The University of Alabama

DEBT MANAGEMENT

What's Too Much Debt

To determine whether or not you have taken on too much credit debt, use the payment to income ratio:

(Sum of All Monthly Payments/ Total Monthly Income) X 100

 

calculator and scholarship money

  1. 10 – 15% is healthy
  2. 15 – 20% you are still a good credit risk
  3. 20 – 30% you may be seen as a bad credit risk
  4. 30% and above means you need credit counseling

 

If you are using more than 20% of your monthly income to cover your credit/loan expenses, then consider making an appointment with the Student Financial Success counselors. They can get you started on developing a budget and give you tips on how to effectively manage credit card debt before it becomes a problem.