Money hacks for students

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7 Minutes Read

How to pay for school AND have a life.

Being a student is getting more expensive every year. Student life means paying for tuition, textbooks, housing, food and more – all without a full-time income. Throw a pandemic and some record-breaking inflation into the mix and it’s no wonder students are feeling anxious about their finances.

We want to ease the pressure. In this blog, we’ll walk you through financial aid options and include best practices for paying back your loans. Plus, we’ve put together tips for building healthy financial habits so you can prepare for the future.

 

 

Financial aid options

Ideally you want to borrow as little as possible for your education. Before you borrow, find out if you’re eligible for scholarships, bursaries, or grants -- which are available through the Government of Canada, your province or territory, and even your school. This is free money that you won’t have to pay back and which can significantly reduce the amount you’ll have to save or borrow for your education. Also, check out sites like ScholarshipsCanada that make it easier to find available scholarships.

As far as loans go, funding for post-secondary education can come from three different places:

 

Federal government

The Canadian government offers assistance to part- and full-time students through the Canada Student Loans Program (CSLP). This Student Aid Estimator shows you how much you can get in financial aid based on factors like your family income, the cost of your tuition, and where you live.

There’s a limit on how many weeks you can receive student aid for (called a lifetime limit) and your loan doesn’t start accumulating interest until you reach it — for full-time students, that limit is 340 weeks.

You also don’t have to start paying back the loan until 6 months after you graduate — although if you wanted to start early, you could.

In 2021 the Canadian government froze the accumulation of interest on student loans until March 31st, 2023. This is really good for students because it means your loan won’t accumulate any interest until then — even after you’ve reached the lifetime limit. You can take the opportunity to relax on payments or get ahead, depending on your cash situation.

It’s a good idea to apply for student aid at least two months before the start of your program so you can get your funding on time if you’re approved. You can check out the full details of the application process and eligibility requirements here.

 

 

Provincial or territorial government

If you’ve maxed out federal benefits or don’t qualify for them, you might be able to get student aid from your province or territory. In order to apply for both federal and provincial loans, you only need to apply through your provincial or territorial government. You can find a list of all the student aid offices here.

If you live in Alberta, Nova Scotia, Manitoba, or PEI and have student loans, your funding might have come from both the Government of Canada and your provincial government, which means you have two loans and two loan payments — consider if you’ll be able to handle two debts and two payment schedules once it’s time to pay them back.

 

Banks/private institutions

If you don’t qualify for federal or provincial student loans but still need financial aid, you can apply for a student line of credit at your bank. A student line of credit is a type of loan that lets you borrow money repeatedly up to a pre-set limit. Your limit is determined by the bank and can vary depending on your program of study, what school you’re attending, your credit history, and living expenses. Keep in mind, you may need someone (like a parent) to co-sign your application.

You can borrow from your line of credit, pay it back, and then borrow again, up to your credit limit — and you only pay interest on the money that you borrow. For example, if your line of credit has a $10,000 limit but you borrow $3,000, you only have to pay back the $3,000 plus interest.

Unfortunately, while you’re in school you do have to pay back at least the interest, but once you graduate most banks let you keep paying only the interest for a grace period of 6-12 months (or more). However, you can pay back the principal at any time, even while you’re still in school.

After the grace period, you have to pay back both the money you borrowed (the principal) and interest. Some student lines of credit turn into student loans with monthly payments after the grace period.

Everyone’s financial situation is different, so make sure you do your own research before applying for any loans or grants. It’s also important to know your rights when it comes to loans — you can find more info about that here.

 

How to stay on top of repaying your student loans

 

 

For federal student loans, you manage your repayment through the National Student Loans Service Centre (NSLSC) Online Services (provincial and territorial loans are managed through their own sites).

Here are some tips for repaying your loans:

