The cost of an education is sky rocketing, but that’s not stopping students from spending blindly on unnecessary wants – despite being stuck with an average debt of $27,747 post-diploma.
A survey conducted by TD Canada shows that while 34 per cent of students feel anxious regarding their school finances, 28 per cent report spending the majority of their money on bars and eating out. Another 10 per cent say that clothing and accessories is their highest cost.
Not only that, but paying off this kind of debt – with a monthly payment of $260 – will take 15 years, not to mention an additional $19,000 in interest. So, what measures can today’s students take to avoid being in the red after graduation?
Moving Out Reality Check
For many students, the biggest financial readjustment is leaving the family home for the first time. As we mentioned in our previous series on fleeing the nest, it’s vital to have a semblance of financial freedom and responsibility before heading to campus or a student apartment. This means establishing a budget for living expenses, a long-term plan for student loan repayment and a keen sense for sniffing out a bargain. For a lot of young people, this can be a bit of a shock. Working a part time job to cover the cost of clothes and entertainment doesn’t hold a candle to dealing with day-to-day expenses – and they may need some help. One great resource is offered by the Financial Consumer Agency of Canada. The FCAC offers a number of fact sheets breaking down the costs of common student expenses, such as moving out, paying off your student loans, and other financial basics.
Don’t Eat Your Profits
As silly as it may sound, it can also be deceivingly easy to literally consume your money. With restaurant and bar options offered on campus (and studying-induced sleep deprivation), it can be so temptingly convenient to eat out on a regular basis. This sneaky money pitfall can literally cost you extra thousands of dollars, and is easily avoided with a little strategy at the grocery store. For tips on how to stretch your food budget, click here.
How To Graduate With As Little Debt As Possible
Other than scoring your diploma and dream job, this is the main goal of post secondary school. For a very lucky few, tuition is footed by parents – but most students are facing the average 4-year cost of $84,000 on their own.
The first point of order – shave off as much potential debt as possible through grants, bursaries and scholarships. Depending on your talents or interests, you could qualify for a number of financial assistance opportunities. Check out websites like Studentawards.com, which unveils a number of available scholarships in Canada, and the requirements to qualify for them – you may be surprised to see just how many are applicable to you. The Government of Canada also offers CanLearn, with information on how to qualify for athletic or academic-based grants and bursaries.
Pay Off Your Student Loan – Faster
Sticking to an effective debt-repayment plan is your only chance to rid yourself of student loans before sending your own kids off to college. Those who qualify for provincial support like OSAP don’t have to begin their payments, and are interest-free until after graduation. Keep in mind though, that there’s nothing like facing a heap of debt to put pressure on the post-grad job hunt. Build those payments right into your budget now, and at least you’ll have a bit of a head start when you join the real world. Those stuck with line of credit as their only tuition option don’t even have the luxury of waiting. Payment installments – and compounding interest – start immediately, so it’s important to have a mapped out plan to tackle them along the way. Remember the 3 vitals: how much do you owe, to whom, and the consequences of not paying it back on time.