1. Smart debt vs. stupid debt Not all debt is bad. Student loans, for example, are a smart investment if you invest that debt in the right program and do well there. When is educational debt bad? When you're wrecking your transcript because you're out partying all the time, for example, or you borrow for a school or a degree that won't enable you to pay that debt back. Even smart student loans need to be managed wisely, however. Your tuition and school fees are fixed costs, but you have a choice to make about every dollar you borrow above and beyond that amount to finance your lifestyle. Every dollar you borrow to live on your own instead of sharing space with a roommate, to eat out instead of feeding yourself, to buy the latest and greatest video game systems or cell phones, to go out drinking, and to have someone paint your nails is stupid debt. Don't get me wrong - I love a yummy restaurant meal as much as the next person, but don't borrow in order to have those things. If you borrow stupidly, you'll find yourself living a lot less glamorously after college than you did in college. Who wants to move backwards like that? Consumer debt is stupid debt. Borrowing to fund illegal or addictive activities is also stupid debt. If you find yourself "having" to borrow in order to pay for alcohol or internet gambling (the latter is also illegal in many states), you have bigger problems to worry about than just your finances. If you can't stop doing either of those things to preserve your financial health, you need help quitting. Now.
2.Know how much you can borrow If you're still in the planning stages, use the excellent calculators and resources at FinAid.org to figure out how much student debt you can manage. 3. Paying off debt If you find yourself with different kinds of debt, pay off any consumer debt before you pay more than the minimum monthly payment on your student loans. Compare the interest rates you're paying on your various balances - pay down the debt with higher rates first.