Student loans

Consumer borrowing is on the rise. Here's the thing: Credit card borrowing is down. Student loans and auto loans -- investment debt -- is up.

I will receive $25,000 in the next couple weeks from the sale of my mom's house. She died suddenly of a brain aneurysm last spring, at age 58. I am asking for advice on how to invest this small windfall. (I also received another $10,000 from her life insurance last year and used that to pay down a personal bank loan of $6k and credit card debt.) Here are my stats: I'm 36 and went back to college in 2010 to finish my first degree (I had worked in insurance and kept hitting income/advancement ceilings due to not having a degree.) As of May, I will graduate with $45,000 of loans. I have $7,000 in credit card debt and own a house with a $130,000 left on the mortgage. I do have $10,000 in a 401k at a previous employer and I also inherited her 2009 car, so I have no car payment. I realize paying down debt is the fastest return on the money, but I feel like I don't want to just sink this money entirely into student loans, which have a low interest rate. My plan is to pay off the credit card debt and create a small emergency fund. This will leave around $15,000. Would it work to place some of it in longer term investments or just completely add the money to my debt? To add complication to the situation. I am studying graphic design and the firms I am in touch with all say they have increased hiring and the future looks good for this career. However, there is the option that I may want to free-lance or split off on my own in two to four years and could use a cushion to help as a startup. Thank you for any advice or information. Jamie, Eden Prairie, MN

College dropouts don’t get the job, earnings and career benefits of postsecondary education, but they do get a student loan repayment book.

I have been out of college for just over a year now and am waiting to be hired by the Federal Aviation Administration (FAA) as an air traffic controller (a 2 to 3 year process, on average). I was lucky with scholarships and waivers and have about $20,000 in student loans (all federally subsidized) and am currently on a standard payment plan for a 10-year repayment period. I have enough saved up in CDs, money market accounts, savings and mutual funds that could pay off all of the loans but only leave me with about $5,000 left over to deal with any "unplanned" expenses (I have no credit card debt and a full-time job with a major airline). Is it smart to get rid of all of my debt immediately but be left with little to fall back on? Should I pay off half of the loan and repay the rest over time? Michael, Minneapolis, MN

My husband and I recently had our first child. We are considering opening a 529 plan for him, but between the two of us, we still have about $15,000 in college loan debt. Our student loans are locked in at a low interest rate (around 3 percent). On the one hand, we know that money invested in a 529 plan now will earn more over time than money invested later. On the other hand, it seems kind of odd to start saving for his college when we haven't finished paying for our own. Does it make more sense financially to open a 529 plan for him now, or to put the money we would have put into it toward paying off our own student loans first? Carol, Athens, GA

A new study reports that student debt in this country could be the next “debt bomb," a major economic threat not unlike the mortgage crisis. And this time, there’s no way to get rid of the debt through bankruptcy.

The student loan debt burden is getting worse. The epicenter of trouble is so-called private student loans. It's time to take action on private student loans.

After close to a decade in graduate school, a post-doc, 24 job interviews, and almost as many rejections, I am elated to have started my first bone-fide adult job. Which in this day and age is not only a blessing, but a miracle, for which I am truly grateful for. While I have mastered the manipulation of matter at the atomic and molecular level, I am pretty clueless about how to manipulate my finances. My question: what should my financial priorities be? repayment of school loans? saving for retirement? putting money into an emergency fund?... Romas, Berkeley, CA

Parents and their students need to work very hard at avoiding taking on too much debt to earn a college diploma.

I've got a bunch of student loans, all at relatively low rates (3.5 percent and lower). I have just under $35,000 at this point. I've been auto-transferring money into my savings accounts -- for "emergency funds" as well as future goals such as a down payment, wedding, etc. I have around $48,000 total in savings (between those funds). That money is sitting in savings at less than 1 percent. Mathematically, it makes more sense to pay down the debt. But I'm not comfortable with decreasing my savings that much. How to I choose? Stephanie, Medford, MA