By Jean茅 Herman, LIT, CIRP
Whether you香蕉视频直播檙e a new graduate or a first-year post-secondary student, student financing for some or all of your costs of living and tuition is likely on your mind.
It may seem too soon to worry about , but budgeting for ongoing living expenses and for future debt repayment is just as important when you香蕉视频直播檙e a student, as when you香蕉视频直播檙e a graduate.
Let香蕉视频直播檚 look at how student debt repayment works:
After completion of your final school term you have six months before you must start making payments on student loans. However, interest starts accruing right away.
According to Statistics Canada, based on 2010 numbers, the average Canadian university graduate finishes school with more than $26,000 in student debt.
Using the Government of Canada香蕉视频直播檚 loan repayment estimator, using a fixed interest rate of 3.95 per cent (you can choose fixed or floating), it would take 10 years to pay off this debt, paying $328.65 per month. The total interest paid over the life of the loan is $13,438.46. If you don香蕉视频直播檛 wait for the six-month non-repayment period, you could pay it off in 9.5 years.
Budgeting for student life and future debt repayment:
Many students fund their living expenses, in addition to their tuition, with credit. Some will use federal or provincial government student loan, and some a student line of credit or credit card.
Ask yourself these questions:
Question 1. How long do the loan proceeds have to last to cover expenses?
Question 2. Will you get new funding every semester, or are you using a limited amount of credit accessed through a credit line or credit card?
Using the total loan divided by the number of months it must cover gives you a monthly amount to work with.
Question 3. When does repayment start?
Question 4. Will the credit be used solely for tuition or do you require the credit to cover living costs as well?
Question 5. What are your monthly expenses? Be honest 香蕉视频直播� do you need that daily latte and weekend case of beer or will you eat Kraft Dinner and drink instant coffee? If you香蕉视频直播檙e using credit to cover your living costs, you have to repay this, plus interest at some point. Do you want to pay interest on lattes and beer?
Question 6. Does your budget balance? If not, cut back on expenses.
Question 7. What is realistically left over to pay the debts?
Question 8. With no change in circumstances, how long will it take to pay off the debts?
Repaying your debts
Once you have your living expenses budget, it香蕉视频直播檚 time to look at monthly payment obligations. Most debts include interest, and student loans are no different. Visit the Government Canada website for more information about . Depending on income, you may also qualify for .
While there香蕉视频直播檚 no set time to pay back credit card debt, as there is for loans, paying off credit cards avoids wasting money on interest.
What if you can香蕉视频直播檛 afford the payments on the debt?
After reviewing your budget, you may find the money left over won香蕉视频直播檛 cover minimum monthly payments, never mind pay off the debts. Now what?
Can you take on a part-time or second job? Can you defer payments through the repayment assistance plan discussed above? If not, it香蕉视频直播檚 time to seek the help of a licensed, reputable professional.
(LIT) are the only professionals licensed and monitored by the federal government to carry out bankruptcy and proposals. LITs can stop ongoing and pending legal and collection action for debt.
You香蕉视频直播檙e not alone 香蕉视频直播� LITs walk you through the steps of a bankruptcy or consumer proposal to see if it香蕉视频直播檚 the right solution for you.
Will the student loan debt be included? Student loan debt won香蕉视频直播檛 be extinguished after a bankruptcy or a consumer proposal is completed if it香蕉视频直播檚 less than seven years from your last study date. In some hardship cases, that may be reduced to five years.
If you have not yet completed your studies, interest will generally not begin accumulating, and repayment may not be required until six months following completion of studies.
Based out of Kelowna, Jean茅 Herman, is a Licensed Insolvency Trustee and Vice President at . Contact Jean茅 toll-free at 310-DEBT or 877-898-2580 for a free, no obligation, confidential consultation to find a Life-Changing Debt Solution that fits your unique situation.