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Managing the rising cost of student loan debt

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    Amount of debt in U.S. households reaches record high

  • Duration 3:28
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It is one big ouch the amount of student debt that is plaguing US household now reaching a record high according to be Associated Press students with public school loans.

Are currently defaulting.

At a rate of eight point 3% that's -- number -- increased every year.

Over the last five years there's also another study.

-- finds it in 2010 at least one in five US households has some sort of student debt had -- escape but how we pay it off.

In today's take charge consumer protection segment.

I wanted to tell you how you can best manage that growing burden of paying for school.

Patricia palace -- founder and CEO Powell financial group she helps folks like -- all the time pay back our bills and Patricia this is a huge problem right now in our country.

I want it give folks creative tools to put it behind them.

But he got.

Well first of all eight -- depends where you are in the in the cycle if you are paying down it's different than if you starting to accumulate the debt.

If you're accumulating the debt -- in school well there's a lot of things you can do what number one is try to minimize the amount that you barring.

A lot of students are not even aware of the fact that there's a lot of scholarships out there if you're already in school and they don't look back at your high school years.

They're looking at your college years so every student every -- -- going to their college -- university foundation.

And looking at the scholarships because there's opportunities to minimize big debt.

Now these -- are quirky sometimes they're for somebody of a specific heritage sometimes it's just very specific major sometimes it's somebody who has a specific hobby.

It's -- all kinds of quirky ones but if you don't apply you don't get -- -- -- -- my first official let me just commend you on that when I never would have thought of going into the financial aid office after the initial -- not the financial aid office the foundation look for your college -- university foundation can't -- already they're not when -- freshmen will use software junior senior.

Some of these out by the way do not even take effect until your sophomore junior senior.

So let's minimize your debt to begin with and -- paying.

We pay well here's a little bit and by trickier this five prepayment options.

That money to go through two of them one is just the standard one.

And that is a ten year program where they -- your debt over ten years ten years and done.

But the one that everybody's focused on right now is this income based plant and this -- in the state of -- remember it's an election year.

On the congress is already -- -- -- -- changes here.

And and the changes are that you would be paying on the -- they they don't take effect for probably a month they -- But you be paying 10% of you discretionary.

Income.

That's -- thank you that thing come after air on taxes and living expenses so discretionary 10% of discretionary income.

And they -- -- at twenty years so if you're not done paying it off a twenty years it's over.

Right let me -- pregnant just simplified because it's the last point we have time to make if you -- money on a student loan bank and you may be able to renegotiate the terms based on the amount of discretionary income you have where do you go to do that that's actually going to be automatic but you have -- you go see your repayment terms.

You go back to your your lender and you say this is the plan that I want to take.

But their in my it's gonna vary each and every year as your income goes up so -- payments going to go up.

All right I'm sure people don't want to what bail on their loans and won at least make that effort and -- -- some good tips today appreciated so much thanks for is that worth the cost of an education.

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