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Properly organizing school debt reimbursement

Posted on Tuesday April 09, 2019


Properly organizing school debt reimbursement

School debt is always a hot topic, and for good reason! New Brunswick students are by far the most in debt students in Canada by the time they finish their studies, with an average of $35,200. That's almost $5000 more than Nova Scotia ($30,440) and nearly $13,000 higher than the Canadian average ($22,300). But should we still reimburse school loans before the others? Let's take a closer look at the matter.

A loan guaranteed by the government

The reimbursement of a student loan, like all other types of loans, implies the payment of interest, usually on an annual basis. No reimbursement of a student loan is required during the period of study from the person who contracted the loan. The student loan is therefore the ideal loan for those who are beginning a study program. What's more, its interest rate set with the support of the government is lower than practically all other types of loans.

Choose to reimburse high-interest rate loans first

A very high-interest rate loan can quickly become a burden. Certain credit cards have rates of almost 20% annually, while car loan and personal loan rates are often much higher than student loan rates. It's therefore better to reimburse other higher interest rate loans while reimbursing the minimum required on the student loan. Here's a comparative table of various types of loans. Interest rates correspond to sector averages and can vary according to individual situations.

 

Type of loan

Amount of the loan

Interest rate

Interest paid annually

Car loan

$11,500

7.99%

$918.85

Student loan

$11,500

4.45%

$511.75

Credit card

$11,500

19.99%

$2,298.85

Line of credit

$11,500

11.45%

$1,316.75 $

Personal loan

$11,500

8.99%

$1,033.85

 

Moreover, the interest paid on student loans qualifies you for a tax credit. Another good reason to prioritize the reimbursement of more expensive debts all while making minimum payments on the student loan!

Finish fast, pay less

Finishing your studies more quickly can really pay off. Thanks to the government Timely Completion Benefit, New Brunswick rewards students who finish their academic training within the planned timeframe. These students qualify for a reimbursement equivalent to 100% of their provincial debt of over $32,000: a gift that can represent several years of payments!

Reduced reimbursements for people in difficulty

The Repayment Assistance Plan provides considerable help to former students who are in a difficult financial situation. It allows for the reduction of the required payments by bringing, in some cases, the maximum reimbursement period to 15 years.

Students' financial situation is an important concern of our society, and the measures put in place can help students better carry the financial burden associated to long studies. UNI offers a wide range of financial tools to help you during and after your studies. Consult the ?my studies? section on this subject.

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