Kimberly Palmer is the author of Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back, which was published by Ten Speed Press this week. The following post has been adapted from the book. She’s also the author of the Alpha Consumer blog at USNews.com, where she’ll be hosting book giveaways all week.

Shortly after meeting my husband, he tried to convince me that debt was a good thing. His student loans, after all, were not only funding his tuition but also many of our first dates. Using something called the “income smoothing theory,” he argued that it was better to borrow now, when we had little money, so we could live better than we otherwise would, and then pay it back later, when we (hopefully) had steady incomes. (Of course, to us at the time, living well meant being able to buy cheap Thai food and beer.)

While his theory falls apart if it’s taken to extremes, for the most part it makes sense. Debt can be a very good thing, as long as you use it wisely. Here are five ways you can use debt to improve your life.

A few weeks ago I asked newsletter subscribers to email me with the things that concerned them. Many readers told me that the cost of higher education, specifically the college and university level, and their student loans were some of the things on their mind.

A few years ago, I wrote about how my sister took advantage of a student loan forgiveness program for teachers. It’s a great program if you can participate because it helps the (former) student and it helps society as a whole by putting incentives and compensation more in line with the work performed. Today, I wanted to discuss the Income-based Repayment plan created by the College Cost Reduction and Access Act of 2007. It only became available/effective on July 1 of 2009.

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I’ve been doing research on the various reward catalogs of credit card companies when I discovered my favorite reward, a student loan rebate check from the Citi ThankYou Network, had gone up in price. I would routinely cite that reward as one of the main reasons I kept using my Citi card. A few short months ago, for 10,000 points, you could get a $100 check written to your student loan servicer. That came out to each point being valued at 1¢.

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Rules of thumb are great. They teach you a little nugget of wisdom and have been vetted by generations of experience. Don’t swim thirty minutes after eating, don’t mix hard liquor and beer, and don’t date your relatives. Follow those rules of thumb and you’ll live a happy and healthy life.

The same can be said about financial rules of thumb. Don’t spend more than you earn, save 10% of your salary, and always buy a used car. You don’t have to always follow those rules of thumb, but if you want to achieve financial prosperity, it’s best to heed them.

However, over the years, some rules of thumb are in need of a refresher. Times change. A rule that made sense ten or twenty, or even a hundred, years ago may not make sense. Let’s have a look.

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Earlier this year I finished writing an article in which I tried to find the salary breakeven point for private vs. public college graduates, a task that was impossible because I couldn’t find enough publicly available information at the time. I was trying to figure out whether college was “worth it” and if so, whether public or private college was a better value. Since I didn’t have enough data, I just took some “average student loan debt” figures and calculated the breakeven point.

In a recent Business Week article, they took a 2007 College Board analysis that showed college graduates earned 61% more than high school graduates over a 40 year career. Master’s degrees earn 93% more. It’s not the private college vs. public college debate but it’s certainly a good look at whether student loan debt, in general, is worth it.

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I was amazed to learn that 25% of families don’t submit a FAFSA, which is the Free Application for Federal Student Aid, because they’re leaving free money on the table for no good reason. For those that do fill it out, be careful to submit it before your state’s deadline for state grants! The FAFSA deadline is June 30th but many states have earlier deadlines for state specific grants.

Best part about grants? It’s money you don’t have to repay!

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I had lunch today with a few friends and the topic of private versus public college came up, a topic they recommended I put on my blog (so to appease them, I did!). As the graduates of private colleges, we were all curious what the difference in salary between graduating from a private college, paying $30,000+ a year for tuition/room/board/etc, and graduating from a public college, paying $10,000 a year for room, board, etc. The impetus of the conversation was that one friend knew someone who was graduating as a radiation oncologist and did a similar analysis between doctors and typical engineers (his analysis said it took twenty years for the doctor, a radiation oncologist, to “catch up” to an engineer, after accounting for typical raises, college loan debt, and other factors). So what’s the break-even point between private and public college graduates?

The answer …?

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Debt is a bitch and student loans have taken center stage recently as the credit crisis threatened the ability of students to get loans. However on this day, I read a story about how some people have resorted to moving overseas to avoid paying their loans, a step that seems like a lot until you realize the size of their loans.

Initially, I felt bad. Then I thought about it some more and realized that we all make choices and trade-offs in our lives and education is merely one of those choices you make. The story talks about Chris, who graduated with $160,000 in student loan debt and a master’s degree in music. Chris admits he could’ve (he didn’t say he “should’ve,” he said he could’ve) gone to a cheaper school but that he’s “most angry at the fact that for anyone who has debt that’s not student loan debt, there’s relief. You can get into $150,000 worth of credit card debt and you can declare bankruptcy and you can go on with your life. But with student loans, you’re being punished for being a better person.”

First, I’m sorry Chris, but you’re not a better person and someone with $160,000 worth of credit card debt is not a worse person; you both made your choices and are now are forced to live with them. It doesn’t matter what the money was spent on, it was spent and now you owe it. There is no woe is me, you can’t blame someone else, it’s all on you.

Second, $160,000 is a lot of schooling. Let’s say he went for six years (4 years undergraduate, 2 years master), that’s about $27,000 a year. He could’ve gone to a public school, he could’ve paid off more while in school, he could’ve done a lot of things. $160,000 for a M.S. in music seems very expensive to me (but I have no experience in that, it could be spot on).

Third, bankruptcy is not a panacea. It’s not like you walk into some courthouse one day, declare bankruptcy, and you’re free to do what you want the next day. When you declare bankruptcy (and prove it, which is not a simple task), it stays on your record for the next seven years. At a minimum, you can’t get a loan for anything. No car loan, no mortgage, no credit cards, no 0% financing… the list goes on.

Finally, and I know everyone is thinking it, but how could you expect to pay $600 a month? At 0% interest, it would take you 22.2 years to pay off a sum of $160,000. As a testament to how off his estimate was, his payments were four times as much – $2400 a month.

Running from your problems doesn’t solve them, it makes those problems harder to solve.