As a student in Canada, pursuing higher education can be an exciting and transformative experience. However, it often comes with long-term, burdensome student loans.
Statistics show that as of 2021, Canadian graduates’ average student loan debt was around $28,000. While it may seem daunting, with the right strategies and financial discipline, you can manage your student loans effectively and pave the way to a debt-free future.
There are many ways to go about it, and a combined approach is generally the best way forward. In this article, we’ll give you a range of methods to help you exponentially reduce your student debt.
1. Start with a Solid Budget
Create a monthly budget that outlines your income, expenses, and loan repayment obligations. Use budgeting apps like Mint or YNAB (You Need a Budget) to track your spending and identify areas where you can cut back to allocate more funds towards loan repayment.
Ensure your budget accounts for all your needs, from groceries to gas and any additional incidental spending. The more exhaustive your budget, the clearer your requirements will become.
If you’re spending more than you’re earning, it might be time to start cutting down on certain items or habits. Doing a weekly grocery shop rather than visiting the store every evening is a good first step, but there are many other ways to curb your spending if you look closely.
2. Understand Repayment Options
Familiarize yourself with the various student loan repayment options available in Canada. The National Student Loans Service Centre (NSLSC) offers opportunities such as the Repayment Assistance Plan (RAP), which adjusts your monthly payments based on your income and family size, ensuring affordability.
This can be a lot of information due to all the variables involved. However, once you know which boxes to tick, you’ll understand repayment schedules, saving you time and money.
3. Explore Loan Forgiveness Programs
Some professions in Canada offer loan forgiveness programs for graduates who work in designated fields or underserved areas. For instance, the Canada Student Loan Forgiveness for Family Doctors and Nurses program forgives a portion of the loan for eligible medical professionals.
According to updates by the Canadian government, in 2021, the Minister of Employment, Workforce Development and Disability Inclusion, Carla Qualtrough, announced the permanent elimination of interest for Canada Student Loans and Canada Apprentice Loans under the Canada Student Financial Assistance Program. This significant action has reduced the financial burden on young Canadians as they start their careers.
4. Take Advantage of Tax Benefits
Maximize tax deductions and credits related to student loan interest payments. In Canada, you can claim a tax credit for the interest paid on your student loans. This can help reduce your overall tax liability and save you extra money. You can then use cash to pay off your loan faster.
According to CTV, the benefits lost to working-age non-filers totalled around $1.7 billion in 2015 alone. That is a massive amount of unnecessarily lost funds because of a simple lack of proper information. Taking advantage of tax benefits should be one of your first exploration routes when finding ways to manage your student loan.
5. Avoid Unnecessary Debt
Be cautious about taking on additional debt while repaying your student loans. Minimize using credit cards and refrain from unnecessary purchases that can hinder your progress toward becoming debt-free. Be disciplined in your spending, and don’t get reckless.
If you can avoid it, you shouldn’t spend on credit at all until such a time as you’re employed. This reduces the risk of running into debt and having to settle large bills with a substantial amount of interest.
Find other ways to build up a good credit rating, such as using store cards and only purchasing within the spending capacity you already have.
6. Explore Loan Consolidation
If you have multiple student loans, consolidating them into one loan can simplify repayment and potentially lower your interest rate. Research and compare options offered by financial institutions to find the best consolidation plan for your needs.
Once your loans are consolidated, you can also pay a monthly lump sum rather than repaying several different loans. This is not only good for budgeting purposes, but it also helps you to avoid penalty fees for accidental missed payments.
7. Accelerate Loan Repayments
Whenever it’s possible, make extra payments to reduce the overall amount of interest you’re accruing. Whether you receive a bonus at work, profit from online stock trading, or get a monetary gift, put any additional funds toward paying off your loan. Even small additional amounts can make a significant difference over time as they’ll reduce your capital balance. Explore the prepayment privileges offered by your loan provider to pay off your debt faster.
8. Seek Repayment Assistance
If you’re facing financial hardship or struggling to make loan payments, reach out to your loan provider or the NSLSC to discuss repayment assistance options. They can provide guidance and support to help you manage your loans effectively.
9. Consider Student Loan Insurance
Protect yourself and your loved ones by considering student loan insurance. This coverage can help repay your loans in the event of unexpected circumstances such as disability, critical illness, or death.
This is more crucial than you think. Unfortunate events happen all the time, and when you’re younger you tend to think they won’t happen to you. Getting student loan insurance is the only surefire way of keeping your repayments at bay in the event of an accident or illness.
10. Stay Informed
Keep yourself updated on changes to student loan policies,interest rates, and repayment options in Canada. Visit reliable sources like the Government of Canada’s website (canada.ca) and the NSLSC for the latest information.
A Last Word
Remember, managing student loans is a journey that requires patience, discipline, and financial literacy. By implementing these expert tips, you can take control of your student debt and pave the way for a debt-free future. Student debt is one of the most crippling financial strains you can endure within your lifetime, but only if you avoid looking for ways to manage it properly.
University Magazine is part of the 
