Student Loans 101 (MNP 3 Minute Debt Break)
G
oing to university or college is a big commitment. It can also be a daunting decision when considering the years of student loans which may follow. If you are a student or know someone who is, now is a great time to sit down and realistically look at the cost of furthering education.
Being prepared by having a detailed budget and having saved for post-secondary costs will give students the freedom to remove financial stress and focus on more important things such as studying, eating well and enjoying the student life. Realistically, a student’s income during university will be either part-time or limited to the summer. Being aware of this and setting good habits such as sticking to a budget will help prepare students for other times in their life when they may find themselves in a similar situation, either unemployed or unable to work full-time.
For many students, the cost of obtaining higher education quickly outpaces what they’re able to earn through part-time or seasonal jobs. As a result, many students will take out student loans to help cover their expenses. By the time they hit graduation, the relatively high interest rates on these loans coupled with low, entry-level salaries can make those loans seem insurmountable.
If you are struggling with paying back your student loans during or upon completion of your education, a good first step is to speak with your student loan provider to see if you can qualify for interest relief or defer payments. If however, you’re still unable to pay them back, you may want to consider filing a Consumer Proposal or declaring bankruptcy to get your financial life on track. Both of these are options can eliminate more debts than just your student loans to give you that fresh financial start you need. However, they will both also have an impact on your credit.
It is important to keep in mind that student loans may survive both Consumer Proposal and bankruptcy. This means that after filing a Proposal or bankruptcy you may still be responsible for student loan debt, even after being discharged. Like many things in life, being aware of the facts and preparing ahead of time can relieve a lot of financial stress.
If you or someone you know, is currently struggling with student loans and accumulating debt, reach out and book a free consultation with one of MNP’s Licensed Insolvency Trustee’s. It’s a very good way to start working towards a debt-free future.
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