Student Loans are a common source of debt held by many people today. How common? Student Loan debt is over 25 Billion Dollars in Canada.
To say this debt is a problem would be over simplifying the situation. What we can say with certainty, is that this significant student debt burden means many former students will need to budget for loan repayments over the long term. If you are facing large students debts, we would like to help with the following tips for paying back student loans.
4 tips for paying back student loans
- The first step you should take is making a budget. If you are already out of school and are fortunate enough to have employment, start by making a monthly budget that you can stick to. Knowing exactly what money is coming in and exactly what where it is going out is critical.
Use your budget to see how much disposable income you have at the end of the month available to make payments toward your student loans. If you need to cut costs, there are age old tricks that still work for cutting costs on your budget every month. You can shop for sales or with coupons and decreasing impulse buys by shopping with a list of items and exact cash, for example. Don’t forget when making your budgets to incorporate some money towards those expenses that don’t always happen every month, such as car repairs, gifts, utilities, etc.
- Know your interest rate. If your loan is with Canada Student Loans, you can see here what the interest rate is on your loan. Use that interest rate and your total student loan debt to give yourself an idea of approximately how much interest you will be paying on your loan annually. From there you have to make sure to repay more than simply the interest rate per year if you want to start to pay down your student loans. You never want to be simply paying the interest rate, as the total loan will never decrease!
- If you are struggling with making a payment of even a small amount per month, look into the Repayment Assistance plan the government has. The government is willing to work with you to help you pay back your student loans. After all, they want you to pay back the loans, if possible. If you don’t ask, they won’t help you. If you are struggling with payments, look into their options and see if there’s something that might help you get through the hard times and closer to paying them back.
- If you’ve exhausted all measures and still can’t pay back your debts, you can always call your local Trustee to see what options you may have. There are situations where a Trustee can help you with student loans. Even if your student loans don’t meet the qualifications for a bankruptcy or consumer proposal a Trustee can still help. Trustees can help you take care of other debt, like credit cards or car loans, through a bankruptcy or consumer proposal, which would free up your budget to pay back your student loans.
Student Loan Debt is more common than most of us realize. Make sure to have a plan to pay it back over time and if not, reach out to someone that can help you take care of those loans.
Rob Kilner
Trustee in Bankruptcy
Rob is the Trustee in Bankruptcy overseeing our Barrie and Newmarket Offices. He is available Monday through Friday from 9am-5pm and is available for weeknight and weekend appointments. Feel free to contact him and he will be more than happy to help you with any question you may have.
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