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Student Debt Overview

By Rachel Solomon
Quick Tips

  1. Generation Debt – In 2007, 42% of college graduates left school with over $25,000 in student loans to pay off, while another 33 percent have a credit card
    balance of more than $5,000. You are not alone.
  2. See where you stand – Before you can do anything about your debt, you need to know how much you have. Check in with the National Student Loan Data System, and then follow up with each individual lender.
  3. Take advantage of your grace period – There is a six-month period when your lenders give you a reprieve from paying back any debt. Don’t let this time pass without confronting your debt situation.
  4. Avoid credit cards – Transferring your loans to a credit card is extremely risky. You will suffer from uncompetitive interest rates and risk decimating your credit.
  5. Know your options – Even if you have a vague plan of action, it’s worth reading through all of our articles on debt to ensure that you make the best choice. The more you know…

We all have those sobering slaps to the face when starting our post-grad lives, and I can still feel the sting of my first. It occurred when I nonchalantly opened a letter from a beloved little bank I’ll call "Broken Noses Consolidated." It read, in so many words:

Dear Sucker,

Congratulations on graduating!

We hope you enjoyed your college experience. We also hope you haven’t forgotten who paid for it. That’s right, when you were a naïve, pretty young thing of 18, you borrowed money from us to go to your "dream school." Well, the dream is over, and now you need to face reality:

Pay us tremendous amounts of money now! And thank you for your business.

You’re truly ours,


Excuse me? Was BNC saying those thousands upon thousands of dollars I borrowed for college must be paid back? With something called interest? In a timely manner?

Well, yes, that is the sad truth. Student loans may seem like intangible play money at first, but, lest we forget, this is not Monopoly. It's time to educate yourself about the issues facing Generation Debt, because if you default on your loans (i.e., don’t pay them back), you could end up losing the live-action game called life. That’s because before making most major purchases in life (e.g., cars and homes) or even starting a business, your credit will be vetted. No credit. No home.

Here's a fun fact: The average college senior owes $21,000 in student loans upon graduation. Depending on the loan terms, repayment on that sum could be over $200 a month. Quite a large chunk of most entry-level salaries!

How, then, are you going to pay your loans in addition to rent, utilities, incidentals, and happy-time expenses? Should you sell drugs? Marry rich? Or, worst of all, move back with your parents?

As someone who is more than a hundred thousand dollars in debt myself, I've certainly considered pole dancing for a cool $1,000 a night. But thankfully there are other ways to manage what seems like suffocating debt. Breathe easy. Your lenders don’t own you after all!

Our crack team at Gradspot.com has taken a deep dive into the unfriendly waters of student debt, and we've emerged with your essential guide to understanding it, looking it in the face, and figuring out what options you have for dealing with it. Let's talk basics, and then we can determine what the next step should be.

The first move is always to check the National Student Loan Data System online so you know who you owe and how much you owe them. If you can prepay your debt or pay your lenders' on the original schedule they've laid out, more power to you. But the common problem facing recent grads is that we have hella debt now and don't plan to make real money until later. In this case, debt consolidation might be the best way to lower your monthly payments by extending the life of your loan. You'll pay more in the long run, but at least you won't miss payments and get trapped into downward spiral of debt. Finally, if you can't pay at all, you can always try to get your debt forgiven.

The next consideration is to assess what type of debt you've got. Is it federal or private? If it's a Stafford loan from the government, is it subsidized or unsubsidized? Again, you can get a hold on this stuff simply by hitting up the NSLDS and then following up with each of your lenders (the NSLDS is a good starting point, but for accurate, up to the minute info, you need to check in with each of your lenders).

Once you've got a sense of the forest, you can use our other student debt articles to narrow in on the trees:

  • Understanding Loans and Debt
  • Student Debt Consolidation
  • Private Debt Consolidation and Debt Forgiveness
  • Good luck, and remember to check in with Gradspot Guru if you have questions that remain unanswered.

    Bonus tip: up to $2,500 of student loan interest is tax deductible, so at least you’re not getting screwed by lenders and the government! Check out our tax survival guide to learn more.

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