Two-thirds of college graduates carry a debt burden.  Consumer Reports says the $1 trillion in outstanding loans for college classes twist the lives of young people and create a drag on the economy.

Kristen Mercado is proud of her undergraduate and graduate degrees, but says the $100,000 in student loans crush her. 

"I'm sitting here sometimes wondering, ‘Oh, can I afford to go do food shopping today or do I need to wait until my next paycheck?’ and I'm sitting here feeling like, ‘What was the point?’” she said. 

Mercado says the loans take a quarter of her take-home pay as a social worker, leaving her barely enough money for living expenses. 

Government loans like Mercado's do have advantages over private loans, however.  Borrowers may have the right to a temporary deferment or a flexible repayment plan.  That’s why students should only get loans from private lenders, like banks, as a last resort, advises Suzanne Martindale, an attorney and student loan expert.   

"Private lenders don't have to offer flexible repayment plans to students. And they may not come with fixed interest rates, for example. And so that may make them costlier and riskier, harder to repay,” said Martindale.  

Here are other ways to minimize student debt:

  • Consider attending a state school instead of a private one;
  • Submit the federal loan application, called the FAFSA, as early as you can; and
  • Borrow only what you really need, not the amount you qualify for.

However, Consumers Union, the advocacy arm of Consumer Reports, says, no matter how careful borrowers like Mercado are, their debt has a profound effect on the economy.

"In record numbers, young people in their 20s and 30s are delaying major purchases, such as buying a car, buying a home, starting a family."

"How could I even fathom having money to put down on a house?" Mercado wondered.

Consumers Union calls for changes in current law so students get standardized, easy-to-read information about their financial aid options before they commit to loans.  Also, it believes students should have the right to refinance their loans as circumstances warrant, and private lenders should be required to offer flexible payment options.