President Trump recently signed an executive order cancelling all student loan debt for disabled veterans.
This, as 2019 student loan debt hit the highest rates ever according to Forbes.
John Wilson, the Senior Tax Strategist at Economic Strategist says many times students pull out a loan not noting the interest and how long it can take to pay back.
"It’s kind of like a 90/10. 90-percent going to interest and then maybe ten percent of that is hitting principle." said Wilson.
Forbes reports 44-million borrowers in the United States collectively owe 1.5- trillion dollars in debt, but luckily there are ways to avoid the hefty bill.
"Instead of it being $250 a month, you would want to be paying double that, maybe $500 a month for it to actually start hitting principle and really driving down that amount." said Wilson.
Wilson says if possible, parents should consider saving for their child before they start school.
He says options like the 529 plan or the Roth IRA may sound good, but in some cases it may not cover all college expenses.
"The only thing about those is that you have to have contribution limits that you can make every year. So the growth potential of that is not quick, it’s actually something that takes, it’s slow and it just moves slow "said Wilson.
Wilson says putting money in a trust is a safer bet for a better outcome.
"As trustee of the trust I have the desecration to spend the money for the benefit of the beneficiaries as I see fit, let’s say I have a trust and I have a certain amount of money in there, I could use the money within the corpus of the trust to pay for his tuition, pay for his books, pay for his, I don’t know labs, room, board, food, clothes, bills. I could pay everything out of that corpus because he’s a beneficiary of that trust." said Wilson.
As the next presidential election approaches, some democratic candidates say they support student loan forgiveness.