Pay Your Loans Automatically
Late payments could hurt your . Scheduling your loan payments to be deducted from your checking account automatically each month means you don’t have to worry about paying late or damaging your credit.
You could also score some interest rate savings if your lender offers a rate discount for using autopayfederal loan servicers and many private lenders do. The discount may only be a quarter of a percentage point, but that can make a difference in how quickly you pay off the loans over time.
Who You Need To Repay
You may have loans or lines of credit that you need to repay to the government and/or your financial institution.
In some provinces and territories, Canada Student Loans are issued separately by the federal and provincial or territorial governments. This means that you could have more than one loan to pay back.
Verify your contracts to determine where your debt comes from and where you need to repay it.
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Make Extra Payments The Right Way
Theres never any penalty for paying off student loans early or paying more than the minimum. But there is a caveat with prepayment: Student loan servicers, which collect your bill, may apply the extra amount to the next months payment.
That advances your due date, but it wont help you pay off student loans faster. Instead, instruct your servicer either online, by phone or by mail to apply overpayments to your current balance, and to keep next months due date as planned.
You can make an additional payment at any point in the month, or you can make a lump-sum student loan payment on the due date. Either can save you a lot of money.
For example, lets say you owe $10,000 with a 4.5% interest rate. By paying an extra $100 every month, youd be debt-free more than five years ahead of schedule, if you were on a 10-year repayment plan.
Include Payments In Your Budget
Build your student debt payments into your budget and make payments that are larger than the minimum payments. You can also speak with your financial institution about setting up automatic payments.
When planning your budget and automatic payments, make sure you know when your payments are due. Remember that if you have more than one loan or line of credit, you may have more than one payment due date.
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Ways To Pay Off Your Student Loans Faster
Student loan debt has become a normal part of attending college. For many graduates, it can be shocking to realize just how much they owe when they graduate. Your student loan payment can hold you back from doing the things you love, and it takes a portion of your income that you could use to reach other financial goals. Your student loan payment can also make it harder to take risks when it comes to your career or other options.
Student Loan Forgiveness: Timing
The timing of a potential announcement for student loan forgiveness is critical. The student loan payment pause ends on August 31, and Biden has said he plans to announce his decision on wide-scale student loan cancellation before that date. However, student loan cancellation doesnt simply happen once Biden announces his decision. The U.S. Department of Education has to implement any student loan cancellation. At a minimum, implementing student loan forgiveness involves careful coordination with different student loan servicers, communication with student loan borrowers, and detailed oversight and transparency to ensure every student loan borrower gets the intended student loan forgiveness. Republicans in Congress claim that the Education Department is not prepared to implement student loan forgiveness, which could either delay student loan relief or hurt student loan borrowers. While Biden could announce wide-scale student loan cancellation before the November midterm election, there is no clear timeline regarding implementation. Given the uncertainty regarding student loans, student loan payments and student loan forgiveness, your best approach is to prepare for the restart of student loan payments. Understand all your options based on your unique financial situation. Here are popular ways that student loan borrowers are conquering student loan debt and saving money:
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Consider Consolidating Or Refinancing Student Loans
Consolidating and refinancing offer two ways to streamline student loan repayment. With debt consolidation , you combine multiple loans together at an interest rate that reflects the average rate paid across all of your loans. This can be done with federal student loans to merge multiple loans into one.
Refinancing is a little different. You’re taking out a new loan to pay off the old loans, so you still end up with one monthly payment. But if that new loan has a lower interest rate compared to the average rate you were paying across the old loans, you could save some moneyprovided you don’t extend the term. One thing to note about refinancing private student loans is that you’ll need good credit to qualify, which may necessitate bringing a cosigner on board.
Be very careful to avoid student loan scams, which are particularly prevalent if you try to refinance your loans or investigate loan forgiveness.
You can refinance federal and private loans together into a new private student loan, but doing so will cause you to lose certain federal loan protections on your federal loans, such as deferment and forbearance periods.
Can You Get A Student Loan Forgiven
Canadian students with provincial or federal student loans are lucky to have the Repayment Assistance Plan . This program allows the federal and provincial government to share the cost of a loan with the student, who will only have to pay back what they can comfortably afford. While most cases involve reduced payments, students may also have the option of not making any payments during individual 6-month periods.
