Just because the average graduate carries more than $26,000 in debt doesn’t mean future students should submit to the same fate. There are plenty of ways to limit financial burden now, even before graduation.
According to Statistics Canada, the average tuition fee for undergraduate students in 2018-19 was $6,838, a 3.3% increase from the previous academic year. For graduate students, the average tuition was $7,086, a 2.4% increase. The total amount of government-issued student loans taken out and in repayment as of 2016 was more than $16.9 billion, with nearly half-a-million students enrolled in the Canada Student Loans Program in the years 2015-2016.
As these costs continue to increase and economies change, parents and students may feel overwhelmed and unsure of where or how to stay ahead of the tuition game.
Here are some financially savvy strategies to stay on top of student debt.
If You Are In Canada, Apply for RESPS
There are ways to avoid incurring large amounts of student debt – a big part of that is by being prepared going in. That means, in part, considering enrolling in a Registered Education Savings Plan or RESP, if you reside in Canada. An RESP is a dedicated savings plan to help subscribers save for their children’s education. Savings within these plans grow tax-free and subscribers can contribute money when they want to the account. When their child enrolls in post-secondary education, they can start taking payments from their RESP.
RESPs are managed and distributed by firms such as Children’s Education Funds Inc. (CEFI). CEFI has three different RESPs to choose from, each with its own features and benefits catering to the various savings needs of today’s families.
Cut Out Living Expenses
There are easy ways to reduce costs from the beginning and one of them is cutting out pricey living expenses. If you’re using loans to cover campus housing costs in addition to footing tuition, consider living at home. You can also choose to rent or borrow textbooks in lieu of buying them. In addition, you can utilize a student meal plan instead of spending money to eat out.
Handling Debt Post-Education
If you are left with significant debt after completing your post-secondary education, although it might be a challenge, there are ways to reduce, and ultimately pay off that student debt. For instance, consider drawing up a list of all the debt you have, including government loans, money owed to parents or other family members, and student lines of credit. Then, note the interest rate on each, how much you owe, and how much time you have to repay it. Knowing exactly how much you owe and which debt should be paid off first can help you organize your finances.
Keep in mind that you also don’t want to keep that debt from growing, and that means following the strict rules of a budget. Although it might seem that you’re living like a student again, staying frugal and living below your means can help you focus on tackling your debt. Forgoing unnecessary expenses, such as luxury vacations and daily restaurant meals, can help you live a more budget-friendly lifestyle.
The days of students covering their tuition expenses with a summer job are over. But with some advance planning, students can avoid falling into debt. And even if you graduate with some debt, with a bit of work, that can be paid off and you can reap the rewards of your education.