Congratulations! You’ve done it!
Your journey through university is coming to an end and it’s time to start a new chapter in your life. So what’s next? Career? Internship? Study? If you’ve taken out government student loans to fund your education, it’s also time to make arrangements to pay those back.
Don’t know your options or need help? Come to the Financial Aid and Awards Office and meet with one of our advisors – it’s never too early to start planning!
Tips for Repaying Your Student Loan
1. Understand your loan and the terms of your repayment agreement
- You can generally find this information on the loan agreement (i.e. Master of promissory note, Certificate of guarantee, etc.) that you provided to your financial institution. If you have any questions, contact your loan provider and your financial institution.
2. Budget - Make a plan and stick to it!
- How much can you afford to pay? What is your timeframe?
- Be realistic – it’s better to overestimate than to underestimate.
- Be prepared to make some sacrifices and be disciplined.
- Use budgeting apps to track your spending and stay within your set budget.
3. Start paying back right away
- If possible, avoid postponing payments — not only will you get into the routine of repaying sooner but you will also avoid having interest accumulate.
4. Pay back with every paycheck
- With each payment you make, the principal of your loan will decrease, and in turn decrease the amount of interest you will pay during the lifetime of your loan.
5. Make extra payments
- If you can, set aside a portion of every paycheque to make extra payments on your loan if your budget permits. Making extra payments will help you pay off your loan sooner and will decrease the amount of interest you pay.
6. Check if you qualify for a tax credit
- The government may grant you a non-refundable tax credit on the interest paid on your student loan.
In general, you will be required to start paying back your loan once you:
- have graduated from your studies; or
- have transferred to part-time studies; or
- have left school; or
- are taking time off school for more than six months.
In general, you pay back the loan provider through your bank. In some provinces and territories, federal and provincial/territorial student loans are issued separately. This means that you could have more than one loan account and more than one loan issuer to arrange payments with. Be sure to contact each loan provider to arrange to repay them.
IMPORTANT: Make sure you keep them up to date on any changes to your address or phone number! You don’t want you miss out on important information!
In general, when you finish your full time studies, you should contact your financial institution to make a repayment agreement or opt into the partial exemption period. Some loan providers will send you a repayment agreement by mail. From there, a pre-authorized debit will allow your financial institution to withdraw the payment every month from your bank account. It is best to contact your financial institution prior to finishing your studies to learn more about your repayment options.
Going back to school? Once you have been accepted and registered, contact us at the Financial Aid and Awards Office for information on the funding options available to you. If you are returning as a full-time student, you may also be eligible for interest-free status during your periods of study. Let us know so that we can advise your loan provider.
Contact your loan provider before your payment is past due. In general, it is easier to make arrangements before your account is overdue, and most student loan programs give you a period of at least 6 months after you graduate before you have to start making payments. This is known as a grace or partial exemption period. This means that you have 6 months from end of your last full-time study period until your first student loan payment is due. During this time you may be able to:
o Defer all payments – The interest that has accumulated during the partial exemption period will be added to the loan principal and paid in accordance to your loan agreement.
o Repay the interest only – During the 6 month exemption period you can pay the interest only each month so that it does not accumulate; your debt will not change. Once the six months are up, you will repay your loan principal and interest.
Visit the Repayment section of you student loan provider’s website for more information.
In general, there are serious consequences if you don’t pay or miss payments on your loans which may include:
- Your credit rating maybe negatively affected.
- Your loans may be sent to a collection agency.
- Any GST or income tax refunds you are eligible to receive will be automatically used to repay your defaulted loans.
- The government may seizing your salary, furniture and/or property.
- You may lose your eligibility for further student loans.