Millions of college graduates are deeper in debt than previous generations, struggling to pay off loans to meet college costs that have risen 900 percent since 1978, according to the College Board. Insufficient employment opportunities, the inability to refinance student loans and the lack of options to discharge student debt in bankruptcy have left young professionals with a crushing burden that not only affects their credit histories but also their long-term saving capabilities.

“Young people are frustrated that they spent all this money on education and now they aren’t earning enough income,” says financial expert Deborah Owens, author of A Purse of Your Own (Simon & Schuster). “It’s critical that they look at the big picture, investigate all their options and crunch the numbers.”

Defaulting on a student loan is the worst thing they could do, says Steven J. Lee, author of The Money Plan (Vantage Point). In the book, he writes, “The result will be attached wages and no tax refunds. But debt can be handled if you break it down into smaller repayment pieces.” Just tackle one debt at a time.

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President Obama’s response to the student loan debt crisis is called the Pay As You Earn plan, which mandates that the maximum monthly loan payment will be lowered to just 10 percent of one’s discretionary income, down from 15 percent. However, the program is based on eligibility, so students should review the guidelines at Any debt remaining after 20 years will be forgiven.

There’s one caveat: Although the program is currently available to some students, it won’t be accessible to all borrowers until July 1, 2014. In the meantime, there is a loan consolidation available, offering a lower interest rate and requiring a single payment for all loans.

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