The Definitive Guide to Student Loans

You were right to take out student loans, says author of 'I Will Teach You To Be Rich'

Roughly two out of every three college graduates last year came out of school with debt. But though debt can weigh you down and hold you back, self-made millionaire and personal finance expert Ramit Sethi says you probably made the right choice by taking out loans: Odds are, your degree was worth it.

Total student debt in the U.S. is up over $1.5 trillion and 2017 graduates who took out loans to attend college have an average of $28,650 in debt, according to the most recent report on student loan borrowing from the Institute for College Access & Success.

Those figures have prompted some, like Reddit co-founder Alexis Ohanian, to question whether college is worth the expense. Others have gone even further: authorJames Altucher has said that, in many cases, "a degree means nothing," and self-made millionaire Grant Cardone has declared that "most people should not be going to college."

Yet Sethi, author of "I Will Teach You to be Rich," disagrees. He says that taking out student loans to pay for college is often a smart choice. "I want to encourage everyone here to not just take advice from a bunch of people on Twitter who are telling you, 'Drop out of college — student loans are bad,'" he says.

Many experts agree: They tend to consider student loans to be a "good" kind of debt, because it serves a purpose and can lead to higher earning potential in the future. Student loans are generally a low-interest investment in your future compensation, Virginia-based financial planner Nicole Theisen Strbich tells CNBC Make It.

Thinking about your future compensation and the future generally, Sethi says, is key. Studies show that those with a bachelor's degree are projected to make an average of $1 million more in their lifetimes than those without one. Plus, college graduates are only half as likely to experience unemployment as their peers with only a high school diploma.

A million dollars over your lifetime compared to an average loan of less than $30,000? "It's not even a question," Sethi says.

Still, it may take a while for the benefits of a degree to kick in. And, since life, and your career, can be unpredictable, don't borrow recklessly: "I'm not saying everyone should graduate with $150,000 in student loan debt," he says. "Don't do that."

Run the numbers, Sethi says. Be deliberate about what you can afford to pay back.

To figure out the right amount for you to borrow, financial advisor, board chair and president of the Charles Schwab Foundation Carrie Schwab-Pomerantz offers a simple rule of thumb: "You should never take out more student loan debt then you believe will be your first year's salary."

So if you think, based on your degree and where you plan to work, that you're going to earn $50,000 right out of college, you shouldn't have more than $50,000 in student loans, total.

Prospective students and their parents should also look at how long it takes students to graduate, Sethi says. If a college has a low four-year graduation rate, it could mean that it takes longer to finish a degree there, so students may have to borrow more money to finance their educations.

Consider, too, he adds, that there are a lot of non-monetary reasons to go to college, such as becoming an informed global citizen and building a professional network. Indeed, building a network is one of the main reasons skeptic Grant Cardone ultimately recommended higher education for his own children.

"I personally told my kids they can go to three colleges," all of which were big-name schools at which they will be able to network, Cardone says. "I want them to go there to meet people — to get connected with the power players. The old adage is: It's not what you know. It's who you know. That's still true today."

In the end, it's about finding a college that works for you and your budget. And taking out student loans to get your degree shouldn't be seen as a negative. "Don't buy the typical advice that everyone seems to be throwing around these days saying college loans are the worst thing on earth. They're not," he says.

In fact, he says, "student loan debt can be a great investment if you are thoughtful and methodical about it."

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