Post-secondary education can be a ticket to a good job and boost your earning potential. However, higher education comes with a hefty price tag. The costs leave many students wondering how to afford it. Students today are graduating with a crushing amount of student loan debt. Fortunately, there are options to help avoid borrowing too much and ways to get rid of your student debt if it’s unmanageable.
Funding Your Education
Considering alternative ways to fund your education is a smart move. It can reduce the amount of student loans you need. It all starts with deciding what to study and how much it will cost. With that information, you can choose the most cost-effective path.
Some things to consider before taking on student debt are:
- Marketability – Choosing a field of study that’s in demand is essential. It can enhance your job prospects, making it easier to repay your student loans after graduation.
- Reducing costs– There are many ways to save on expenses. Choose a school where you can live at home, do some courses online, attend part-time so you can work part-time, take a year off to work to save money, or choose a program with a paid apprenticeship or internship.
- Calculate your loan payments— Find out how much you’ll need to repay before agreeing to take a student loan. This proactive approach helps you plan and manage your finances effectively, ensuring you’re prepared to repay your student loan debt after graduation.
Sources of Education Funding
You can get money for tuition and other educational expenses from many different sources.
One way to pay for school is to use your savings and money from your employment. Other funding sources include the Registered Education Savings Plan (RESP) and the Registered Retirement Savings Plan (RRSP). You can use your RRSP to pay for your education through the Lifelong Learning Program.
You may qualify for other funding sources if you need more money for your studies.
- Financial aid is available through the Canada Student Loans and Grants Program.
- Financial institutions offer lines of credit for students.
- Applying for scholarships and bursaries is a good way to have all or part of your tuition paid.
Canada Student Financial Assistance Program
The government provides student aid to full and part-time students. You apply for federal student loans and grants through your province. The Canada Student Financial Assistance Program offers many types of financial aid. The types of assistance you qualify for will depend on your circumstances.
You don’t need to repay student grants. If you get a Canada Student Loan, however, you must begin repaying it six months after you finish school. The National Student Loans Service Centre (NSLSC) administers student loans and payments in Canada.
Financial institutions
Many banks and credit unions offer student lines of credit. A student line of credit typically has a maximum amount you can borrow. The limit is revolving, which means you can use it again as you pay it down.
The interest rate on a student line of credit is tied to the prime lending rate, which increases or decreases as the prime rate changes. Your payment is based on the prime rate, and you only pay for what you use.
You must make interest payments if you use your line of credit while in school. Once you finish school, you typically have a six to twelve-month grace period. When that ends, you’ll begin paying interest and principal payments to pay off your debt.
Scholarships
Scholarships can be a great source of free money because they don’t need to be repaid. They’re available to students who meet the requirements. The scholarship may be based on factors such as academics, the field of study, and community engagement. Corporations, educational institutions and charitable foundations often have scholarships for aspiring students. You may need to apply to be considered for a scholarship.
Bursaries
Bursaries are typically based on financial need. You don’t have to repay a bursary. Schools, charities and some businesses offer bursaries. The qualifying criteria may include more than financial need. Academic achievement, community involvement, and leadership can be part of the conditions you must fulfill. In most cases, you need to apply for a bursary.
Repaying student loan debt
You don’t need to repay your student loans while you’re in school. There is a six-month grace period after you leave school before you must begin repaying them. Depending on where you live, you may need to make your payments to the NSLSC, the NSLSC and your province, or your province or territory.
The amount you owe and your payment can come as an unpleasant surprise. The average debt for a bachelor’s degree in Canada is about $30,600. Student loan payments can take up a large part of your budget and quickly make life unaffordable.
So, what can you do if you can’t afford your payments? You can take advantage of government relief programs for student loan debt, depending on your situation. There are three that may make your repayment schedule easier.
- Customize your repayment terms. This option allows you to increase or decrease your payment to fit your budget.
- Repayment Assistance Plan (RAP) and Repayment Assistance Plan with a Disability (RAP-D). The RAP or RAP-D can reduce or eliminate your payments for up to six months. To continue to qualify, you need to reapply every six months. The program has other advantages that can benefit struggling borrowers.
- Medical and Parental Leave allows interest and payment-free terms of six months for parental or medical reasons. If you qualify, you can get up to 18 months of no payments or interest on your student loan.
- Student Loan Forgiveness for Doctors and Nurses—This is available for physicians and nurses working in underserved rural and remote communities.
Debt Help if Your Payments Are Too Much
Once you finish school, you may find it hard to pay rent, bills, credit card debt, and student loans. If you feel you’re in an impossible financial situation, help is available.
A Licensed Insolvency Trustee (LIT) can offer debt relief. You can consider a Consumer Proposal or filing for Bankruptcy.
A Consumer Proposal can reduce your debts and give you one payment to pay off all your creditors. It allows you to keep your assets. Your LIT can include personal loans if they’re from private lenders like a bank or credit union.
If your student loans are from the government, you must be out of school seven years prior to include your student loans in a Consumer Proposal.
Filing for Bankruptcy can eliminate your unsecured debt. You can be discharged from Bankruptcy in as little as nine months. Government student loans can be part of your Bankruptcy if you’ve been out of school for seven years or more.
Where to Find Debt Help
Our Licensed Insolvency Trustees at Alan Marshall and Associates are debt experts who offer student loan help. We will work with you to solve your debt problems and help you with financial literacy. Call us at 1-888-371-8900 or use our online form to contact us so you can begin to build a debt-free future.
