From first year to alumnus, everylate night and cramming session culminated in the diploma in your hand, but a diploma isn’t the only thing you earned after four years of hard work. If you’re like most grads, you came away from your undergraduate degree with debt.
It’s with a mixture of relief and nerves that you close this chapter of your life and start a new one. Relief because it’s over, and nerves because it’s over, too; you’re now a grown up with bills and responsibilities — the most important of which is your student loans. If you’re worried about how you can cover these payments and your expenses as a university grad, here are some tips to manage your debt.
Know what you owe
Thanks to the rising cost of education, students are graduating with record-high student loan debt. The Canadian Federation of Students reports the average student finishes their four-year degree $28,000 in debt. Regardless of how you compare, any kind of debt can be overwhelming.
Luckily, you aren’t responsible for its immediate repayment. You have a six-month grace period when you don’t have to make payments against your debt, giving you time to find a job and establish yourself financially. Check legal sites to see what kind of loan you have to confirm you qualify for this grace period. If you do, it starts as soon as you graduate, and you’ll be expected to make full payments once those six months elapse.
Understand your options
It’s not always easy hitting these due dates after your grace period ends. Fresh out of school, you probably don’t have any savings set aside to help. You’ll also face underemployment, as an uncertain job market makes finding a career in your field a challenge.
The government recognizes the difficulty in paying your loans under these circumstances, so they’ve set in place programs to help offset the pressure your Canada-B.C. integrated student loans have on your finances. These programs include:
- The Repayment Assistance Plan (RAP): This plan reduces your monthly payments and interest accrual according to a financial needs basis.
- The B.C. Loan Forgiveness Program: This is reserved for graduates entering specific in-demand industries.
- Pacific Leaders Loan Forgiveness Program: This plan pays off one-third of your B.C. student loan debt for every year you work with B.C. public services. That means, if you work for the government for three years, the Pacific Leaders program will have paid off your entire student loan.
Though the most popular methods of deferment, they aren’t the only option.
Make a budget
This important financial tooldoes two things. One, it tracks your expenses to reveal the current state of your finances. Two, it can guide your spending to achieve financial goals. For most grads, the number one goal is paying off debt, and there are plenty of techniques to help you do that.
Rachel Cruze, the co-author of The Graduate’s Survival Guide, prefers the zero-based budget for recent grads. This budgeting method ensures your expenses match your income, so your budget balances exactly to zero each month.
Cruze doesn’t mean you should spend your paycheque on things like brunch, the new Pixel 3, or another superfluous itemuntil you have nothing left over. If you have any extra cash after you’ve paid for the necessities, she recommends splitting it between your debt and savings. This will help you pay off your debt faster while protecting you in case of an emergency.
Hit the books
After a few months of using your budget, you should have more control over your spending. However, if you find yourself overspending or missing bills, it’s time you delve into the world of financial advice to see if you can learn new financially responsible habits.
Just because you handed in the last exam of your undergrad career doesn’t mean you should stop studying. Learning is a lifelong occupation, and the more you read up on finances, the better you’ll be prepared to manage your money at every stage of your life.
Free, online resources can help bridge that gap in your knowledge by sharing simple, no-nonsense advice about your finances. You just have to know where to look. Some websites, saying Gen Z spend too much on lattes, claim you can solve your problems simply by cutting out this daily $5 treat.
If you aren’t a regular at Starbucks, this kind of advice is impractical for your situation. It’s hard to cut out something you can’t afford in the first place. That’s why you should seek out financial advice from the experts at GoDay. As an online lender, they understandpeople struggling to make ends meetneed a different kind of advice. That’s why they have a Finance 101 page (or a cheat sheet of financial info) and a blog full of actionable savings tips for people who live paycheque to paycheque.
Though these tips are designed for people who use payday loans, they work for your situation because they don’t assume you have a lot of expendable cash to work with when you make your budget.They usually revolves around realistic sacrifices and lifestyle changes that can save you money — like joining the gig economy to increase your earnings and moving in with your parents to lower your expenses.
Healthy finances are all about finding the right products, services, and budgets that work with your situation. It can take time, but don’t worry—you’ve got this. You survived four years of undergrad, during which you figured out how you needed to study if you expected to ace the exam. It’s time you put this tenacity back to the test by hitting a different kind of book—your account books. Commit to your finances after graduation and learn how you can cope with debt.