Graduates Take Charge of Debt They're Finding Innovative Ways to Lift Post-College Fiscal Funk

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As graduation season proceeds and many students prepare to rpay their education loans, innovative grads are taking steps to lower their college debt and invest for the future.

Amanda Barton, who earned a graduate degree in nursing from the University of Pennsylvania two years ago, is among them.

"We hate debt," said Barton, 24, of her and her husband Adam's attitude toward the $18,000 she amassed in college loans. "We're trying to pay it off as quickly as we can." College students borrowed $25.5 billion last year, according to the U.S. Department of Education, up from $16.5 billion in 1993. Undergraduates who take out loans have an average $11,500 in debt, according to the Student Loan Marketing Association, or Sallie Mae, a government-chartered purchaser of one in three federal student loans. While most grads entering the work force have limited resources for anything beyond basic expenses, there are several ways to pay down their debt, including tailored refinancing, consolidating loans and, even, investing. "We looked at paying off loans in terms of where we could get the most bang for the dollar," said Barton, who opened an individual retirement account after graduation and invested in an income growth fund. Some 4.5 million students took out federal loans last year, the Department of Education said. While about 45 percent of students in four-year programs are borrowers, that figure rises to more than 50 percent for graduate students, said attorney Robin Leonard, author of "Take Control of Your Student Loans," to be published in July. That fact notwithstanding, most financial planners agree recent grads should first focus attention on another financial thorn affecting many of them - credit card debt. When Tad Benson earned his graduate degree at the University of Southern California's School of Public Administration, he had close to $19,000 in outstanding loans. The 28-year-old fund-raising consultant in Pasadena, California, also had several thousand dollars in credit card debts, which he must repay at twice the 8.25 percent interest rate he carries on his college debt. Paying back the student loans is easy, Benson said. "It's the credit cards that are the problem." Benson is not alone. "Right now we're seeing students with $10,000 to $20,000 in student loans and matching amounts on plastic," said Jennifer Reihm, a school relations representative at Chela Financial, a San Francisco-based lender that holds about $1.3 billion in loans. "You can be eaten alive by interest rates." While making minimum monthly loan payments on an entry-level salary can be very taxing, it's not impossible. People who can't afford standard minimum payments - typically $120 for each $10,000 borrowed on a 10-year term - can arrange a plan to fit their budget constraints. "Figure out what your comfortable level is," said Scott Miller, director of government relations at Sallie Mae. "You probably can find a repayment plan to meet that amount." An income-dependent plan lets the borrower pay a percentage of income. Chela's plan lets borrowers pay as little as 4 percent of monthly gross income or the monthly interest due on the loan, whichever is greater. …