How to Repay Your Student Loans

A recent report by the Department of Education found that students defaulting on loans are up seven percent.

With the average debt upon graduation totaling more than $23,000, what can you do to make the situation more manageable?

CBS News Business and Economics Correspondent Rebecca Jarvis shared som useful information on "The Early Show" Wednesday for how students can make their debt more manageable.

According to Jarvis, the No. 1 thing to avoid is defaulting on your student loans.

"You don't want to default. Being default in student loans means not paying it off for 270 days," she explained. "The reason you don't want to default is there are huge consequences to this. The bank, the lender, can garnish up to 15 percent of your wages. They can take back your tax refunds. They can even keep you from getting new professional licenses and getting work in the future."

If you are having difficulty paying back your loans, what should you do?

"First thing you want to do is contact the lender. Whether it is a private lender, whether its the institution where you're attending school, let them know your circumstances. Sometimes they can defer your payment terms for up to three years. Especially when it comes to federal loans.

"On top of that, you can change your repayment schedule. Make sure you talk to them about all of those alternatives. Remember, pay off the highest interest rate loans first because those are the ones costing you the most."

With loans coming from several different lenders, is it difficult to consolidate loans?

"It's actually easier than many people think. It's a very good option for people who just want one payment and they also want to cut their monthly payments," she said. "In many cases consolidating loans can cut your monthly payments up to 50 percent, cut them in half."

According to Jarvis, graduates should really consider consolidation.

"You want to go to loanconsolidation.ed.gov if they're government loans. With private loans you have to consolidate under a private lender, Wells Fargo and Chase are some of the banks that do it," she added.

As lots of kids head off to college, parents are shocked by the cost of education these days. So what's the best thing to do if they need to get a student loan?

"First, look at federal loans. Generally speaking, the terms are better for the people who are borrowing. Students and their parents. So, the Stafford loan, Perkins loans. If you're looking for a private loan, again,
finaid.org as well as bankrate.com talk to students about good places to go," she said.