The problem is that the Repayment Assistance Plan cant actually get your student loan forgiven. Dont worry, because there are several loan forgiveness programs that you can apply for in Canada, including the ones below.
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How To Get A Deferment
To apply for a deferment of your federal student loans, contact your loan servicer. If you don’t know who your loan servicer is, visit the U.S. Department of Education Federal Student Aid website. You can also get a copy of the deferment request form online.
You don’t have to pay a fee to apply for a deferment of your federal student loans.
Eligibility Criteria For Deferment
You can get a deferment for up to three years on your federal student loans if you’re unemployed or unable to find full-time employment.
Deferment Isn’t Always Available for Private Student Loans
Deferments are available for federal student loans, but not always for private student loans. Some private lenders might allow you to temporarily postpone your payments, but they could charge interest during this time. The types of deferment options will depend on your lender and the specific loan product you took out.
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Find A Roommate Or Live At Home
If you are looking for ways to reduce your expenses, you may want to consider finding a roommate or living at home. It may not be how you pictured starting your new journey as a young adult, but it will help you to cut costs on household expenses and give you room to make your loan payments.
Having graduated from Toronto Metropolitan University , I had my fair share of Ontario Student Assistance Program student loans. I was able to pay off my loans within six months of graduation by earning scholarships and working various part-time jobs. I applied for, and received, 10 scholarships during my four-year studies, totalling more than $10,000. This helped to reduce my student loan debt in half. To pay off the balance, I worked part-time as a research assistant and teaching assistant on campus, while having summer jobs as a server. When I started my first full-time job, living at home helped me to focus on saving and investing my hard-earned money.
Taking the aggressive approach , gave me a clean slate at the start of my career and enabled me to focus on building my wealth. I encourage you to take advantage of applying for scholarships and bursaries because its free money that you could be leaving on the table.
Next Avoid Risks And Wasting Money
- Find help with making a budget and explore strategies for reducing debt when you take control of your loans.
- Don’t pay for help with your student loans, and don’t use credit cards or home equity to pay your student loans. Find out more about these and other ways you can avoid scams and wasting money.
Explore other situations
- If you’re in the military or work for a government or nonprofit organization, learn about public service loan forgiveness
- Have another type of loan? Review options again for more advice
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Should You Pay Off Your Student Loans Early
For some people, paying off student loan debt as quickly as possible is their biggest financial goal. But there are times when you shouldnât rush to eliminate your student loans.
For example, you may not want to sacrifice your future retirement for a faster student loan payoff. If your employer matches 401 contributions, for instance, it could be wise to contribute whatâs needed to get the match in lieu of putting more money toward your student loan balance.
If youâre trying to buy a house, start a family or launch a business, you may want to beef up your savings instead of throwing extra money toward your loans. If you donât have an emergency fund, then you should likely make that a priority instead of paying off your student loans.
Additionally, if youâre eligible for any kind of loan forgiveness program, you might want to reconsider paying off your loans faster. You may end up saving more by opting for loan forgiveness, even if youâre technically paying off your student loans for a longer period of time.
But if the above scenarios donât apply to you, then paying off your student loans early may be the right financial decision.
Managing Your Debt Repayment Assistance Plan
As a borrower, you are required to repay your loan. Missing payments could damage your credit rating. Your student loan could go into default. Contact the National Student Loans Service Centre at 1-888-815-4514 before you miss a payment. There are options available to help you manage your payments and avoid defaulting.
The Repayment Assistance Plan makes it easier to manage your debt. You pay back what you can reasonably afford, based on your family income and size. Monthly payments are limited to no more than 20 per cent of your gross family income. No borrower on RAP will have a repayment period lasting more than 15 years. If you have a disability, your RAP repayment period will not last longer than 10 years. If you earn very little income, you might not be required to make loan payments until your income increases. Contact the National Student Loans Service Centre to apply.
Bc Loan Forgiveness Program
Students with specific essential occupations can get their British Columbia student loans forgiven if they agree to work for a publicly-funded facility in one of the provinces under-served areas or with children in an occupation that has a shortage of workers.
Are you struggling to make ends meet? Consider applying for BCs social assistance program.
