How to save while paying off college loans

Roughly half of Americans have no savings, a precarious situation that is even more acute for the roughly 40 million Americans who are paying off student loans.

The mountain of debt, which now totals $1.2 trillion, is not surprising, given the soaring costs of higher education. Four years of in-state tuition at public colleges and universities now runs an average of $23,410, while the average tab for four years at a private institution stands at $46,272, according to The College Board.

But it's still possible -- and ever more important, given the spiraling costs -- for people to save, even while paying off school loans, said CBS News financial analyst Jill Schlesinger.

"This is a real problem, especially for Millennials and recent graduates. You've got a pile of debt, [and] it stares you in the face every month," Schlesinger said. "Financial planners would say, 'Look, you've got to pay down your debt.' I would also suggest that you probably want to put a little bit of money in savings, because you want to try to slowly build that habit."

That might not be as hard as it sounds, so long as you start with a few modest steps.

"If you had $10 extra in a week, maybe $9 goes to the debt pay-down and $1 goes to savings," Schlesinger said. "Once the debt is paid off, then you can really build that emergency reserve fund."

She advises that people have the equivalent of six to 12 months of their living expenses in an emergency reserve, preferably in a safe place such as a checking account or certificate of deposit.

Default rates on student loans currently run at about 20 percent, with those carrying the smallest balances most likely to be behind on payments, a scenario that could be attributed at least in part to those placed at an economic disadvantage when they don't earn a degree.

"People are nibbling at college -- they're saying: 'Let me go in, let me take an online class, let me try community college, I'll borrow money to do it,' and then they don't finish," Schlesinger said. "And because they don't finish, they are not getting as good of a job. College graduates make $800,000 more over their working lives than non-college graduates. So when you come out and your job is not going to support that debt, oftentimes you are going to default."

Although it's important to pay down debt and save, that effort should not mean turning down what is essentially free money in the form of matching employer contributions to retirement accounts, when those are offered.

"Let's say you work for a place and they have a matching component -- 'We match 50 cents of every dollar up to 6 percent'. I would encourage you to try to put up to the match point in your retirement account and use the rest of your free cash flow to pay down that debt," Schlesinger said. "As a former financial advisor, I just want you to grab that free money. If there's no match, then I'm OK with you really attacking the debt, or maybe putting some amount of money into a Roth IRA [Individual Retirement Account], if you have no retirement plan at all."

The bottom line? Schlesinger advises paying down debt as the top priority, followed by establishing an emergency fund and, lastly, maximizing retirement account contributions.