Student Debt – Avoiding The Bank of Mom and Dad
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November 25, 2024
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What do you do if you’re heading to college or university this fall without a RESP to cover tuition? Rather than asking the bank of mom and dad, let’s look at some alternatives!
Get A Student Loan
This seemingly straightforward tip comes with a warning: Loans are not “free money” and are an expensive way to pay for higher education. Accepting a loan is a serious financial commitment. Students need to understand the importance of spending the money wisely while at university.
How student loans work depend on where you live in the country. In many cases, to be eligible for a loan you must be a Canadian citizen and a resident of the province where the school is located, as well as able to demonstrate financial need.
While you’re in school you don’t have to make payments on your loans, but once you leave school, interest will start to accumulate. You’ll have six months after leaving school before you have to start making regular payments on your student loan.
Apply for grants, bursaries and scholarships
Students don’t have to pay back money received through grants, bursaries or scholarships. Various governments, organizations and schools offer grants. Different offerings have different requirements for application; it could be income tested, grade rated, or a winning submission, so be sure to read the descriptions, but often its beneficial to apply even if you don’t qualify, as several bursaries go unclaimed every year because no one applies.
There are tools and websites available to help you search online for scholarships and other financial awards, including Scholarships Canada and Student Awards. The federal government also lists various scholarships and training programs on its website.
Get a Job
Once a student turns 15 or 16, consider having a part-time job to help save for post-secondary education. Ideally, this will not only help reduce students’ reliance on loans (or their parents) – using their own money to pay for school can encourage students to take it seriously. Statistically, kids who have some skin in the game perform better in post secondary.
Having a job through college or university could also help jumpstart your repayments before interest starts accumulating, saving you much more in the long run!
Create a budget and a plan
Student debt is a common side effect of getting an education. But that doesn’t mean students should just ignore the debt piling up around them.
Consider using “free money” – like birthday gifts and tax refunds – to make a lump sum payment against their student loan. Budgets should contain a section for loan repayments. Statera Financial Planners has interactive calculators and trackers you can use to help!
Take advantage of student discounts
Students receive discounts country-wide for anything from transit passes to movie tickets, bank accounts and everyday purchases. The Canadian Federation of Students offers a “Student Saver” card, which grants cardholders discounts anywhere from 10 to 50 per cent off at participating businesses. Research local businesses and choose ones that offer student discounts.