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Carmen: Student Loans. What's Realistic?

What’s the tipping point for student loans? When they go from being an investment in your future to an anchor dragging you down? When does it make sense to go into a certain amount of debt—debt that you cannot get rid of EVER, even in bankruptcy—and when does a lot of student loan debt become too much?

I’ve been in student loan debt for what seems like half my life (wait, it has been half my life!) but not getting into too much student loan debt actually shaped my career.

I was wrapping up my masters degree and was on the PhD track when I did some calculations. So, I’m in $50,000 of student loan debt, will have to take on at least another $50k+ and the first job out on the private-practice track, I’ll be making $38,000. BBBbbbbzzzztttt! End of that PhD track.

The fact of the matter is, I didn’t have the financial help from family to make doctorate-dreams a reality (which I noticed many/most doctoral candidates did have, even if it just was a rent-free place to live) and I knew that taking on more debt would tip the future scales out of my favor. It would take too many years to pay off that loan and at that point, the student loans that I had so far—which were and have been an amazing investment in my future with fantastic returns—would turn into a prison.

I hear from many of you who are parents seeing your kids graduate in this rather desolate job market that your kids now want to go to graduate school, after all, they can’t find a job. And I hear from those of you who did go to graduate school only to find yourself out of work and loaded with student loan debt.

And then there’s the six-figure club: Those of you who climbed the mountain of law school, medical school or other professional track to suddenly face debt as big as a mortgage.

Before you take on more student loan debt, do some math. Ask yourself frankly if there’s a reward at the end of loan-tunnel. How much would you have to make a year or a month to be able to pay the minimums even of those loans? Is it realistic that you’ll be able to get a job that can cover those loans?

For some doctors and lawyers, looking at six-figure starting salaries, it might make sense. But if you’re a college grad thinking graduate school is the answer, it’s a question of when and how much you can pay.

And parents please DO NOT take on too much student loan debt yourselves. You have a lot less time to pay off those loans and you need to make sure your retirement is secure, first. Sometimes all it takes is a cold, hard look at the math to protect your financial future.

Questions? Comments? OnTheMoney@cnbc.com

The Suze Orman Show

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