The Student Debt Affordability Calculator provides an estimate of the maximum amount of how much a student can reasonably afford to borrow to avoid financial burden after graduation. Take a deeper dive into the methodology for each component of the tool below. Note: While calculator estimates use a robust methodology, the actual outcomes for the variables indicated below vary widely based on each individual’s circumstance. As such, the results are meant to provide guidance to those exploring their various college options and users should consider their specific situation before making any major financial decisions.
Salary
Salary is an estimate of one’s annual earnings. It is the total income before paying taxes and other expenses.
Salary estimates are based on data from the Department of Education, which provides the median salary for graduates of a specific major, at a specific college, one year after completing their degree. For college programs that do not have sufficient data available, estimates include the median salary for that major across similar schools.
Note: Calculator estimates do not account for double majors, minors, interdisciplinary programs or post-graduate degrees. The Student Debt Affordability Calculator currently only provides estimates for four-year degree programs. We are hoping to include other types of programs in future iterations of the tool.
Using Moody’s Analytics economic forecasts, salary estimates are adjusted forward to the year of expected graduation. This data also accounts for cost of living differences by location as well as the expected level of economic activity in each metropolitan area.
Taxes
Estimated taxes include federal, state, and payroll taxes and assume a single filer with no dependents. The calculation assumes users are taking the standard deduction and only include the employee’s share of payroll taxes. All federal tax data comes from the Internal Revenue Service (IRS) and state tax data is compiled by the Tax Foundation.
Expenses
Anticipated expenses include all major costs like transportation, housing, food, entertainment, utilities, healthcare, and more. Estimates are based on consumer spending data from the Bureau of Labor Statistics.
Similar to salary, expenses are adjusted for the expected graduation year, cost of living differences, and expected economic activity.
Student Loan Payment
The calculation for student loan payments assumes a 10-year fixed repayment plan, which is currently the most common. It uses the current federal interest rate of 3.73 percent and assumes a 10 percent interest rate for private loans. It assumes borrowers will only take out private student loans once they’ve borrowed the maximum amount for federal loans.
Affordability
Affordability is defined as a user’s spare net income – the income left over at the end of each month after taxes, expenses, and student loan payments – exceeding $150 each month. That affordability threshold was based on an analysis that evaluated college graduates’ spare net incomes for various major and school inputs within each state.