Many young Canadians have to take out loans to attend a post-secondary institution. Statistics Canada reports that, on average, around half of all Canadian students take on student debt.
The reality is that students accumulate debt before entering the workforce as full-time employees. In many cases, the burden can be both overwhelming and disheartening.
Nothing can entirely relieve the stress of mounting student loan debt, except for complete government forgiveness. Some intervention from the government has alleviated that financial burden.
One example is Prime Minister Justin Trudeau’s decision to eliminate interest accumulation. Regardless, there may be a need for more tweaking of the system. This would help new graduates switch their focus to job hunting and honing their skills.
Managing student debt: A personal relationship
Everyone handles the reality of owing money differently. Some need help and are passionate about advocating for government forgiveness. While tackling the burden head-on without waiting for assistance is better for others. The bottom line is that it takes work to pay off.
Researching available resources and learning to be financially savvy can help alleviate the stress of repaying loans.
Dealing with student debt: Tips and resources
There are tools graduates can use to lessen the financial blow of student loan debt. Lifestyle changes and making use of preexisting resources can provide balance and relief.
Apply for the Repayment Assistance Plan
Arguably, the most helpful tool for those in the repayment phase is the National Student Loans Service Centre’s Repayment Assistance Plan (RAP).
The plan adjusts people’s payments based on how much they earn per month. Those who earn $2,083 or less can pay $0 a month. Someone can still qualify for lower, more affordable payments if they earn slightly more. The RAP is a great way to save money so students can later make larger payments toward student debt.
Pay more when possible
Making a large payment towards student debt can buy some time before the next payment. Peace of mind comes with knowing a big chunk of the principal amount is paid.
Learn about different types of debt
Student loans fall under the good debt category, as they’re a means of investing in a future career. There is also no interest accumulation in Canada.
Credit cards are a type of bad debt. They charge high interest rates and the possessions people accumulate with credit cards lose value over time. Knowing that student loan debt is “good” can help relieve stress.
Students don’t have to start repaying federal lenders until they’ve completed their studies. However, that doesn’t mean it isn’t wise to get a part-time job while in school. Tucking a portion of each paycheque away for repaying loans in the future will lessen the burden, even if it’s a small amount.
Assess the budget
Monthly spending budgets usually leave some room for adjustment. Cutting back on spending and purchasing luxuries when there’s extra income can make a big difference towards repaying debt.
Public debate highlights why federal leaders should forgive student debt in Canada. The government’s current stance isn’t changing, but hope exists for future reform. With that said, it’s important not to rely on this hope or ignore loan debt.
About the author
Brittany is a reporter for Youth Mind. When she isn’t working hard to become a full-time writer, she can be found making a dinner reservation, rewatching her favourite movies, or reading about True Crime.