Money Tips: How to Pay Off Your Student Loan Quickly

Education is a lifelong currency – it will not depreciate and will never disappear. Investing in your education is an investment in a brighter future for you and your family. 

It is common for Canadian students to incur debt while pursuing post-secondary education, with around 1.8 million borrowers in Canada. 

For a majority of students, loans are essential for them to achieve their educational goals. Student loans offer support for students with many options for easy repayment. To learn more about student loans and how to apply for them, check out our article, A Guide to Student Loans & Grants in Canada.   

There are many different strategies for repaying your loan quickly – and some of them are simple, everyday things that can actually make a huge difference! Here are a few saving tips for repaying your student loan

so you can start enjoying your new career debt-free as soon as possible. 

1. Stick To A Budget 

Whether you have a student loan to repay or not, it is always a good idea to understand where your money goes each month. You might be surprised how much money you’re spending on takeout coffee, restaurants, or even fast food. The best way to track your spending is by using a budget. For more helpful tips on creating and managing a budget, check out our article, Budgeting for College Students in 5 Easy Steps.  

2. Avoid Eating Out Regularly  

Buying lunch a few times a week may seem harmless in the moment but when you see the amount you have spent outlined in your budget you might think differently. Taking the extra time to prepare your food at home will greatly increase your ability to repay your loan quickly.  

3. Try A Spending Freeze 

Try to exclusively spend your money on essential items only. Ignore the urge to buy new clothes, go out to eat, or do other activities, and see how much you can save. Even better, try doing it for a month or two! Make your spending freeze easier by avoiding stores where you tend to impulse buy. Small sacrifices in the now will pay off in the long run when you are debt-free and able to enjoy each paycheck as it comes in. 

4. Use Your Tax Refund   

If you have worked in the last year, come tax season, you may be expecting a tax refund from the Canada Revenue Agency (CRA). While it might be tempting to spend it on something exciting, you could make a dent in your student loan by applying your tax refund toward your loan.  

5. Evaluate Your Memberships & Subscriptions  

Chances are, you are paying for multiple subscriptions like Netflix, Spotify, gym memberships, or Amazon Prime. In order to eliminate your outstanding debt, it’s time to cancel any subscriptions you don’t use on a regular basis. For the subscriptions you do use a lot, think about sharing memberships with family or friends. That way, everyone wins – and saves! 

How To Repay Your Student Loan 

Once you’ve stashed away some extra money, make sure you use it wisely to repay your loan. Depending on your situation, there are a few different methods to do this: 

1. Increase Monthly Payments  

This is one of the easiest and most effective ways to reduce your debt. Any amount you pay over and above your monthly minimum will go directly toward the principal of your loan, which reduces the amount of interest you’ll pay. Even an additional $10 a month can make a surprising difference over time. By using the saving tips listed above to increase the amount of money you have in the bank, increasing your payments each month shouldn’t be a problem! 

2. Make Payments While In School Or During Your Grace Period  

If you can start paying right after graduation (or even before) do it! Although government loans do not require any payments on the principal while you are in school or in the first six months after graduation (this is called the grace period), that doesn’t mean you can’t start paying earlier. Any payments you make while in school will go toward the principal of your loan, which will reduce the total amount you owe. This means less interest to pay in the long run. 

The six-month grace period after you graduate gives students an opportunity to establish themselves in the workforce and start earning a salary before they are required to start making payments. Interest, however, does accumulate during this period.  

3. Refinance Your Student Loan  

Student loan refinancing allows you to gather some or all of your outstanding loans into one new loan, often at a lower interest rate. This can help you to pay less over time or provide you with a longer repayment term that will lower your monthly payment.   

This option works well if you have a good line of credit and a permanent job. Without a steady stream of income, refinancing your student loan is never a good idea. 

How Sundance College Helps With Student Aid  

At Sundance College, we believe everyone should have the opportunity to pursue post-secondary education and a career. We also believe lack of funds should not prevent anyone from starting this journey. 

Sundance College is a designated post-secondary institution, and all our programs are eligible for government Student Aid funding. We also offer our students scholarships and a laptop program, so each Sundance College student has the best chance at success.  

If you are thinking about becoming a student at Sundance College, simply fill out this Request Info form. Your personal Financial Aid Advisor will walk you through all the funding options available to you and assist you in completing an application for whichever funding option you choose.