6 Tips to Manage Student Loan Debt

You took out a student loan. Now, years after graduating, you still haven't paid it off. Here's how to get out of debt as quickly as possible.

Taking out a student loan to earn a degree that will lead to a good job can be a sound investment for the future. It’s why student loans are considered “good” debt. It’s also why the Quebec Government helps students with a no-interest loan for the entire length of their studies and up to six months after graduation.

The subsequent interest rate on student loans is far lower than that on a regular loan. What’s more, students have 10 years to repay their debt, as opposed to five years for a standard loan.

Despite these advantages, with the rising cost of living, housing and groceries, many young workers are unable to repay their debts.

If this is your case, fortunately, there are solutions. Here are a few examples.

1.

Repayment Assistance Plan (RAP)

With RAP, you may qualify for reduced or waived payments, depending on your income. You can apply for repayment assistance as soon as you begin repaying your student loan and any time while you are in repayment.

2.

Deferred payment

If you qualify, the Deferred Payment Plan allows you to reduce the amount of your payments or pause them for a set period of time. Each application covers a six-month period.

3.

Payment arrangement

You can try to reach a payment agreement with the financial institution that granted you the student loan. For example, ask to have your repayment period extended so that you can spread out your monthly payments.

4.

Debt consolidation

Debt consolidation involves grouping all your debts (including student loans) into a single monthly payment rather than several. This solution allows you to swap high interest rates (on credit cards, for example) with an attractive interest rate. Ask your financial institution for advice.

5.

Consumer proposal

A consumer proposal can be a good solution if you’re unable to pay off your student loans or other debts. According to the Bankruptcy and Insolvency Act, for debt to be completely erased, you must have completed your full- or part-time studies at least seven years ago.

This procedure allows you to :

Include your student debt in the consumer proposal;
Reach an agreement with your lender to reduce part of your debt.

To know more about consumer proposals, see our web page.

6.

Personal bankruptcy

If you are unable to repay your student loan and other debts, bankruptcy may be a last resort. However, as is the case with the consumer proposal, you must have completed your full- or part‑time studies at least seven years ago for the debt to be completely erased.

For more information about declaring bankruptcy, consult our web page.

In any case, if your student debts are causing you financial difficulties, don’t hesitate to ask one of our insolvency trustees for help. They’ll find a solution to get you out of this delicate situation!

What are the signs that you’re in over your head with student loans?

You’ve been out of school for more than 10 years and you’re still paying off your student loan;
In addition to your student loan, you’ve accumulated other debts;
You’re regularly behind on your monthly payments;
Your credit card is full and you’re struggling to make the minimum payment.

Don’t wait to enlist the help of one of our financial recovery professionals!

Have your debts piled up? Don’t hesitate to contact one of our counsellors in financial recovery. They will guide you towards solutions that reduce or eliminate your debts.