Minimize student debt


After years of hard work earning my undergraduate degree, I have finally been accepted to graduate school, a dream come true! I’m really excited about continuing my education but since I can’t pay off tuition in full, I will have to take out a student loan. I also just proposed to my girlfriend, and we want to be able to buy a home and start a family in the coming years. I’m worried that taking out a student loan will burden my future. How can I keep my debt to a minimum?

Daniel R.
Moncton, New Brunswick

Hi Daniel,

Congratulations on your engagement! While education is a great investment, remember that you do have to pay it back! This means that before you graduate and get a job, you may find yourself with additional debt on your shoulders.

According to the Canadian Federation of Students, skyrocketing tuition fees and the prevalence of loan-based financial assistance have pushed student debt to all-time highs. This past year alone, almost 425,000 students were forced to borrow money for their education, with an average of over $27,000 of debt for Canadian students. For graduate students, who spend more time in school, those debts are even higher than average.

In a study of graduate students by TD Bank, two-in-five respondents said they are delaying buying a first home, and 36 per cent are putting off starting a family until their debts are repaid. Research also shows that many young Canadians are facing a delayed adulthood with 42 per cent of young adults aged 20 to 29 living at home with their parents, a 10 per cent increase since 1991.

Because you are concerned about your future and affording a house to grow your family, I would highly recommend investing in your education with a budget and money management goals in mind. You want to minimize your student debt and pay it off as soon as possible to ensure you have the tools to manage your money, repay your loan and continue saving for the future. Without good money management skills, it may be difficult to pay off a loan plus added interest.

Use the following suggestions to pay off your student loans faster:

  1. Have a Positive Mental Attitude – Achieving any goal requires determination and an ‘I can do this’ type of attitude. Remind yourself what you are paying for – your graduate school education. That will open career doors and help grow you as a person! That’s huge. And don’t forget – Canadian college graduates earn more money on average.
  2. Understand your Loans, and Make a Plan – Plug the information about your loan into a repayment calculator to learn how much you need to pay per month within a time frame. Pay attention to details – Are your interest rates fixed or variable? Understanding the terms of your loans will help you avoid potential complications in paying it off.
  3. Make Payments while Still in School – Paying your loans down before you graduate will certainly help you pay it off faster. For some loans, interest collects the whole time while you are in school, adding to your total balance. Cut costs by finding a part-time job, or cutting costly habits like eating out at restaurants instead of making food at home.
  4. Pay More than Required Monthly – It may seem obvious, but there are lots of ways to pay more to cover your costs faster. You can find ways to earn more money. You can earn more with part-time gigs, yard sales or bake sales. Market research panels can pay up to $100 for a study – depending on availability in your area. Be creative and have fun!
  5. Start Saving by Cutting Back – Sharing a house with roommates can lower the cost of living. If you use a car, you can get around by transit instead, or rent a car to cut costs. You can also spend less on entertainment. Host a movie night instead of going out and borrow books and movies from the library instead of buying them.

Again Daniel, congrats on taking the initiative to start saving money to pay off your student loan. You are well on your way to building a financially steady future. I wish you success in making the right financial decisions as you build your family and home!

Jeffrey Schwartz
Executive Director

Jeffrey Schwartz is the Executive Director of Consolidated Credit Counseling Services of Canada and President of the Credit Association of Greater Toronto (CAGT).

If you have a question about a debt management program or just about finance in general, Jeff is here to help. Send us an email with your question to [email protected]. You’ll get the expert advice you need and your question may be featured here on our website.