As Canadians’ household debt levels continue to rise, it’s important to consider ways to reduce the total amount owed. One of these areas is student loan debt. Student loans can start a freshly minted university graduate off on the wrong foot, already in debt. Even though the cost of attending university is on the rise, you don’t have to be crushed by debt. Here are some ideas for reducing the amount you borrow for student loans.
In order to reduce the amount of money you borrow for university, it requires planning and foresight. You want start as early as possible to improve your situation, and to find ways to fund your university education in other ways.
RESP contributions
One of the best things you can do is start contributing to your Registered Education Savings Plan (RESP) as soon as possible. You receive tax-favoured status with RESP money, and you can save up quite a bit if you plan carefully, and choose wise investments to hold in your RESP.
The more money that you save up ahead of time, the less you will have to rely on loans from the federal and provincial governments.
Scholarships and Grants
Also, don’t forget about education grants from the government. Free money is always a plus; get as much free money as you can, and you won’t have to borrow as much for your education, and debt management won’t be such an issue later.
Be Smart About Living Arrangements
You might be required to live in residence your first year at university. After that though, consider shopping around for a less expensive living arrangement. Find roommates who can split costs – rent and utilities – with you. Better yet, consider attending university close to home. That way, you can live with your parents. It may not be glamourous, but living with your parents can provide you with a way to live cheap. No rent, no utilities, and someone to help you with your laundry. As long as the commute isn’t very long, living at home while you attend university can be a great money-saver, reducing your need to borrow.
Get a Job
Another way to avoid borrowing as much in student loans is to work. Earning money to pay tuition and other costs can prevent you from needing to borrow quite so much. Look for a job on the university campus, or nearby. Your job can come with perks that might help you further reduce costs.
• Work in food service for free or reduced-cost meals.
• Work as a residence advisor, or in some other similar capacity to get a break on housing costs.
If you have money coming in, there is little need for borrowing large amounts of money to pay for the costs associated with your education.
Bottom Line
In some cases, you may not be able to completely avoid student loans. However, there are ways to avoid becoming overwhelmed with student loan debt. Create a plan to help you reduce your need for student loans. Do as much as you can on your own. This includes looking for free money in the form of scholarships and grants, as well as starting as early as possible to contribute to the RESP. Living at home and working can both also reduce the need for student loans.
If you do end borrowing, take as little as you possibly can. Use a combination of strategies to reduce your need for student loans, and you will finish university with less debt – and be that much further ahead for your financial future.
