<p>Just wondering…
Assuming I decide to go to grad school and work in a low-paying field (i.e teaching hs or public service), where should I draw the line at debt for undergrad? I would call any amount of debt that would compromise my ability to start a family too much debt. Can anyone quantify this for me (estimates…)?</p>
<p>10% of your income for college debt payment. So if you are making 40,000, 4000 a year or $333 per month.</p>
<p>Let’s say you wanted to buy a home when starting a family. You could use the amount of debt a mortgage lender would let you have to see how much is “too much.” There are many variables, most importantly what you think your income might be and what houses cost in the area you might live.</p>
<p>Let’s say you might make $40,000/year in your field. If your spouse was not adding any income to the equation, your monthly income would be: $3500 in round numbers. For rule of thumb, lenders will let your mortgage payment (including taxes and insurance) be 28%-30% of that, or $1050. They will allow you to have “other debt” payments of about 6-8% more of your income, or say around $225/month. So, figure that you would not want to have more debt than that. If you have no other debts (car loans, boat loans :eek:, credit card debt), you can have student loan payments of that $225 and still perhaps be in a position to buy a home.</p>
<p>As I say, there are many variations on what banks will allow and this is just one way to look at it, but it’s a start.</p>
<p>Not many places left where you can buy a home with an income of $40K but that’s another topic. I do think somewhere in that 6-10% range is the most you want per month.</p>
<p>Ok, thanks very much. Those numbers are helpful.</p>