May is a good time of year for moving forward: apart from the emergence of persistent sunshine and the occasion of your intrepid bloggerâs birthday, it is also the time of year that thousands of university graduates will complete their degrees and begin their journeys into the workforce.
Student Loan Debt – A Reality
Millennial graduates are all-too-aware by now of the challenges and contradictions of the post-secondary market for education. Thinking about and planning for student loan repayment is a real-world necessity for class of 2015 college graduates. Recent surveys by CIBC show that 51% of Canadians plan to use loans to pay for tuition, living costs and textbooks. On average, Canadians currently graduate with $26,000 in debt. Students, despite their best intentions to become economic contributors and leaders, face a significant obstacle in the form of debt.
Managing Your Student Loan
If youâre a post-secondary student or about to become one, what are your options? For one, itâs never too early to start thinking about your personal financial plan – or saving to contribute to it. Improving your financial literacy will be an important factor in the avoidance of defaults on student loan debt.
Learn the essentials of budgeting, find out how repayments are calculated and what to expect, and understand the different methods and terms by which you can make repayments over time. You can even find some ways to reduce the cost of repayment, such as maximizing contributions during the six-month âgrace periodâ during which interest does not accumulate on your loan. The sooner you can pay back the outstanding debt, the less impact interest will have on your borrowing costs.
Developing good savings habits, controlling your use of credit, maintaining a good credit score and setting meaningful targets for your savings goals sooner, rather than later, will definitely help you avoid the pressures of debt later on. Coming up with ways to manage your finances during school – including careful monitoring of your budget, spending patterns and lifestyle choices – may be a significant challenge, but it pays off if you can avoid deferring or defaulting on a student loan payment. A default on student loan debt may bring about even more serious consequences for your credit score and longer-term financial future.