Advice for Students and Grads Trying to Reduce Student Debt
Pursuing post-secondary education can be an exciting time to enhance your career opportunities. However, with rising tuition costs, living expenses, and student loan payments, you can easily find yourself with greater amounts of debt than you anticipated.
Fortunately, there are solutions to help you reduce the financial burden of student debt, whether you’re currently in school or have graduated. Let’s explore some of the ways you can set yourself up for a better financial future.
Budget While in School
With the average student loan after completing college or university now at $13,367, many graduates have a difficult time managing their student loan payments while navigating the competitive job market.
Though you may think of budgeting as something you’ll do when you graduate, getting into the habit now can make all the difference for when you start your career. This budget planner by the Financial Consumer Agency of Canada is a great tool for creating a personalized plan for your situation. Not only will you get a detailed overview of your income and expenses, but you’ll also receive tips and suggestions for how to live within your means.
Find Part-Time Work
Summer jobs are commonplace for many students, but it can be stressful to bring in enough income within a few short months. Working part-time throughout the school year can help ease some of the financial pressure when enrolled in higher education. The additional income can give you a buffer for unexpected costs and you’ll rely less on your student loans.
We recommend looking for a flexible employment opportunity that allows you to balance work and school. Many colleges and universities offer part-time jobs that work around class schedules. Your institution’s career centre can also connect you to employers who are mindful of your educational commitments.
Avoid Loans and Credit Cards
Many students are tempted to sign up for credit cards, but the long-term cost of high interest rates and fees can cause more financial pressure than they are worth. Similarly, purchasing a car while in school is an expensive decision that shouldn’t be made without a close look at your budget.
We understand how difficult it is to be a student with limited income, but we encourage you to avoid taking on additional debt. Whereas student loans are considered a good type of debt because they are an investment in your future, other debts can set you back for years to come. By living within your means now, you’ll be able to start your career with less financial baggage.
Consider Repayment Solutions and Extensions
If you’ve graduated from post-secondary education, there are options available to help you with student loan payments.
You may want to consider the Repayment Assistance Plan (RAP) through the Government of Canada and the province of Ontario. You can apply for RAP at any time, including when you first start repaying your student loan. If eligible for the plan, you can receive assistance towards the repayment of your loan, including interest and principal payments.
Another option is to apply for a Revision of Terms where you can extend the period of your student loan repayment. The extension will reduce your monthly interest and principal payments. This adjustment can be temporary or permanent. Under this plan, you can also apply to make interest-only payments for a period of up to 12 months.
If you are struggling with your student loan payments, a Licensed Insolvency Trustee can work with you to explore your debt relief options. Contact us to learn more about how we can help.