Weigh Student Debt Before Attending Early Decision College

High school seniors who applied to college via early decision programs now know whether they have been accepted to their first-choice school. Since early decision is binding, many are likely celebrating that they know where they will attend next year.

But what if your first-choice school offered you significantly less grants and scholarships -- and a lot more student loans -- than you anticipated? Should you still attend, despite the debt?

Or should you ditch the dream and hope you get accepted by one of your financial safety schools? Do you follow your heart or follow your head?

[Learn what happens to students who back out of early decision offers.]

The truth is there's no right or wrong answer to that question. You could attend and graduate from your dream college and go on to launch a successful career that makes your education debt worth it.

Or you could start at your dream school, find it's not worth the value, drop out before graduation and regret the decision every time you make a student loan payment.

How do you give yourself the best odds of attaining the former? By asking yourself these three tough questions.

1. Can I afford the monthly student loan payments? To determine the answer to this question, calculate how much you will owe after four -- or more -- years. Families often approach paying for college on a semester-by-semester basis, but it makes more sense to map out how you will finance your entire education.

Be sure to factor in the financial aid package as well as savings, current income, monthly payment plans and loans. This will give an estimate of your family's education debt following your graduation.

Keep in mind that financial aid packages can change over the years -- ask the college's financial aid office if it regularly awards more loans to upperclassmen.

Now that you have an estimate of the total amount owed, use an online calculator to break down expected total debt amounts in the aggregate into monthly installments for a specific payback term. Owing $30,000 might not mean much to you now, whereas making $345 monthly payments for 10 years is much easier to grasp.

Next, review salary estimates for your intended major or career to get a better idea of how much to borrow based on your projected salary. Many student loan experts advise limiting total amounts to less than the anticipated salary in the first year after school or keeping student loan payments to no more than 10 to 15 percent of your expected monthly income.

It's good advice, but if you don't know what career path you'll choose, then aim to stick to federal student loans -- rather than private loans -- as much as possible. Federal loans come with income-driven repayment options that will make payments more manageable.

[Ask 10 questions before borrowing a private student loan for college.]

2. Is attending my dream school worth jeopardizing my parents' retirement? Your early decision financial aid package may suggest your parents take out a federal parent PLUS loan. Parent PLUS debt levels have increased significantly in recent years, and since there is no debt-to-income or ability-to-pay analysis conducted before a PLUS loan is granted, many families are incurring debt well in excess of what they can ever hope to repay.

While your parents may want to contribute to your education or shield you from debt, remember that you will have far more time to repay the debt before retirement than they will. Federal student loans come with a lower interest rate than parent PLUS loans, and in the early years of repayment, your parents could always choose to help you with payments.

[Discover four things borrowers don't always know about parent PLUS loans.]

3. Why this college, and can I succeed? Be honest with yourself about why this college is your dream school. Beyond being a good academic fit, what are your reasons for choosing it? If it's because you -- or your parents -- want to impress friends or family or name drop a highly selective college, it's time to seriously re-evaluate.

Ultimately, you should not wholly ignore the many intangible aspects of college fit during your selection process. You need to consider all aspects -- academic, social, emotional and financial.

The cheapest institution isn't always the best choice -- often, higher-priced schools can offer more in the way of student support services that give you a better chance of graduation success. But expensive institutions don't come with an iron-clad guarantee either.

If you're not willing to give your classes your all, engage with your professors or take advantage of everything your campus community has to offer, then the debt may not be worth it. In the end, your college success will be determined by how much you put into the experience.

Go in with your eyes wide open -- because education debt is a terrible thing to regret.

Allesandra Lanza is the director of corporate public relations for American Student Assistance. She has nearly 20 years of experience in the student loan industry, and has answered students' questions about their federal loans; conducted on-campus loan counseling sessions for students as they enter and exit school; and written about loan repayment, debt management, budgeting and more. Lanza received a B.S. in journalism from Boston University.