  • Know your options — you have some! You can customize your payment terms for your Canada Student Loan to better suit your budget — remember, decreasing your monthly payments will make it take longer to pay the loan back and increase the amount of interest you’ll pay. You can also change the type of interest rate (fixed or floating) for your Canada Student Loan — just keep in mind, if you switch, you can’t switch back.
  • Use the loan repayment estimator to help you figure out what is affordable for you. You can also use it to see how the interest rate options affect your monthly payment. The faster you can repay your loan, the less interest you’ll have to pay overall.
  • Set up pre-authorized monthly payments in your NSLSC account so the money is automatically taken out of your account and applied to your loan — that way you’ll never miss a payment. Missing a payment will affect your credit score.
  • Don’t wait to start paying. While you’re in school or during the 6-month non-repayment period, payments are applied to the principal of the loan and not the interest, making it possible to pay off your loan without paying any interest. If you have a job while you’re in school, it might be worth it to start reducing the principal before it starts accumulating interest.
  • Make extra payments and pay more than the minimum amount if/when you can. You’re allowed to pay more than the required minimum every month on both student loans and lines of credit. If you have extra cash, top up your payments to pay off your debt faster! Keep in mind, some lenders require a letter letting them know what the money is for so it isn’t automatically applied to your next month’s payment.
  • If you have more than one loan, rank them from highest priority to lowest. Typically you want to start paying back the loans in order of highest interest rate to lowest so you minimize the overall interest you’re charged. Of course, what works for someone else might not work for you so some research is necessary to figure out what strategy works best for your situation.
  • Claim interest paid on your student loans on your tax return — you can receive a 15% tax credit on the interest you pay for your government student loans every year.
  • If you’re having trouble paying back your loan (and there’s no shame in that), the Repayment Assistance Plan (RAP) can help. Depending on your income, you might get reduced payments or no payments at all.

However you choose to do it, just be sure to celebrate when you’ve finally paid off your loans — that’s a huge achievement!

 

10 tips to financially thrive this school year

 

 

  • Make a budget. You’ve probably heard this one a million times, but that should tell you exactly how important it is. Budgeting helps you keep track of where all your money goes and is an easy way to save money. If you have student loans, add your monthly payments so you know how much you have left over for everything else. The Government of Canada also has a helpful guide to budgeting for student life.
  • Try meal planning. Groceries are a big expense every month and with inflation making everything more expensive, you can save a lot of money by using your groceries more effectively and avoiding things that are designed for convenience. You’ll also save on delivery fees and eating out — but you don’t need to give it up altogether, find a place for some things you enjoy in your budget.
  • If you’re working, save money from every paycheck. Even if it’s not very much — setting aside even just $25 a week will result in $1,300 after a year. If you’re not working, consider picking up a part-time or summer job.
  • Buy textbooks used and sell them when you don’t need them anymore for a little extra cash every semester. Most universities and colleges have programs or networks to buy and sell used books or you can do it online. Tip: search for a textbook buy and sell Facebook group for your school.
  • Take advantage of student discounts. You can save some money on things you might already use, like Amazon Prime or Spotify Premium. Also check out the Student Price Card (SPC) — it’s a Canadian student loyalty program that offers discounts on things like tech, fashion, and food for only $10/year.
  • Use the campus amenities. Most schools have many amenities like gyms and health centers that you pay to get access to as part of your tuition. Take advantage of it, that’s what it’s there for!
  • Shop secondhand. Thrifting is as trendy as ever and is a great way to save money on things like clothes, home décor, books, and household items — it’s also just a fun activity to do with your friends that happens to be environmentally friendly!
  • Build your credit score. There’s a huge selection of no-fee student cards with useful perks out there (like cashback on groceries or free movie tickets), it’s just a matter of doing the research and picking the best one for you. Just make sure you’re practicing healthy credit habits because credit cards can be an expensive way to borrow money if you’re not paying the full balance off every month.
  • Remove autofill for your credit cards. Online shopping is incredibly convenient and your spending can get out of hand very quickly if you’re not on top of it. You can prevent impulse buys by removing your credit card and personal information from your browser. This gives you a chance to think your purchase through as you walk across the room to get your wallet.
  • Don’t be afraid to ask for help. If you’re struggling to maintain your finances as a student, there’s nothing to be ashamed of, but it’s important to reach out for help before financial trouble arises. Talk to family and friends or check with your school for resources (many have financial literacy programs available to you!).

Investing as a student

You don't need a ton of money saved to start investing. In fact, with Flahmingo, you can start trading with just $1.

Starting early will give you the chance to learn about investing, make some inevitable mistakes, and learn from them so once you’re out of school and have more money to invest you won’t be starting from square one. With a long-term strategy you’re also giving your investments time to increase in value.

Consider opening a Tax-Free Savings Account if you haven’t already. We have a blog on how these accounts work but they’re a great way to invest to save for a big purchase completely tax free. Many banks have special offers for students so do some research to find the best fit for you.

 

Try to find balance!

 

 

It’s important to take the time to plan your finances and start thinking ahead while you’re in school, but being a student is also a fun and exciting experience you should be able to enjoy to the fullest — there’s a place for both in your life.

Good luck, you’ve got this!

Melissa Atefi

Author