let go of your vision of college if your dream school is too expensive. Yes, you can always appeal for more financial aid, and living at home or applying for outside scholarships can help offset costs. But your likely student loan burden should be one of the top factors you consider when figuring out where to apply and where to go.
Here’s how to decide whether a school is truly affordable: Your student loan payment after graduation should be no more than 10 percent of your monthly take-home pay. That’s true for both parents and students.
Use a student loan affordability calculator to find your maximum loan payment. As a student, you’ll need to know your expected first-year salary, which you can find in the Bureau of Labor Statistics’ Occupational Outlook Handbook. No idea what you’ll do after school? Use $50,000 as an upper bound; that’s the median annual salary for 25- to 34-year olds with bachelor’s degrees, according to the National Center for Education Statistics. But depending on where you live, $30,000 or $40,000 could be more realistic, especially for your first year out of school.
Choose the right loans
Keep an eye on the type of loans you opt for, too. Choose federal loans first, and take out the maximum amount of subsidized and unsubsidized federal direct loans that you can as a student.
Parent PLUS loans have higher interest rates and fees than federal student loans, and they have higher borrowing limits. Parents who work for nonprofits could get PLUS loans forgiven through the Public Service Loan Forgiveness Program, as long as they go through the process of making those loans eligible.
But in general, it’s troublingly easy for parents to borrow too much in PLUS loans. Also, PLUS loans require a credit check, so if a parent can’t qualify, a student may be able to get more unsubsidized federal loans.
Parents should keep their borrowing well below the 10 percent threshold referenced above, and potentially look into private loans, if they can get lower interest rates than PLUS loans offer. Many private loans also offer the option to remove the parent as the co-signer later on, leaving the student with the responsibility for payoff.
More than half of student loan borrowers in 2017 said their education wasn’t worth the debt they took on, according to a NerdWallet survey. You don’t have to be one of them.
This article was written by NerdWallet and was originally published by The Associated Press.