If eligible, the BC Government will forgive the provincial portion of your Canada-B.C. integrated student loan at a maximum rate of 20% yearly for 5 years. Once you finish 5 years of qualified work, a percentage of your student loan will be forgiven, along with the interest generated during each year youre registered in the program.
Eligibility For The B.C. Loan Forgiveness Program
You can qualify for student loan forgiveness in BC if you:
- Are currently paying off a B.C. student loan
- Have graduated from an accredited post-secondary educational facility
- Are not enrolled in any full-time post-secondary studies
- Work an acceptable amount of in-person hours
- Are or will be employed in an eligible full-time, part-time, on-call and/or casual occupation at a publicly-funded facility and working with children or an under-served community
Eligible Occupations In Under-Served Communities In BC
- Teacher Educator
- Teach of the Visually Impaired or Deaf/Hard-of-Hearing
Do you live with a disability? Get extra financial aid through BCs disability assistance program.
Struggling With Student Debt Heres How To Pay Off Student Loans Faster
By Sandy Yong on May 27, 2022
If youve taken on debt to get your diploma, now what? Heres how to be financially savvy about repaying your student loans.
Pursuing post-secondary education can help you land your dream job. But obtaining a degree or certificate can comes at a cost, in the form of student loans. In fact, the average Canadian takes 10 years to pay off student debt.
According to Statistics Canada, Canadian students enrolled in an undergraduate program shelled out on average $6,693 in tuition costs for the 2021/2022 academic year. If you live away from home, you might need loans to cover housing costs, too. Over a typical four-year program, that can mean shouldering tens of thousands of dollars of debt.
So, how can you pay off your student loan debt? We break down the types of student loans, repayment strategies, and how you can balance this obligation with other priorities.
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What Are The Chances That My Student Loan Debt Will Be Forgiven Completely
Not great, unless you owe $10,000 or less in federal loans. Biden campaigned on forgiving $10,000 of student loan debt, and recent reports indicate that student loan forgiveness would include an income cap.
According to Federal Student Aid Data, borrowers have an average of $37,014 in student loan debt, and 2.1 million borrowers owe more than $100,000 as of the first quarter of 2022.
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Pay More Than The Minimum Amount
If you have the capacity, increasing the amount of your monthly payments will help you get out of debt faster. Whats more, the amount you pay above the minimum payment will go toward paying off the principal of the loan. Even better, this will help to reduce your balance and thus reduce the amount of interest you will have to pay.
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Ways To Get A Student Loan
Canada Student Loan Program.
To get federal loans, apply online for SNLP through your Provincial and territorial finance aid offices:
Alberta Student Aid
Saskatchewan Student Loans
Yukon Student Financial Assistance
You could manage and repay your loan through the National Student Loans Service Center site and your provincial loan through the provincial government’s financial assistance office or their service provider.
Provincial and Territorial Student Financial Assistance. You can apply for financial assistance at your provincial office to combine this loan with a federal program and get only provincial or two loans simultaneously, according to your province’s residency conditions. For example, it could be provided for a full or part-time student.
Private educational loan or line of credit. You should choose the lender with the most favorable terms and conditions which suit your needs. It could be traditional lenders like banks, credit unions, or online alternative lenders.
Transferring The Money Yourself
You can also repay your loans by international bank transfer. You have to pay in euros. You can pay in either monthly or annual instalments.
- If you want to pay in monthly instalments, you will receive a payment request each month.
- If you want to pay in annual instalments, you first have to apply to DUO to do this. You will then pay all your monthly instalments at once at the end of the year. This could reduce your extra bank fees. You will receive a payment request in October. You must make the repayment by 31 December.
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How Much You Need To Repay
Verify your loan or line of credit contract to figure out the following:
- the total amount you owe
- the interest rate that will be applied to your debt
- how youll repay your debt
- how much youll pay
- how long it will take to pay back your debt
Contact the organization that provided your student loan or line of credit if you dont have the information listed above.
Other Options If You Can’t Pay Your Student Loans
If you don’t qualify for deferment, you might be eligible for a forbearance for your federal student loans. A forbearance is another way to temporarily postpone loan payments or reduce the monthly payments. Unlike a deferment, interest will continue to be charged on all types of loans.
Another possibility is that you might be able to change your repayment plan to lower the monthly payment.
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