Online Tool Helps Take Guess Work Out of College Debt
The Savvy Consumer

By Teresa McUsic

College acceptance letters are out. Now it’s time for parents and students to do some math.

In subtracting out the “free” money—grants and scholarships—now is the time to bear down and really assess whether the student loan debt is going to be worth it financially after they graduate.

How Americans Pay for college:

Grants and scholarships—30 percent
Relatives and friends—5 percent
Student income and savings—11 percent
Parent income and savings—21 percent
Parent borrowing—9 percent
Student borrowing—18 percent

Source: Sallie Mae “How America Saves for College” 2014

 Fortunately, there is a relatively easy way to calculate this, with a Texas specific debt-to-income online tool that can give the information students need to become “smart buyers” of their education.

The tool, called the Major Choices calculator, is provided by TG, a nonprofit based in Austin created by the Texas legislature to facilitate state education lending and promote educational access. It can be found at TG’s Adventures in Education website,

The calculator is particularly helpful because it uses recent data on current salaries in Texas from those who have graduated in a specific major from a specific Texas school. The calculator can be found by clicking on the tab called “Paying for College” and then under the list “Cost of Attendance.”

The first year annual median income data used by the calculator is provided by the Texas Workforce Commission and matched with student records released in aggregate by school and major to the Texas Higher Education Coordinating Board.

The salary data is then calculated against the median total student debt for students at each specific Texas college. In a clear graphic, it shows whether the debt is financially manageable based on the student’s monthly loan payments.

For example, a University of Texas at Arlington biochemistry major received on average $25,148 in his first year salary, or $2,095 per month before taxes, according to the calculator. The median debt for a biochemistry major graduate at UTA is $20,013.

The calculator shows that 9 percent of that graduate’s monthly income, or $196, will go towards paying off his student debt.
Student debt under 10 percent is considered a reasonable amount, according to research that looks at repayment of student debt, said Carla Fletcher, senior research analyst for TG.

In contrast, a journalism major at UTA has a first year salary of just $16,904, and with average debt for students with that major at that school of $23,330, their monthly loan cost would be $229 or 16 percent of their monthly income. This may be more difficult for the graduate to pay back.

The calculator divides the student debt into three categories: under 10 percent (color coded green), 10-15 percent (yellow) and more than 15 percent (red.)

“Some of the research says 8 percent is the highest level you should have in loans compared to salary,” Fletcher said. “But others say 15 percent is the max. We created ranges, so students could see what they are facing.”

 The calculator lists almost 600 different majors to choose from under categories like engineering, health and medical and visual arts. Also included among the major choices are trade school offering like barbering, baking and welding.  

More than 230 Texas schools are listed, from online, for-profit schools with a Texas campus to all public community colleges and universities in the state. Only private schools are not included because the data is not available, Fletcher said.

Another important piece to the calculator is showing how many students at that college with that major actually got jobs in the first year in an employment rate percentage—another useful piece of information regarding debt repayment.

  Such data-specific calculators are only available in a handful of states, said Mark Kantrowitz, senior vice president and publisher at Edvisors Network and author of “Filing the FAFSA.”

“I really like this kind of a calculator,” Kantrowitz said. “The idea is to give the student the lay of the landscape, such as the ranges of outcomes for the schools and programs he/she is considering, as well as placing it in the context of other schools that haven’t been considered and which may be better.”

There is pending legislation in Congress to facilitate creating such systems in each state and linking them together, he said.
“This is the sort of system families need to make a more informed decision about the tradeoffs between college cost, financial aid and other criteria,” he said.

For students who want to get an idea of how much their major would earn in other cities, TG has a new calculator called a Career Choice tool that provides first year salaries around the country. Keep in mind, however, that many areas have higher cost of living along with potentially higher salaries.

   Fletcher said the salary data for the calculators are updated annually and the 2012 numbers should be put in within the next few weeks.

This week, Sallie Mae, a large student loan lender, released its annual report showing how Americans save for college. It showed that only about half of Americans with children are saving for college, down from 62 percent in pre-recession times.

But total average college savings was up 30 percent over 2013 to $15,436, according to the data, compiled from a poll of 2,000 families with a child under 18.

The dominate savings vehicle for college savings is still a general savings account, used by 45 percent of families saving for college. Twenty-nine percent of parents used 529 plans, 24 percent used checking accounts, while 18 percent used retirement accounts.
  Most parents—89 percent—still believe that a college education is an investment in their child’s future, with 83 percent believing a college degree will increase their child’s earnings, according to the report.

Families who save for college have more confidence they will be able to afford college for their children, Sallie Mae said.
“At every income level, families who use savings to pay for college can afford more while borrowing less,” the report said.

However your financial package looks, take a few minutes to see that your investment is worth it.

Teresa McUsic’s column appears Saturdays in the Fort Worth Star-Telegram. She can be reached at