Should You Take Out More Student Loan Money Than You Need?

If you want to pursue a higher education, you have a lot of questions to answer: What degree do you want? Which school will you attend? How long will it take to finish? How much money do you need to borrow?

That last question is complicated. Not everyone needs student loans to get a degree, but many need to borrow something. Most undergraduates can only borrow up to $31,000 in federal student loans throughout their education, but grad school is totally different, leaving people to decide how much they can take on. The most common advice is to take on as little debt as possible — there are plenty of people who say you should only do a grad program if it’s of no cost to you — but it’s up to you to decide how much you should borrow.

Defining Education Expenses

Students may be able to borrow student loan amounts in excess of their tuition bills. If you’re not working (or working very little) because you’re pursuing a degree, your living expenses are by extension education-related expenses. That can make it tricky to figure out exactly how much you need to borrow — you don’t want to go into unnecessary debt, but you don’t want to run out of money, either.

You have to ask yourself a lot of questions: Do I need a new laptop for my stint in grad school? What about transportation? What sort of food budget should I have? Will I be able to take a low-paying or unpaid internship during the semester if the opportunity arises? Can I pay for these things out of pocket, or will I need to use student loan money to cover them?

If you’re looking at the possibility of running out of money and filling the gap with credit cards, taking on more student loans could be a better choice, from an interest-rate perspective. Perhaps you’re going into school with some credit card debt, and those bills are part of your living costs — it may seem like a good idea to use your student loan money to pay your credit cards and reduce your monthly expenses that way. Living off student loans can make your financial decisions a lot more complicated, especially because you’re taking out loans before you have a chance to know what the academic year has in store for you.

“I there’s a good experience — and it’s harder to put an ROI (return on investment) on that — like the opportunity to study abroad, it’s a bit harder of a financial decision,” said Andrew Josuweit, CEO of Student Loan Hero. “Another example would be an internship. That could be a great resume builder. … On the flip side even if someone is taking out student loan debt to pay for a TV or go out with friends on the weekend, it is less expensive than a credit card.”

Plenty of people have paid for things loosely tied to their education using student loan money and paid less in the long run than they would have if they used credit cards. Still, credit cards and student loans are extremely different financial products, and if something goes wrong with your plan to repay your student loans, you could end up with a financial mess.

The Trouble With Borrowing More Student Loans

Education debt is different from every other form of consumer credit because it’s nearly impossible to escape. It generally cannot be discharged in bankruptcy, so if everything falls apart, you’re still on the hook for that money. You could have your wages garnished, face debt collection lawsuits, lose out on tax refunds or even lose full access to federal benefits like Social Security. You’ll also damage your credit, which can affect you for years to come. (You can see how your student loans are affecting your credit by looking at your free credit report summary on

Josuweit said people run into the problem of living in the future tense, thinking they’ll get a well-paying job and therefore have the means to repay whatever debts they incur. Of course, things don’t always go according to plan, which is why it’s a good idea to keep student loan borrowing to a minimum.

“The last thing you want to do is rack up a lot of debt in law school and then all of a sudden you can’t pass the bar,” he said.

You may see student loans as credit with low interest rates, but in reality, that’s a risky way to look at it.

Josh Cohen, a student loan lawyer in Vermont, said people often don’t understand how financing works and how much they’ll really need to make in order to afford their loan payments, which is why it’s problematic to borrow more than you need. The fact that you’re stuck with it makes student loans an even riskier burden to accept.

“The Titanic was supposed to be unsinkable, but it still had life rafts on it,” Cohen said. “Student loans don’t have life rafts.”

More from Long Will I Be Paying My Student Loans?Private Student Loans: What to Watch Out ForHow student Loans Can Impact Your Credit

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Christine DiGangi covers personal finance for Previously, she managed communications for the Society of Professional Journalists, served as a copy editor of The New York Times News Service and worked as a reporter for the Oregonian and the News & Record. More by Christine DiGangi