Managing student debt: What you need to know

While graduation is a time for celebration, this milestone isn’t without its fair share of stress – especially for anyone who has to start paying down their student debt. In Quebec, the average debt after obtaining a bachelor’s degree is close to $20,000*, and its financial impact can be felt long after graduation. But taking the first steps toward smart financial decision-making doesn’t have to be complicated. Here are answers to some of the most frequently asked questions about student debt, with input from an expert advisor.

Managing debt at the start of your career can be overwhelming, so it helps to have a clear picture of your finances. Start by making a list of your student loan and credit card balances, interest rates and minimum payments, advises Angela Iermieri.** Then, pay down your most expensive debt first, while still making minimum payments on everything else.

If the size of your debts is getting you down and you need a quick win, try using the snowball method. Here’s how it works: you pay off your smallest balance first, regardless of its interest rate, then “roll” that payment into the next-smallest debt. This method might end up costing you a bit more in the long run, but the quick wins are great for motivation and a sense of accomplishment.

Debt consolidation is another way to lighten both your debt and your mental load. By combining several high-interest debts into a single loan with a better interest rate, debt consolidation cuts down on interest payments while simplifying overall debt management. But this won’t help address the spending habits behind your debt, and it can prolong your repayment.

There’s no one-size-fits-all answer here; it comes down to making an informed choice based on your situation and how comfortable you are with risk. That said, a relatively low interest rate can give you some breathing room, since you’ll feel less pressure to repay it quickly.

Think of it this way: paying down a loan is a guaranteed return equal to the interest you avoid paying. There’s no risk, no ups or downs, and that kind of certainty can bring you peace of mind. Investing, on the other hand, can yield higher returns over the long term, but those returns aren’t guaranteed. Markets fluctuate, which means the value of your investment could go down in the short term.

Doing both – that is, investing while making regular loan payments – is another option. But before you start investing, it’s a good idea to set money aside in an emergency fund. That way, you won’t have to rely on credit if the unexpected happens.

There’s no hard-and-fast rule for determining whether you have “too much” student debt. What really matters is your debt-to-income ratio once you’ve graduated. The best approach is to build a budget around your income and your financial goals, then set up a repayment plan that works for you.

Spending too much of your budget on student debt repayments? Struggling to cover everyday expenses? These are signs that you need to rethink things, either by taking another look at your budget or exploring payment relief options.

Focusing all your efforts on your student loan while letting your credit card balance creep up is a bit like taking one step forward and two steps back. Credit card interest rates tend to be higher than student loan or line of credit rates, which can drive up the total cost faster than what you’re paying down.

As a rule of thumb, you should prioritize whichever debt has the highest interest rate, while keeping up with minimum payments on the rest. Cutting back on using your credit cards or avoiding them altogether can also help you stay on track while repaying your student loan. It’s better to come up with a repayment plan (however gradual it may be) that fits your budget than to pay more than you can afford and risk throwing your finances out of whack.

Sticking to your minimum payments means you’re fulfilling your obligations, and keeping some wiggle room for the unexpected is a totally valid approach – especially when you’re just starting out.

That said, paying only the minimum amount means the repayment period will be longer, and the interest you pay will be higher. When your budget allows, try bumping up your payments ever so slightly. Adding an extra $20 to $30 a month, for example, can steadily chip away at both your debt and the accrued interest.

Debt has a way of sneaking up on you – and when it does, it's easy to feel stuck. But the earlier you acknowledge it, the more options you have to turn things around. A good first step? Revisit your budget and reach out to your financial institution. Depending on your situation, more formal options might be available. A repayment agreement with your lender, for example, can sometimes extend the repayment period and give you the opportunity to reduce your monthly payments. Debt consolidation, which combines several loans under a single interest rate, is another option to help simplify management, but it can also drag out your payments.

There might be other options that fit your personal situation. Reach out to your advisor to discuss what makes the most sense for you.

Treating yourself doesn’t have to be at odds with managing your money. After spending so many years studying, it’s completely normal to want to celebrate with a trip. It’s not about depriving yourself; it’s about planning things properly and making sure you don’t add to your debt. The best approach? Set aside money for the trip ahead of time, instead of relying on credit. And you should also make sure paying for the trip doesn’t get in the way of your financial priorities, like paying down debt or maintaining a minimum balance in your savings account. By working the trip into your budget at an amount you know you can afford, you can enjoy it to the fullest without straining your overall finances.

Paying down debt – especially high-interest debt – is important. But choosing to stop setting money aside altogether to get there faster can leave you without a financial safety net. One small hiccup or unexpected expense, and you’re right back to relying on credit.

Rather than choosing one or the other, Angela Iermieri suggests doing both simultaneously: keep actively paying down your debt while maintaining a minimum savings balance for emergencies. An emergency fund that covers a few months’ worth of expenses, for example, can help protect your financial stability. And with that balance comes the ability to keep paying down debt without putting yourself in a tight spot.

It’s completely normal to want to catch your breath before you start paying down your debt. For a government-guaranteed student loan, you have a 6-month*** partial exemption period once you graduate. During this time, you don’t have to make any payments, but interest will continue to accumulate.

If you’re in a precarious financial situation, programs like the Quebec government’s Deferred Payment Plan allow you to reduce or pause your payments for a set period of time, during which the government pays the interest on your behalf.

Learn more at Gouvernement du Québec (2026), Student Financial Assistance: Deferred payment plan.

The grace period before you have to start repaying the principal on a student loan or line of credit varies by financial institution (often between 12 and 24 months), but interest accrues from day one. So if you've got a bit of room in your budget, even small payments can go a long way in cutting down the total cost and making repayment feel less overwhelming.

A few key takeaways to keep in mind. First, get a clear picture – and understanding – of your total debt, including all balances, interest rates and repayment terms. Next, to save on interest, prioritize your most expensive debts instead of your largest ones. And finally, lighten your mental load by automating any payments you can. But above all, make sure to create a repayment plan that works for you. Whatever your financial situation, having an advisor by your side can make a real difference when it comes to taking the first steps toward smart financial decisions.

* Statistics Canada (2024), Student debt from all sources, by province of study and level of study.

** Financial Planner at Desjardins

*** Gouvernement du Québec (2026), Student Financial Assistance: Advantages of Loans and Bursaries