Five ways to stop being shackled by your student loan

Five ways to stop being shackled by your student loan

As a recent graduate, you may feel overwhelmed about repaying many thousands of dollars in student loans. But don’t panic, there are strategies to help you soar over this obstacle. Your loan–the cost of getting your degree or diploma–has been a smart investment in your future. Protect that great future with some more smarts: financial literacy—knowing how to leverage your money—will help you stave off the panic and shrewdly plot your options.

1. Knock back that interest charge.
Here’s your first opportunity: there’s no interest or repayments for the first 6 months after your coursework ends. And right now, due to the Covid-19 pandemic, the Canadian government has suspended sudent loan repayments until the end of September, with no interest accruing (check with your province about provincial loans).

It’s a golden time to pay whatever you can toward that debt and save loads of interest. Yes, you need to plan your spending with a careful budget and some fiscal restraint. But if you leverage your options, such as paying down the loan as much as possible now, you will end up father ahead financially.

2. Make it a family affair.
Another idea to get ahead of this debt: ask your family to offer loan repayment cash, in lieu of gifts, during upcoming family celebrations.

3. Protect your future.
An important fact for your financial literacy: don’t miss any payments—ever. Because it will affect your credit score, and this can make it harder to borrow money in the future—such as a credit card or mortgage. That’s a costly mistake.

4. Be glad you’re Canadian.
When faced with monthly withdrawals from a sparse bank account, you may be inclined to panic. But as a student in Canada, help is available to reduce your payments. You can ask for temporary help or extend the lending period of your debt. Details and application forms are available through the National Student Loans Service Centre.

5. Change your focus.
Student loans typically have lower interest rates than other bank loans. So, if you’re also struggling with higher-interest debt (such as a credit card), paying those down more quickly can save you interest costs.

When you have a secure job, get in the habit of planning your spending so you can wipe out debt and then begin investing your money. This is the route to an amazing, prosperous future.

Your financial advisor can assist you by calculating your repayment schedule and helping you plan a savings strategy. If you don’t have one, give us a call—we’d love to hear from you!

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