A Graduate’s Guide to Student Loans

I just received a letter informing me that I paid off one of my student loans’ accounts. The paid-off amount amounted to 1/3 of my total student loans debt. Having seen that letter, I knew the Gods of personal finance were smiling down on me. I thought since I figured a few things out, I might as well share it with the broke-ass recent graduates who don’t know what is going on. Maybe a student will benefit from it and I can get some brownie points out of this deal.

Here is a reminder about student loans:

It cost money to borrow money.

This is the most essential concept about debt one must understand. The best thing about interest is to avoid it. In order to know how to avoid it, you have to know how it accumulates. Interest starts to accrue in 3 different scenarios:

  1. When you forget to let the National Student Loans Service Centre (NSLSC) or your provincial loans office that you’re back in school, which you should do every semester.
  2. When you are in your 6-month grace period immediately after graduation.
  3. When you’re in the repayment period.

So in scenario 1, always submit your request form for the interest-free period so that NSLSC receives your proof of enrollment from your school. You can do this as soon as you are registered in your next semester’s courses.

Scenario 2 and 3 are rather subjective to different circumstances which we explore below.

Get rid of the principle. Get rid of it fast.

“But I don’t have the money for it or I have other financial plans/would rather pay it later.” That is totally okay. In fact, that’s the sole reason NSLSC offers repayment assistance plan to cover the interest that accrues on your loan, which you’d need to re-apply for every 6 months. In the meantime, you can look for ways to save up for lump-sum payments and create an income for yourself. That way you are actually implementing the idea of costless borrowing where the Government pays off the cost.

Do your research.

I have no idea why no one talks about Student Loans before we started school. My immigrant parents were clueless. My friends and classmates were not comfortable talking about it. Even I who read the terms of the contract word by word still found the whole thing very confusing. This does not mean you will be clueless. I encourage you to spend the time to read your contract, learn about the interest rates and do what I didn’t do from the beginning: call the NSLSC and ask questions and for resources. Happy financial planning!


Originally published at amidsedghi.com on October 1, 2018.

Entrepreneur | Creator | Traveller

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