What to Know About Student Loans

what to know about student loans

Student Loans: The Importance of Repayment

Our Canadian students have many financial advantages to choose from for their studies. The Government of Canada offers loans to eligible students, and there are many CanScribe students using this opportunity to train to become a Medical Transcription/Healthcare Documentation Specialist. If you have a government student loan or are considering one, we want you to be as educated as possible about what your responsibilities are, and we want to provide you as many tips as we can for a successful repayment! Below are some tips and background info to pay attention to going forward. Here’s what to know about student loans before you apply.


Living in Canada, people have the benefit of gaining financial support from the government to obtain their educational goals. This financial support assists hundreds of thousands of Canadians to go to school and gain a more valuable education for themselves, which will allow them to gain greater employment. This is a privilege that many people do not have access to and there is the importance of paying the loans back. Without government financial assistance, many people would not be able to obtain a post-secondary education. When students are not repaying their government loans, it can actually cause issues for future students that want financial aid when trying to reach their goals.

Did you know?

“In 2010-2011 Canada student loans program (CSLP) provided 2.2 billion dollars in loans to approximately 425,000 full time students in the ten participating provinces and territories.” (Lochner, Stinebrickner, Suleymanoglu, 2013.) This debt level is higher for many students that participated in student lines of credit, credit cards and the use of private lenders. Wow!

Debt can sneak up on a person, especially when they have more than one way of being provided with finance. With all of this debt, students are having trouble repaying their student loans.

Don’t let debt sneak up on you

The Government of Canada does offer suggestions for students with student loans in hopes that the information provided will keep student loan debt at a minimum, and will assist students in steering clear of collection agencies and keeping their credit rating at a positive level. Here are some tips for keeping your student loan debt to a minimum:

Start paying while you are in school

Making payments while you is still in school can help you immensely with your loan repayment. If you make payments on your loan up to 6 months after you complete your schooling, the amount you pay is applied directly to the base principle of the loan. Any payments placed on the loan during the 6-month non-repayment term will be applied directly to the accumulating interest, and there are no penalties for early repayment. What does this mean for you? When the repayment period actually starts, the principal amount will be lower which will equate to less interest owing!

Make larger monthly payments

When your loan is approved you will be notified regarding what your monthly payments will be. This is actually a minimum monthly payment. When a student pays more than the minimum monthly payment, that payment is applied towards the principal amount of the loan. This means that you will have to pay less interest over the life of the loan because the loan amount owed is decreased at a higher rate when you pay a higher amount per month.

The Government of Canada gives a great example in their information resources: “If a student has a $25,000 student loan, with a 5.5 percent interest rate, you will end up paying an extra $7,555.88 in interest over the life of your loan (total repayment period of 9.5 years). If you increase your monthly payment by only $50.00 you’ll cut the overall interest you’ll pay by $1,579.65. If you pay $100 more a month, you’ll cut the interest by a whopping $2,617.84. That’s saving more than 1/3 of the interest you would have to pay!”

A great way to manage these larger repayments is to make a budget. Make sure all of your expenses will be sufficiently covered for the month, and calculate how much you can afford to take from your funds for extra loan repayment. There may be months where you can’t pay more than the minimum amount, and that’s okay. You can pay those larger monthly payments whenever you choose; try to make it a habit though!

Take advantage of your tax credit

The government offers tax credit for people with student loans. There is eligibility to obtain 15% tax credit on the interest that’s paid on student loans each year. This applies to provincial, federal and territorial student loans; this tax credit does not apply to private lenders (such as a student line of credit with a bank).

Other tips for managing your student loans:

  • Keep all of your student loan documents somewhere where they are safe and easy to find.
  • Be smart about your borrowing. Be aware of how much you are borrowing, and try not to borrow more than you think you need.

Repayment Assistance

Stressed that you can’t make your loan payment? Already missed a loan payment? Many students aren’t aware that there is support in place if they are having trouble paying their government student loans back. Please, don’t ignore your payments if you are having trouble with them, as doing this will affect your credit rating. You may qualify for a reduced monthly payment or no monthly payment for a certain period. For more information on repayment assistance and how to qualify, visit CanLearn.

The best way to gain a good credit rating is by paying off the student loan as quickly as possible. Anytime a student has extra money it is suggested to put it on the loan to pay down the principal amount. Juggling all the different payments that people have to make every day is tough, but showing responsibility and obtaining a good credit rating by managing your student loan will have the most positive outcome for your future.

Student Loans CTA

How to bring your Canada Student Loan out of collection. (2013, March 3). Government of Canada, Employment and Social Development Canada. Retrieved August 25, 2014, from
Lochner, L., Stinebrickner, T., & Suleymanoglu, U. (n.d.). Student Loan Repayment Problems. CIBC Centre for Human Capital and Productivity . Retrieved August 25, 2014, from http://economics.uwo.ca/cibc/cibc_docs/policy