Tool Aims to Tell You How Much to Take Out in Student Loans

College students who still aren’t sure what they want to be when they grow up have a new tool at their disposal to help show them their return on a college investment.

The Return on College Investment, or "ROCI" tool  aims to help students make smarter decisions by showing future earnings potential for different careers.

The tool uses national salary data and was created by non-profit Iowa Student Loan in West Des Moines.

Knowing their prospective income can help students determine the amount of student loans they can take out to avoid getting buried in debt after graduation. According to the New York Federal Reserve, outstanding student loan debt topped $1 trillion last year.

Marc Hendel, senior researcher and data analysis manager with Iowa Student Loan, says the goal of the tool is to prevent students from borrowing more than they're capable of repaying.

"We want people to be more educated about what a loan is, what their responsibilities are and what it's going to cost them in the future to pay back that loan.”

Hendel and the ROCI tool suggest borrowing a maximum of the expected first year's salary.

For example, an accounting major planning to be an accountant can expect to make about $36,000 after graduation. This means the student shouldn't take out more than $36,000 in loans.

Hendel also advises students look for ways to fund college outside of taking out loans. "Live like a college student while you're in college so you don't have to live like a college student when you're out of college.”

Iowa Gov. Terry Branstad introduced the tool in a press conference in February, which according to Hendel, has increased traffic to the website.

"Only borrow what you need, not as much as you can get. Because a lot of times they can get more than they really need and then spend it on things that probably aren't the wisest decision," Branstad said in an interview with Fox News.

Branstad has highlighted decreasing student loan debt as part of his agenda as governor. "Money isn't everything. In order to support yourself and your family you need to think these things through and realistically know what to expect and be careful about not incurring more debt than you absolutely need."

While it’s important to understand future earnings potential, Hendel says the tool is not meant to dissuade students from following their passions, just to be smarter with money.

"We want to encourage people to follow their dreams, but what we ask is when you're considering that major, consider the salary so you know how much to borrow," says Hendel.