How to Pay Off Your Student Loans

When President Joe Biden announced he was canceling up to $10,000 of American student loans per person, it was met with criticism from both the right and left. Republicans feared it would only serve to worsen the already rapid inflation, as well as general complaints about fairness. The left’s complaints were contrary; they were upset it didn’t go far enough. 

The news prompted debate in Canada, too, about whether or not canceling some amount of student debt was the optimal solution to the issue here. Canada’s national student debt, however, is significantly less than our neighbours to the south. Canadians owe the federal government roughly $22 billion in loans, while the US number is over $1 trillion. Both in Canada and America, some students will have loans to pay back. Here are some ways to make it a little easier.

Use Your Grace Period Wisely

Current students with a student line of credit or a government loan have a little extra time to pay them back — at least until six months after graduating. You shouldn’t wait to the very end of the six months allotted, but rather pay whatever you can afford before the period ends. Apart from the amount you’ll save on interest on any credit cards you may have used later, the pressure of student loans will also be a little easier to manage. 

Live Frugally in School and After Graduating

The importance of living frugally during your college days is not lost on the younger generations. Most students are aware that they don’t necessarily have to spend every last dime of their loan. It’s fine to go out on the occasional night on the town but know that the money you don’t spend can be used later for loan repayment.

Graduating from university is a momentous occasion, and it’s understandable that people would want to treat themselves. It’s more advisable, though, to continue living economically. The urge to move out of your parent’s home, or buy a car, is tempting, but it’s important to always keep your debt in the back of your mind. 

Make Extra Payments Whenever You Can

Federal loans as well as lines of credit can be repaid in lump sums without penalty. Basically, you’re allowed to pay more than what is minimally required every month. Whenever you have extra money, some of it can go toward paying off your loan, even if it’s just a few extra dollars. A birthday cheque or any recent Covid benefits may make those payments easier. 

Consider a RoommateA recent poll by the CIBC found that household costs and living expenses take up most of a young Canadian’s budget. With apartment rental rates only expected to rise in the next year, taking on a roommate could help lessen the daily cost of living and free up some of your finances to repay what you owe. If this isn’t an option, there’s no shame in temporarily moving back home.

Kenny Hedges | Contributing Writer

Fall 2023

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