College debtLast month, Rohit Chopra, the student loan ombudsman for the Consumer Finance Protection Bureau, told a Consumer Bankers Association conference that educational debt in this country now tops $1 trillion.

That's a problem in and of itself. But perhaps a bigger one -- at least in the eyes of the parents of those debtors -- is that grads aren't well-equipped to manage this debt. In a recent survey from the nonprofit group Young Invincibles, two-thirds of student borrowers misunderstood or were surprised by aspects of their loans or the student-loan process. And -- according to a report from the Federal Reserve Bank of New York -- more than 5 million are currently delinquent.

Fortunately, the economy seems to be turning where recent college grads are concerned. The National Association of Colleges and Employers says that businesses plan to hire 9.5% more college graduates this year than last. That means the class of 2012 just may have the cash to make a dent in those loans. Now all they need is a plan. Here it is, in five steps:

1. Assess the situation. Many people have more than one loan. Start sorting things out by plugging your information into the National Student Loan Data System, suggests Heather Jarvis, a student loan expert. It will spit back the date each of your loans enters repayment and who the servicer is. In general, the servicer -- which may be different than the lender -- will be the company you will work with in repayment. They are, in other words, your contact if you have questions.

Private lenders are not included in this database. Jarvis suggests pulling your credit report (you can access a free copy at to get a comprehensive list of those loans.

2. Update your information. The address and phone number listed on your loan most likely belong to your parents. This is part of flying the coop: Once you have a more permanent address of your own, change that contact information. Swap out your old school email address. And as you go through future life changes, make sure these are kept up to date.

3. Set a repayment strategy. Federal loans have more flexible repayment terms then private loans. You can choose to pay off your loans in 10 years or 25 years; you can arrange to make lower payments now and higher payments later; or you can tie your payments to your income -- a particularly good option if you don't find a steady job right away. "The main thing to consider is that a lower monthly payment in the short term likely means extending your repayment term overall, which leads to paying more in interest," says Kevin Walker, CEO of SimpleTuition, which runs a student loan calculator at that can help you weigh your options.

4. Make it automatic. Elect to have payments automatically taken out of your bank account each month. You'll never be late and, better still, paying federal loans this way gets you a 0.25% interest rate reduction. Private lenders may give you a similar break.

5. Focus your efforts. You have to make at least minimum payments across the board, but if you have extra cash, you should also have a plan for where to put it. In general, you want to direct any extra payments toward the loans with the highest interest rates. But there's a catch, says Jarvis: "Although some people will have private loans that are at lower interest rates than federal currently, many have variable interest rates that are quite likely to rise over time." The lower your balance is when that rate jumps, the better.

-- With Arielle O'Shea

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toya r

getting a job is no problem but getting a job in the field i spent thousands of dollars in fiancial aid in is a huge
very huge problem so since i don't make enough to live on i can't make any payments sorry. i'll pay you when i get enough experience!!! who has years of proven experience straight out of school. come on corporate america take a chance sometime we didn't get A's for nothing give a graduate a chance!!!!!!!!!!!!!!!!!

May 27 2012 at 8:18 PM Report abuse rate up rate down Reply

These lousy banks pay less than 1% on savings accounts, but student loans are over 6%. Why do the banks get a bailout, and the kids (and parents carrying PLUS loans), pay these high rates?

April 23 2012 at 8:26 PM Report abuse rate up rate down Reply
1 reply to BIG KELL's comment

absolutely NO ONE FORCES THEM to enter into these higher educational indoctrination kamps or the loans associated with THEIR outrageous fees.
better to work part time and slowly accumulate your college credits for a career and pay as you go.

April 25 2012 at 10:37 AM Report abuse +2 rate up rate down Reply

Hate to say it, but those 5 "helpful" items DON"T HELP! I've been fighting the college loan fight since I graduated in 97. I paid for school myself. I would still do it again, don't get me wrong. But You pay thousands to colleges for school and many jobs don't pay half as much to get you out of debt. Not when you count actually trying to LIVE- ie- apartment, car, food, etc. It's just not possible. And I don't have ANY other type of debt. Go to college they tell you, but tough luck after that when no matter what you go to school for, unless you get a high paying job, will let you help pay off the interest, and the loan itself. They need to rethink it all and stop bailing out the BIG COMPANIES. Recession=STILL HERE

April 23 2012 at 8:06 PM Report abuse +2 rate up rate down Reply

If anyone's thinking about Medical Assistant degrees....DON'T WASTE YOUR TIME AND MONEY!! Just go to nursing school. I went for 2 years, wracked up student loans. Drs want NURSES, NOT MA'S in their offices and the cheap drs don't want to pay you what you're worth (minimum wage). I didn't expect minimum wage when I graduated after 2 years. I hoped for a little better than that. I ended up a cashier and a dishwasher and paying back a uselesss loan. I should've went to nursing school. A dr even told me that the MA externship at the end is a sham...YOU pay the school to work for a cheap dr for 6 weeks for FREE, then when you go to work for another dr, because the cheap dr doesn't want to keep and pay you, you have to be trained all over again. MA DEGREES ARE A RIP-OFF! DON'T DO IT.

April 23 2012 at 5:03 PM Report abuse -1 rate up rate down Reply
1 reply to sunnydawn95's comment

once upon a time,you simply applied and got into a nationally accredited hospital school of nursing and paid a whooping 400-500 bucks if you could...or simply signed an agreement to remain after graduation and work there,the same for an x-ray tech as well....and yes,you got paid for your work the same as everyone else.
but then the elites decided for US ALL that these accredited hospital schools simply wouldn't do and shut them all down leading to the SHORTAGE of registered nurses in ANY CAPACITY from bedside to CCRN etc.
thank them all for destroying a formerly great profession,open to all that were motivated and loved it.

April 25 2012 at 10:42 AM Report abuse rate up rate down Reply

no jobs no payment

April 23 2012 at 11:44 AM Report abuse +2 rate up rate down Reply

8.9 unemployment for recent college grads. It ain't good out there kids.
But Obama said the recession was over

April 23 2012 at 8:49 AM Report abuse +5 rate up rate down Reply
1 reply to marine1942's comment

It is for him Pelosi, Reid, Geithner, Bernake and Corzine.

April 24 2012 at 7:57 PM Report abuse +1 rate up rate down Reply