Total school loan debt in the U.S. reached $1 trillion last year -- which is more than credit card debt. Students graduating last spring owed an average of $22,900.

 

These loans can be a good investment. Someone with a bachelor's degree will earn 70 to 80 percent more than someone who only has a high school diploma. In addition, college graduates have an unemployment rate that's about half as high as the rate for people without college degrees.

 

Clearly, having a college degree has financial benefits, but it's important not to take on more debt than the increased income justifies, according to Mark Kantrowitz, expert on financing higher education.

"What you need is a balance between debt at graduation and annual income," Kantrowitz says. "If the total debt figure is less than one year's income, you can pay off the debt in 10 years." If the amount is greater than a year's salary, though, it can take up to 20 years to pay off.

 

Kantrowitz, publisher of two websites that help students finance their education, FastWeb.com and FinAid.com, says "Pursue your dreams, but economize as you do it. If you take on too much debt to pursue your dream, you may have to abandon your dream."