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5 College Debt Myths You Can't Afford to Believe

NEW YORK (TheStreet) -- The end of April signals a big decision for millions of high school seniors: What college or university will they call home for the next four years?

In most cases, their parents will have a big say, as in many cases they'll be paying for that college education.

It's also a big time of year for graduating college seniors, who'll enter the "real world" and start paying back their student loans.

Both groups -- high school and college seniors -- will need all the help they can get in dealing with increasingly burdensome student loan debt.

According to the Project on Student Debt, 2012 college graduates owe an average $29,400 in student loan debt. That's up from $18,750 in 2004.

"For many 2012 graduates, their college years came during a time of increasing college costs and stagnant family resources. State budget cuts led to sharp tuition increases at many public colleges, increasing students' need to borrow," says he project's report, sponsored by the Institute for College Access & Success.

The best way to handle heavier student loan debt is to better understand that debt. College grads need to weed out the myths and focus on the realities of student loan if they're going to pay off those loans as soon as possible, says one college loan expert.

"A college education is a major investment, and most people today must borrow money or take out student loans to help cover the costs," says Mike Sullivan, chief education officer for Take Charge America, a national nonprofit financial education that councils college students and graduates on student loan debt. "Students are right to be concerned, but simply understanding the truth about your loans will make a huge difference now and in the future."

Sullivan says "debunking" common student loan myths is a huge part of that process, and he offers five popular but misleading ideas about student loan debt:

Myth 1: College is out of my reach unless I take out massive loans. The cost of college is high, Sullivan says, but there are other ways to pay for it. "Students can keep the costs in check by exhausting all options for grants and scholarships, getting a job to offset the costs and sticking to a budget," he says.

Myth 2: I don't have to worry about my loans until I graduate. Knowledge is power with student loan debt, and the better you use that knowledge to prepare for loan repayments, the better. Students who "understand what it will take to repay their student loans are more likely to keep their debts to a minimum," he says. "Students also may benefit from using online loan calculators that estimate monthly loan payments based on future salaries."

Myth 3: College is "good is debt." The past six years have been a financial drain on the U.S., and the idea college debt is good debt really doesn't apply anymore, Sullivan says. "Many students who borrow money during college have much difficulty making their payments afterwards," he says. "Before considering student loans, research alternatives and opt for more affordable options, such as a community college or in-state public university."

Myth 4: Student loan debt won't affect my credit. On the contrary, student loan debt is your first, and thus a highly important, chance to show creditors you can repay your bills. "Missing student loans payments will damage your credit score and credit history, making it difficult to borrow money for a mortgage, auto loan or any other purpose," Sullivan says.

Myth 5: Bankruptcy will shed my student loan debt. That's false, Sullivan says, and dangerous. "To receive a discharge, students must file an 'undue hardship' petition demonstrating that they cannot maintain a minimal standard of living while making payments, that the circumstances preventing repayment will persist indefinitely and that they have already made a good-faith effort to repay the loan," he says.

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