You work in your colleges financial aid office, and Mary Lou Hennings, a junior, has come to you for advice. She just found out that her mother has been downsized from her job. To ensure that she has sufficient funding for her senior year, she needs to apply for a loan to help with expenses. She has a part-time job with take-home pay of $450 per month. She expects her annual net earnings to be approximately $35,000 after graduation, and she plans to continue living at home for another year or two. Her parents have told her she can use up to $10,000 of their home equity line of credit; however, she is not sure she wants to do that. She does not have any debt except for 3 more years of monthly auto payments of $194. She is worried about trying to pay for an additional loan while still in school, although her mom is convinced she will find another job soon and be able to make the payments.

Using her current income, calculate her debt limit ratio for the most expensive school loan and her auto loan during school. Using her projected income, calculate her debt limit ratio for the loans after graduation.