In late 2016, the Liberal government launched a new form of student debt relief. Depending on their personal or family income, post-secondary graduates are exempt from repaying their student loans until they earn an income of at least $ 25,000.
For graduates with high debts, this grace period may be welcome until they find work and determine next steps. However, w hen you factor in inflation and the costs of shelter and basic necessities, is $ 25,000 enough to live on and pay off debts?
More education, more debt
The Canada Student Loans Program estimates that $ 2.8 billion will be borrowed for student loans this year, and 40 percent of these students will need the maximum amount of funding. In addition, even if the government funds university tuition fees for eligible lower-income families, students are still often forced to borrow to cover living expenses during their studies.
Repaying this debt while earning the minimum wage (the situation of many Canadians with post-secondary education) could lead to more serious debt problems and make it difficult to recover from their situation. Although debt is recognized as a major source of stress and anxiety, little has been done to ease the burden on those who wish to continue their education.
Debt Repayment Strategies for Students
If you have a postgraduate degree and are trying to pay off your student loans while going through the milestones of your life, here are four steps you can take to make your life easier:
- Adopt a budget. A budget is an excellent tool that will allow you to keep track of your debts and anticipate your expenses. Add up all your debts, including your credit cards, personal loans and student loans using an online calculator. Then calculate your essential expenses per month, for example rent, utilities, transportation and food. Does your budget cover all your payments? What expenses can you reduce or eliminate? A money management or budgeting app can help you answer these questions.
- Consolidate your debts. Combining high interest credit card balances on a lower rate card or line of credit can give you some relief by lowering your interest costs each month. You could apply for a consolidation loan from a bank to combine your debts into one payment. Keep in mind that the higher the loan amount, the higher the payment amount.
- Talk to a professional. A debt relief professional such as a credit counselor or a licensed insolvency trustee will be able to provide you with suggestions for managing your consumer debt and thus free up funds that you can allocate to repay your student debt. . An authorized insolvency trustee could suggest that you file a consumer proposal to combine and reduce your debts and pay them off within a specific time period. Student loans, however, cannot be included in a consumer proposal if you have not stopped studying for at least seven years.
- Take advantage of a deferred payment plan. If you’re having trouble making payments while working and paying your bills, consider signing up for the Deferred Repayment Program until your situation improves. This will free you from your monthly payments for a period of time and put your finances in order.
Do you have an overwhelming student debt and are you looking for a debt relief option?