Money

How to manage, or better yet avoid, student loan debt

March 28, 2012 at 7:33 AM ET

Andy Kropa / Getty Images
POUGHKEEPSIE, NY - MAY 23: Students attend the Vassar College 2010 commencement at Vassar College on May 23, 2010 in Poughkeepsie, New York. (Photo by Andy Kropa/Getty Images)

You don’t need a degree in economics or statistics to see that the facts about student loan debt are sobering.

The Federal Reserve Bank of New York estimates that Americans owe $867 billion in student loan debt, and a separate estimate from the Consumer Financial Protection Bureau said the total could even have surpassed $1 trillion.

Part of the issue is that education is getting more expensive. Tuition rates at both public and private colleges have risen substantially in the past decade, even when you adjust for inflation.

But all hope is not lost. This week, Consumer Reports released a report on how to manage -- or better yet avoid --  student loan debt.

If you already have student loan debt, Consumer Reports recommends taking control of the situation. Figure out how much debt you have, to whom you owe it and what repayment options you have.

If you can’t afford your payments, you may be able to get a deferment or even take a job or do a volunteer program that would qualify you for loan forgiveness.

If you’ve exhausted all those options, let the lender know right away that you can’t make your payments. Avoiding the problem will definitely not make it go away.

The best course of action is to avoid taking on debt in the first place. With many people preparing for the coming academic year, now’s a good time to consider some of these tips.

One big piece of advice: Carefully consider going back to school to avoid unemployment. Although hiding out in grad school may seem like a good idea when you can’t find a job, consider whether the extra education will really pay off in terms of salary and career advancement, once you factor in the student loans.

Consumer Reports also recommends that you try to live as frugally as possible and don’t take on student loans for things like furniture for your dorm room. Look to federal loans before considering private loans, since the federal loans will have a fixed rate and the private loans may be variable.

Another tip: Try not to borrow more than you expect to make in your first year of employment.

Consumer Reports also recommends taking whatever courses you can at community college before transferring to the school where you will eventually earn your degree.

It’s also worth considering whether you can get the education you need at a state school rather than splurging for a private school.

A little more than half of public college students graduated with student loan debt in 2009, according to the College Board, and the average debt was $19,800. More than six in 10 graduates of private, nonprofit colleges took on debt with their degree that year, and on average those 2009 graduates owed $26,100.

What are your tips for getting an education without a lot of debt? Share them in the comments section below or on our Facebook page.

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