With national student loan debt totaling a whopping $1.75 trillion, parents and students are rightly worried about taking out loans. On average, graduates are leaving college, saddled with around $30,000 worth of student debt. This is a concerning figure for prospective students wanting to take out loans to fund their education.
Should you be worried about taking on student debt, or is it actually okay to have student loan debt? We’ll get into the meat of these questions throughout the rest of this post.
Is Taking Out Student Loans a Bad Idea?
Student loans can seem daunting, but for most students, they are a necessity. With the rising cost of higher education, you may need loans to pay tuition fees and living expenses. No one wants to owe money to the government or other private institutions, but the fact remains, that investing money in your future can benefit you financially down the line.
To put it simply, student loans are a financial tool that may provide you with better job opportunities and may open doors for you in your career. More importantly, the right college degree—and the debt you take on to acquire it—could mean the difference between financial struggle and a lucrative career.
In short, while it is certainly possible to borrow too much money if you plan carefully, you can come out of school with better financial security than when you went in.
What Kind of Student Loan is Right for Me?
There is a range of student loans to choose from. Specifically, students and parents can either borrow money from the government, or they can apply for a loan from a private lender like a bank.
Of these options, we highly recommend getting a government loan. The interest rates for these loans are usually lower, which makes paying back your student debt much easier. To be offered a government loan—and other forms of financial aid—fill out the Free Application for Federal Student Aid (FAFSA).
Types of Government Student Loans (2026 Update)
Federal Direct Student Loans are the most common form of student debt. As a borrower, you may be eligible for subsidized loans or unsubsidized loans. Of these options, subsidized loans are preferable, as they are interest-free until you leave school.
Unsubsidized loans, on the other hand, accrue interest as soon as you take them out. With unsubsidized loans, students end up owing more money than they would with a comparable subsidized because interest will build up over a longer period of time.
We consider Federal Direct Student Loans to be the best way to pay for a college education, but such loans do have a cap. Since they are in the student’s name and students generally have limited credit, Federal Direct Student Loans are limited to $27,000 – $31,000 for an undergraduate degree. If you need more than that, your parents will have to take out loans.
In this case, we suggest loans known as Parent Plus Loans. These loans are borrowed from the government, but the interest rates are a little higher, and they are unsubsidized. They are also, as of July 1, 2026, capped at $20,000 per student, which sometimes does not cover the total cost of tuition. However, this is usually a better option than taking out private loans, since government loans have a fixed interest rate and tend to have better interest rates overall.
One Big Beautiful Bill Act Student Loan Changes Explained
The 2025 passage of the One Big Beautiful Bill Act (OBBA) saw major changes to student loans from the U.S. Department of Education. Here’s a quick rundown of those changes:
- Direct PLUS loans for Graduate and Professional students are no longer available
- PLUS loans for parents are now capped at $20,000 per student yearly
- Aggregate limits for parent PLUS loans are now capped at $65,000 per student
- The lifetime maximum limit for student borrowers is now capped at $257,500 and not more than $23,000
More changes are made on the repayment side; here are those explained:
- The SAVE plan has been eliminated
- The Repayment Assistance Plan (RAP) calculates payments based on income and dependents and will be discharged after 360 on time payments over at least 30 years
- The Tiered Standard Plan calculates payments based on your total loan principal and interest over a fixed number of years
- Any forgiven loans may now be taxable
There are some exceptions to the above changes; learn more about loans here.
How Much Student Loan Debt is Manageable?
Again, it’s not necessarily bad to have student loan debt. Over time, student loan debt can benefit borrowers by providing a college education to pave the way for future success. Still, borrowers must exercise care. Excessive student loan debt can become overwhelming if you aren’t careful and don’t use financial common sense.
Specifically, you never want to take out too much money. Loans should cover only what a student needs for tuition and living expenses. To help students avoid excessive debt, families should, if they are able to, help pay for room and board or other expenses. Students can also reduce their debt load by working a job while in college. Overall, a good rule of thumb is to keep your total student loan amount less than your anticipated first-year salary. Anticipated salaries vary by major, so choose wisely.
Each student will require a different amount of money to finance their college dreams, but when it comes down to it, don’t overborrow. It can be tempting to take out extra money for vacations, dining out, and other luxuries, but you should avoid doing this.
Finally, make sure you are spending money on a degree that will land you a career. Each college degree has its own value and choosing a major that interests you is not wrong. Still, you want to research which degrees will earn you a livable income that aligns with the lifestyle that you want to live. This way, you can reliably pay back your student debtand achieve financial stability and independence!
Frequently Asked Questions
How do I pay for college without loans?
One option to explore is pursuing community college, which is often low-or-no tuition for residents, and transferring into a BA-granting institution after two years, which will reduce your cumulative costs of attendance. There are also scholarships and grants you can apply for that might pay for college– but these are often need-based or very competitive.
When is student loan debt considered “good debt”?
If you take on debt to pay for an education that radically improves your career security and potential, student debt is an investment that will pay itself back as you enjoy the fruits of your higher-paying career.
How can I minimize my student loan debt?
One of the easiest ways is to apply for grants and scholarships. There are a variety of need- and merit-based scholarships available to students from both institutions and available nationally. Check out our scholarship directory and see what’s out there!
Another thing to consider is your college list: look at schools that provide in-state tuition discounts or schools known for generous financial aid to diminish the overall financial burden of your college career.
We at HelloCollege aim to help you get the most out of your university preparations. For more information about paying for college, and choosing a major that will aid in helping pay back student loans contact us.
