Before Taking out Student Loans

Before you take out student loans, do a cost basis analysis. Will you spend more or less than you are expecting to make in returns?

Let's say that you want to get an MSW and become a social worker and it will cost you 80K in grad loans. You currently make 30K and think that you can get 40K if you had an MSW. That does not seem like a good return. If you do a loan analysis on a 15 year, 80K loan at 6.8% interest, you will pay $710/month in loans for 15 years. The 10K increase (which is not guaranteed) would bring you an extra $625/month if you cut 25% out in taxes. Therefore, you will be loosing money the first 15 years.

However, if you are currently earning 25K and think that you can earn 40K with an MSW after spending $40K on a degree, then it's worth it. The loan ()using the same terms) would end up being $355/month and the potential increase would be $937/month after taxes. It looks like you would be profiting around $582/month. That seems like a sound investment.