Since spring is the season when many prospective college students and their families are looking over financial aid award letters (or emails or web pages), I thought it might be helpful to provide an informed perspective on college borrowing.  To that end, here is some information about what's typical, and some suggestions on how to determine what is wise when it comes to borrowing for college.

According to The Institute for College Access and Success, 59% of U.S. students graduating with four year college degrees in 2007 had taken out student loans, and of those who borrowed their average debt at graduation was $20,098.  So if you are looking at a financial aid offer that calls for you to borrow $5,000 per year don't feel you are being singled out for financial persecution.  This level of borrowing is the going self-help debt rate.

Of course you could borrow more, and some of the award offers you are considering could make higher borrowing essential. Is it worth it to take on larger loans for a chance to attend your top choice college? Maybe, but usually not.  If you compare being $20,000 in debt with a college degree to skipping the debt and foregoing the degree, in most cases you find that the difference in your earnings would allow you to pay off your loan and still have more income after loan payments than you would have had without college.  Can you make a similar case for borrowing $40,000 to attend Harvard instead of borrowing $20,000 to attend Tulane? Researchers have argued about the economic benefits of attending a top college, with some of the most intriguing research comparing students who were admitted to extremely selective schools but choose not to attend to those who did enroll. If there is any benefit to the name on the diploma independent of the ability of the students who manage to gain admissions, it isn't showing up consistently in this research.  All these researchers seem to agree that it matters more what students do with their time at a good college matters far more than the relative reputations of two schools.

So is it ever reasonable to take on more debt to attend one college than another? Yes, if you have reason to believe that your chances of graduating from one college are much greater than your chances of graduating from another.  Yes, if at one college you can pursue a degree that will help you achieve your desired post-college career, and a similarly helpful degree is not available at the other college. If you are tempted to borrow more to pay for prestige, however, think twice. You may be paying for that prestige for years to come.