Student loan debt: 3 tips for tackling it

Student loan debt reached an all-time high in 2010, outpacing credit card debt for the first time and leading economists to wonder if we should look at loans as a "healthy investment" rather than a financial burden.

Last year, the average student left college with $24,000 in student loan debt, and the amount is higher for those graduating from pricey private colleges, where tuition can cost as much as $50,000 a year.

"When you think about what's good debt and what's bad debt, student loans fall into the realm of good debt, like mortgages," Susan Dynarski, a professor of education and public policy at the University of Michigan, told the New York Times recently. "It's an investment that pays off over the whole life cycle."

Other experts disagree, pointing out that a lot depends on the kind of job you land after you graduate. With unemployment for recent college graduates on rise-8.7 percent in 2009, up from 5.8 percent in 2009-that student loan debt can linger for a long time.

"In the coming years, a lot of people will still be paying off their student loans when it's time for their kids to go to college," Mark Kantrowitz, the publisher of and, told the New York Times.

"If you have a lot of people finishing or leaving school with a lot of debt, their choices may be very different than the generation before them," said Lauren Asher, president of the Institute for College Access and Success, pointed out. "Things like buying a home, starting a family, starting a business, saving for their own kids' education may not be options for people who are paying off a lot of student debt."

As student loan debt levels have risen, the popular advice for dealing with that kind of debt has changed. Here are three tips for paying back your student loans:

1. While students were once encouraged to defer payments while they're in school, loan giant Sallie Mae now suggests that students not wait to make payments. "Making payments while in school helps you graduate with less debt than if you had let accruing interest build up and capitalize onto the balance," says Patricia Christel, a Sallie Mae spokesperson. "A typical customer making in-school payments (either interest-only or a simple $25 per month) can save a dramatic amount in the long run-30 to 50 percent in interest-compared to the conventional payment-deferred 15-year-term loan."

2. If you have student loan debt and credit card debt weighing on you, the old debt-reduction advice still applies: Pay off the one with the highest interest rate first. Also, since a portion of the student loan interest is tax deductible,

3. The Project on Student Loan Debt points out that there are a few options when it comes to student loan repayment, including loan consolidation, the income-based repayment program, deferment, and forbearance. Though more students, especially those graduating from private colleges, end up defaulting on their debts, it's not a good choice in the long run. "When you default, your total loan balance becomes due, your credit score is ruined, the total amount you owe increases dramatically, and the government can garnish your wages and seize your tax refunds if you default on a federal loan," the Project advises recent grads. (Click here for more of their great advice.) Federal loans defaults after nine months of non-payment; private loans can default more quickly (and put your co-signer at risk).

How much student loan debt did you have when you graduated? (Or how much do you think your children will rack up)? How long did it take you to pay it off?

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