Re-paying student loan debt

College student studying

A student loan can be essential to helping you pay for your post-secondary education. But, once you’ve graduated, it is important to work to pay off your loan in order to build a good credit rating and minimize the interest you will pay on your debt. Here are some student loan re-payment tips:

Make a Lump Sum Payment

Do you have any extra money kicking around? Put this extra money to good use by making a lump sum payment on your loan. If you have some extra money while you’re in school or during the non-repayment period of your loan, your payment will be applied directly to the principal of your loan, reducing the amount of interest you will be paying.

If you are able to do so, working a part time job while you’re in school can be a good way to make some extra money to put directly towards the principal of your loan.  

Pay More than the Minimum Monthly Payment

If you can afford to do so, paying more than your minimum monthly payment is a great way to pay off your loan quicker, reducing the interest you will pay on your loan. If you receive a raise at work, or get a higher paying job, consider devoting that extra income to student loan or other debt re-payment in order to get debt-free sooner.

Until March 31, 2022, Canada Student Loans will be interest-free, allowing you to make your minimum payment, and put any extra payments towards debt that is accumulating interest.  

Manitoba Student Loans are interest-free too, so once your Canada Student Loan starts accumulating interest once more, focus extra payments on it, in order to pay it off as soon as possible.

Get Tax Credits for your Student Loan  

Did you know that you are eligible for a 15% tax credit on interest paid on government student loans? If you have a government student loan, ensure you’re taking advantage of this tax credit. Then, if you receive a tax refund, a good strategy is to use some or all of your refund to make a lump sum payment on your debt.