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Student Loan Tips

on Mon, 09/02/2013 - 11:10

Lots of us got student loans when we went to school. Whether you just got your student loan or just finished studies and will have to repay your student loan soon (if you just graduated in June, your repayment starts in Dec, this is a good time to start planning a budget for that payment), here are some tips on student loan, so that our credit is not being affected just because we have not done things the correct way.

photo credit: Prashanth Gopalan

Canada Student loan repayments do not start until six months after you have stopped being a full-time postsecondary student (so while you are still a full-time student, there is no repayment needed nor interest being calculated). The National Student Loans Service Centre (NSLSC) will send you what is called the Consolidation Agreement, outlaying actual rates and conditions for repayment. It tells you how much you owe, your expected monthly payment and the interest rate. Interest though, will begin to accrue on your outstanding loans. If you choose to start paying towards your loan, loan payment(s) will start to apply against the outstanding principal (which is a good thing). The good thing is, you can always go online and check your loan repayment status.

Part-time Students are responsible for making interest payments on student loan even though when you are still in school. Six months after you have completed your studies and/or stopped being a part-time student, you have to start repaying your student loan.

As of your "consolidation date" (the date you require to start repaying the loan), the amount of interest which accrued in the six-month period after your studies ended is calculated (as indicated earlier), you can either pay the interest or pay extra to lower your loan principal. If you pay extra, your monthly payment amount will be adjusted accordingly.

Make sure you make your repayments on time every single month, so that you have a good record on your credit bureau. Be aware that student loan CAN very well screw up your credit, and you can't even get away from your student loan by filing bankruptcy (unless you had already graduated 10 years), so keep your payments intact and protect your credit! - This is NOT encouraging anyone go bankrupt to avoid repaying any loans either!!

What do you do if you find yourself unable to meet your repayment obligations? Contact NSLSC, you may be eligible for interest relief, or make repayment arrangements. NSLSC usually gives you six months' "breathing time", then you have to continue to make regular payments. Note that during the negotiate period, you have to continue your payments, otherwise, your credit may get affected.

If you are among the unfortunate ones, that you have credit cards debts together with student loan balance, make sure you try to pay off your credit cards while you carry your student loan. Note that not only credit cards charge a lot higher interest rates, student loan interest cost is tax deductible as well, which only make sense to carry it a bit longer if you have to.

Lastly, I would like to share a CNN video on educational cost. 


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