05/06/2015 02:24 pm ET Updated May 06, 2016

The Facts You Need to Know About Large Student Loan Debts

Nobody wants the bragging right about having the most student debt. How about facing a monthly payment of $850 for the next 20 years? Or maybe a $350,000 loan thanks to high variable interest rates? Unfortunately, these are real student loan nightmares that help make up the $1.2-trillion total debt facing graduates today.

Far Too Common

According to Business Insider, these true stories are all too common today. In fact, a recent report by the Institute for College Access and Success reveals that nearly seven in 10 students have an average of $28,400 in student loan debt. Furthermore, many schools had average loan burdens of over $35,000, and quite a few had more than 90 percent of their students graduate carrying loans.

Public vs. Nonprofit vs. Location

According to the same report, among the higher-debt-level schools, public college debt was as high as $48,850. On the other hand, nonprofit schools had a maximum debt of $71,350. Geographically, New Hampshire, Delaware, Pennsylvania, Rhode Island and Minnesota ranked among states with the highest debt, all with averages above $30,000.

Graduate Students Hit Hardest

The Graduate Student Debt Review shows just how hard borrowing has affected the graduate world. The average grad student has accumulated $57,600 in debt, as compared with just over $40,000 in 2004. Also, it's not uncommon to see debt levels of up to $170,000 or more, especially among graduates in the medical and health sciences field.

Real-Life Impact

The conundrum that faces many student borrowers is that they get a degree to be qualified for a job that pays well, but they end up having to borrow a lot of money, which puts life plans on hold.

For example, large loan payments might prevent home buying, since nothing is left to pay a mortgage. Others can't even practice their profession, or they must take a second job due to large monthly payments. In the worst cases, bankruptcy is the only way out.

Are there any other solutions out there?

How to Reduce Large Student Loan Debt

Some choose to defer their loans until they get on their financial feet. This means that, for a set period of time, the borrower doesn't have to make payments. While this might work, it can be dangerous, as interest continues to accumulate during the deferment period.

The better strategy might be to negotiate a lower monthly payment instead of complete deferment. If the lender won't accept this, one can deposit a portion of their paycheck each month in a personal savings account. When the deferment period is over, a lump sum can go a long way towards paying off the loan.

Refinancing is another strategy that many use to reduce their student loan debt. High interest loans are especially painful when deferred, but with a lower rate the borrower can sometimes save thousands of dollars. The savings might even be enough that deferment isn't needed, since monthly payments can be smaller with loan refinancing.

Light at the End of the Tunnel

Even though many graduates have high debt burdens, this doesn't mean all hope is lost. Living within your means and applying smart financial strategies can lead to financial freedom.

Visit Credible to find out if you can save by refinancing your student loans. The average borrower who refinances saves $11,668.

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