It might be hard to believe but eventually you have to pay back your student loan.
For many students, making post-secondary education a reality is only possible by applying for a student loan. This first taste of financial responsibility separates the frugal from the extravagant: some find their way out of debt as quickly and efficiently as they entered it, whereas others must start a long and painful journey towards financial recovery.
So, should you take out a student loan? In recent years, both federal and provincial student loans have become increasingly available to students, regardless of their family’s income bracket. Student loans supplied by the government are interest free while a student attends school full-time. They also offer flexible repayment options that can come in handy. For instance, when you hit a financial roadblock, payments can be stopped temporarily or reduced to a manageable amount.
Banks offer specialized student credit in the form of lines of credit for students who may not have a government loan or who have costs exceeding that amount. Student lines of credit usually require a co-signature from a parent.
The advice when it comes to loans from private institutions is the same as with any other borrowing situation: shop around. Banks want to outshine their competition and also want to ensure your future loyalty so that you’ll continue to use their services when you become a big business tycoon.
A helpful hint to remember is that borrowed money is just that, borrowed money! It has to be repaid at some point. After maxing out a $7000 line of credit, plus owing $14,000 in government loans, student Krystal Yee has a word of advice: “If I was talking to someone about a line of credit right now, I would say to treat credit with respect. It’s something that I didn’t do. I was really abusive to my line of credit and it really hurt me in the end.” After spending $1,600 on a cheap used car for transportation, Yee confessed: “besides my car, I was horrified to realize I had no idea where the money went. It just was gone.”
The most important thing to remember is that your ability to repay a loan or your failure to do so will affect your credit rating. So be aware of what you’re getting into, and be resolved to avoid wasting borrowed money.
To equip yourself with the information you need regarding student loans, visit the federal government’s CanLearn website, a great resource to help you plan and pay for postsecondary education. For student lines of credit, find out what you need to know by speaking one-on-one to a financial advisor at your institution.
The bottom line? Don’t use your loans for a trip to Hawaii. Treat credit responsibly so you can embark on your professional life with your financial situation under control.