Student Loan Consolidation Crunch

All across the Capital Region, college graduates are trading their cap and gown for a ball and chain.

It's called student loan debt.

"It's just a waste of money," UAlbany junior Joseph Burlandi said of the high interest rates. "When I'm older -- when I have a job, when I have kids -- it's going to be harder to pay more interest."

College students recently lost a major option: Sallie Mae, the nation's leading student lender, has suspended federal loan consolidation, citing the poor credit market and subsidy cuts in Washington.

"It's going to be more of a burden on students," said Dr. Dean Skarlis, president of "The College Advisor of New York. "I was talking to someone yesterday who was saying she had $66,000 in loans...and it's going to end-up costing her $167,000 in repayment."

While students may still consolidate through another private lender, that all depends on their credit rating. Paying down debt as early as possible is therefore crucial.

"People come out of college and they're buying $35,000 automobiles and looking to buy their first home" said financial planner Dennis Fagan, of Fagan Associates, Inc. "They're not taking care of (that) which is the foundation of their financial future: eliminating debt to the extent that that's possible."

"Possible" is the key word, said Dr. Skarlis. Barring a windfall of cash, it may come down to finding a lucrative job.

"If you can't consolidate and you can't come-up with cash to pay it down, you've got to stick it out and try to increase your income," he said.

The best advice, Dr. Skarlis said, is to plan for college spending well in advance: decide which schools you can afford and how much debt you can shoulder.