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How do I manage my money so I can pay off my student loans?

Succeed on the Job

Committed to paying back your student loans? Excellent! It’s a good idea to aim to be debt-free as soon as possible, even if it takes some sacrifice. You could save a lot of money in interest over the long run.

Know What You Owe

To plan properly, start by figuring out what your monthly loan payment amount will be. These payments will be part of your monthly budget for 3 to 9.5 years, depending on the amount of your loan. To calculate payments, try the Government of Canada Loan Repayment Estimator. The monthly amount will depend on your total loan balance, interest rate and repayment term (the number of years you’ll take to pay it off).

As soon as you graduate, you enter a 6-month “grace period” when there is no interest on your Alberta student loan. Interest will start accumulating at the 6-month mark, which is also when you’ll make your first payment. If you have a Canada student loan, note that while repayment also starts at 6 months, interest starts accumulating right away.

Budget Realistically

Your student loan payment will need to fit into your budget for basic living expenses (housing, utilities, food) and other debts (credit cards, car loans), as well as expenses for “nice to have” items, such as entertainment, trips and extra clothes.

List your monthly expenses and compare them with your monthly income to make sure you have enough. Your income must cover all of your expenses. If your income is greater than your expenses, you’ll have some breathing room. If your expenses are greater, you’ll have to cut back on spending or change your lifestyle.

Save Where You Can

You’ll pay less interest over the lifetime of your loan if you

  • Make your payments on time.
  • Increase your monthly payment amount.
  • Make payments bi-weekly instead of monthly.
  • Make payments while you’re still studying or during the grace period.
  • Pay the grace-period interest on your Canada student loan before you enter the repayment period.

Change Your Loan Terms

If your circumstances change, you can do several things to adjust your monthly payments to meet your needs:

  • Change the payment schedule to match when you get paid, which can help you budget.
  • Shorten the term of your loan to make bigger payments and repay your debt faster.
  • Lengthen the term to make smaller payments. It will take longer to pay off the loan, but may help you manage your money better now.
  • Apply for the Repayment Assistance Plan (RAP), which can help if you have trouble making your monthly payments.

Student loans can pave the way to education and better earnings over the course of your career. Just don’t lose sight of how much the interest can cost—or your responsibility for repaying loans over time.