Student loan repayment: how to pay your loan off quickly

Posted on 15 November 2021

Written by Samantha Galea

Student loan debt is an increasingly common debt for many of us nowadays, with more Canadians going to school and picking up debt each year. In fact, the average student loan debt in 2021 was an eye watering $26,075. It is a growing problem across the country, and often not the best start for any graduate about to begin their career. Student loan debt does bring with it one certainty, however – the need for repayment. Repaying student loan debts often requires a long term budget in order to pay off the loan as quickly as possible. For some, student loan debts can feel overwhelming, which is where a debt relief firm like Spergel can help. In this article, we explore how you can make your student loan repayment as fast as you feasibly can.

Understand exactly how much debt you owe

It is difficult to create a student loan repayment plan without knowing the precise numbers. With the average student loan taking graduates ten years to repay, it is important to get your figures in check so that you know exactly what you are working towards. As soon as you possibly can, you should create a spreadsheet to capture all the student debts you may have. Include the numbers you owe for any government loans you took out, any student lines of credit, credit card debts, and any informal debts like money owed to your family members. While student loan debt can seem daunting, documenting the reality can be helpful in ensuring you have the right strategy in place for repayment.

Prioritize your student loan debts

Once you know exactly how much you owe, you should then prioritize your student loan debts. Rank each of them from top priority to lowest, based on the amount of each, the interest rates, and the time period for which you are able to repay your loan. In most cases, it makes sense to order them from the highest interest rate to the lowest to reduce the overall amount owed. It can sometimes take a while to find a job in your field as a graduate, so any reductions in the student loan debt you owe can go a long way. The Canada National Student Loans Service Centre clearly depicts the interest rate on any government student loans. In order to start paying down your debts, you will need to make payments that are greater than the interest rate.

Create a student loan debt repayment budget

Now that you have a student loan repayment plan, the next step is creating a budget to help you pay it off. If you are already out of school and are fortunate enough to have employment, begin by making a monthly budget for your student loan repayment that you can stick to. Knowing exactly what money is coming in and exactly what where it is going is critical. Use your budget to see how much disposable income you have at the end of the month that you may be able to put towards your student loan repayment. Check out our guide on how to budget. If you need to cut costs, there are age old tricks that work for cutting costs on your budget every month, like using coupons for groceries, using cash instead of credit cards, and sticking to lists for shopping.

Investigate the Repayment Assistance Plan

If you are struggling with making a student loan repayment of even a small amount per month, look into the government Repayment Assistance Plan. If you are eligible, the government is willing to help you with your student loan repayment. After all, they want you to pay back your student loan, if possible. If you do not ask, they will not help you so it is worth investigating this option. Depending on your income, the government may only need you to make payments of 20% of your income, if any payments at all. You can apply for the Repayment Assistance Plan any time during your repayment. Should you be eligible and accepted, the Canadian government will pay any interest that you cannot cover until your student loan is either repaid or written off.

Pay as much student loan debt as you possibly can

The first step is to ensure you are never late with your student loan repayments, as this can negatively affect your credit score. It is important you begin repaying your student loan as soon as you possibly can too – right after graduation, or before – in order to set yourself up with the best financial future possible. Once you have met your minimum requirements, making extra repayments where you can (even if they are minimal) can make a huge difference. Overpayments can be made on student loans without penalty, and mean you do not accrue as much interest over time. All you need to do with repayments is include a letter to your lender explaining what the money is for so that it is not applied to your next month’s repayment.

Gain student loan debt relief

If your student loan repayments are simply too much, you may be eligible for student loan debt relief. You will need to speak to a Licensed Insolvency Trustee, the only professionals in Canada legally able to administer all forms of debt relief. At Spergel, we have been helping Canadians gain debt relief for over thirty years, and we can help you too. Should you meet the ‘Seven Year Rule’, we will review your student loan and explore solutions including student loan debt consolidation, a consumer proposal, and even bankruptcy. Even if you have had your student loan for less than seven years, we can help you to take care of other unsecured debts you may have to free up your budget for student loan repayments.

Student loan repayment is a growing issue in Canada, especially around an increasingly expensive cost of living. At Spergel, we can help you to create a repayment plan and help you gain debt relief on your student loan repayment where needed. Simply book a free consultation with one of our reputable Licensed Insolvency Trustees to discuss your circumstances today – you owe it to yourself.


Samantha Galea

Samantha Galea is a Chartered Insolvency and Restructuring Professional and LIT (Licensed Insolvency Trustee) who started working with Spergel as a summer student in 2010. With her socio-political background, Samantha is committed to breaking the stigma associated with bankruptcy so that individuals and families can properly understand all of their options on their path to debt freedom. She is also our resident expert on student debt and collection agencies, as well as the manager of our Brampton office. Outside of work, Samantha is an avid reader of historical non-fiction and world traveler.

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