Should You Take Out Student Loans for a Dream School?

The Emotional Pull of a Dream School

You've pictured yourself on that campus for years. The sweatshirt is already in your closet. But now the financial aid letter arrived, and the gap between what they're offering and what it costs is tens of thousands of dollars per year. Is it worth borrowing the difference?

The Math You Need to Do

Calculate your total debt at graduation: annual borrowing × 4 years, plus estimated interest. Then look up the median starting salary for your intended major at that school. A common rule of thumb: your total debt shouldn't exceed your expected first-year salary.

Example: If you'll graduate with $120,000 in debt but your major's median starting salary is $45,000, you're in dangerous territory. Monthly payments could consume 25% or more of your take-home pay for a decade.

When Borrowing Makes Sense

• Your intended major has strong, proven earnings (engineering, CS, nursing, accounting)
• Total debt stays under your projected first-year salary
• The school has a high graduation rate for your major (you'll actually finish)
• You've exhausted all grant and scholarship options first

When It Doesn't

• You're undecided on a major and borrowing for "the experience"
• A comparable program at a cheaper school would lead to similar earnings
• You'd need private loans on top of federal loans
• The school's graduation rate for your major is below 60%

The Alternative Nobody Talks About

Attend the affordable school for undergrad, graduate debt-free, and use a top-tier school for graduate school if the credential matters in your field. Many employers care more about your most recent degree than where you got your bachelor's.