After years of reading, researching, writing and cramming, you did it! You’re officially a university graduate. Congratulations!
Like most young Canadians, it’s very likely that you’ve had to take student loans to see you through your educational journey.
As a new chapter of your life begins, you need to close the previous one by repaying the money you borrowed. This can be a daunting task.
Here are 6 steps to help you get started.
1. List All Your Loan Providers
These could be the governments – federal, provincial- but also banks or Mum & Dad.
Retrieve the paperwork associated with each loan you took. You need to know the interest rate(s) you’re being charged, when you’re expected to make repayments, the minimum payment amount, and if you have a grace period or not.
2. Make a Draft Payment Plan
Start with the minimum payment you would need to make and go from there. Under your proposed payment plan, how long will it take you to pay off your student loans? How much will you pay in interests over the course of your repayment plan?
3. Test Your Draft Payment Plan
Time to be as realistic as possible. Will this payment plan cause you hardship? Or do you have spare income that you could redirect to it? Will you still be able to pay for your other bills? If not, what are your options?
4. Investigate Consolidation
Research about the possibility of consolidating all your loans into a single one. A consolidation loan usually makes budgeting easier, and by extension repayments. You may also save on interests. Speaking of interest, ensure you’re not charged more for consolidating.
5. Investigate Forgiveness and Discharge
Check if a portion, or all your loans could be forgiven or discharged. Depending on what you studied, it could be a possibility. This applies to government loans.
6. Understand the Implications of Defaulting
You need to be aware of what will happen if you default on your loans.
It will definitely impact your credit score, which in turn, will impact your ability to borrow money in the future. A poor credit score could also impact your employment prospects and your insurance rates.
Paying back your student loans is a huge responsibility. Ultimately, it’s your responsibility.
The Money Savvy Blog 