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Student debt clock strikes $1 trillion

Today's the day that the student debt clock crosses the $1-trillion-dollar mark.

The milestone was expected to be reached at approximately 6:40 a.m. Eastern time.

You can see the exact amount of debt that college graduates, as well as college dropouts, owe by heading over to FinAid, the popular financial aid site, which maintains the student debt clock.

While the amount of student debt seems stunning, Mark Kantrowitz, the founder of FinAid, estimates that it's only about a tenth of the size of the nation's mortgage market.That explains why the collective student loan burden hasn't derailed the economy like the foreclosure crisis did.

The amount of student debt outstanding depends on who is calculating it. The student debt clock bases total outstanding federal student loan debt on figures from the federal budget. The federal figures do not include capitalized interest, which would have generated an even scarier figure. The debt clock also includes calculations on the size of private student loans.

Borrowing responsibly

Borrowing for college can be a smart move, but you don't want to over extend yourself. Here are four ways to make sure that your own college debt burden remains manageable:

1. Stick with federal student loans.

For most people that will mean borrowing with Stafford Loans, which provides borrowers with built-in federal protections. Here is a primer on the different types of college loans:

College loans: what you need to know

2. Use a loan calculator.

When families are contemplating how much they can afford to spend, they often don't look at the big picture. They calculate how much they will have to borrow for one year. They should, however, multiply that by four and five years since most students don't graduate in eight semesters.

Use a student loan calculator to get an idea of how much borrowing can cost.

3. Don't postpone paying the interest.

Don't wait until you've graduated to pay the interest on unsubsidized federal loans. Start paying the interest while you are in college.

4. Pay automatically.

The best way to avoid missing payments is to sign up for automatic monthly payments through your checking account. Many lenders will reward you by dropping your interest rate by .25%.

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