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Loans and borrowing

Solutions for paying off your student debt

April 18, 2021

Congratulations! You’ve graduated. Now’s the time to start looking for a job and, if you took out student loans, time to start thinking about paying them back. You probably have lots of questions—here are the most frequently asked ones.

When do I have to pay back my student loan?

As soon as you graduate, you’ll need to make a repayment agreement with your financial institution. The terms will be based on your financial situation and ability to repay your debt within the maximum amortization period allowed for your balance. Your advisor can help you determine the:

  • Amount, payment frequency
  • Amortization period (total repayment period), based on the loan amount
  • Payment dates

You’ll also get a copy of the repayment agreement.

Early repayment: another good strategy!

Why would you want to do that? By making more frequent payments—weekly or bi-weekly, instead of monthly—you could save more and shorten your payback period.

You could also decide to pay back your loan over a shorter period than the one suggested by your financial institution and pay less interest. Take the time to thoroughly evaluate your financial situation, consider any other debts you have with a higher interest rate, and your actual ability to repay the loan so you have some breathing room. Since everyone’s financial situation is different, we recommend speaking with your advisor to find out more about the options available.

What’s a grace period?

If you’re not able to start paying back your loan on the first of the month after you graduate or leave school, you don’t have to make any payments for 6 months. But beware: interest starts accruing as soon as you finish your studies. Postponing the repayment start date just means you’ll have a bigger debt load and more interest to pay and it will take you longer to pay off your loan.

This debt comes with the same obligations as any other debt, like a credit card or car loan. If your finances are in good shape, you might want to pay off your loan sooner. But before you do, be sure to carefully evaluate your financial situation and contact your caisse advisor for more information.

What’s deferred payment?

Something unexpected can happen at any time. Maybe you can’t find a job after you graduate or your income is unpredictable. The Deferred Payment Plan can help.

Your eligibility will be determined based on your:

  • Financial situation
  • Income

If you’re eligible, you won’t have to pay some or any of your student debt for 6 months. You can take advantage of the plan for up to 60 months (10 exemption periods). This rule is applied for 10 years after the first 6 months you’re given when you finish full-time studies.

What happens if I go back to school after the 6 months?

Once the 6 months are over, you’ll have to start paying back your loan (principal and interest), if you’re not returning to school. If you do decide to go back, the government will resume payments of the interest accrued during your loan. However, you’ll have to start paying back your loan if you were in school full-time and are returning part-time.

Did you know?

15% debt forgiveness (Quebec)

If you received a bursary every year you were in school and completed your studies within the prescribed period for your program, you could have 15 percent of your total student loan forgiven. You have 3 years after you finish your program to apply.

Tax credit on interest paid

In addition to the many benefits of a student loan, the Quebec and federal governments grant you a tax credit for the interest you pay every year on your student debt until the end of the repayment period. You can find out how much interest you’ve paid by taking a look at your account statements—be sure to include it on your tax return.

Paying back your student line of credit

You may have taken out a student line of credit instead of (or in addition to) a government loan. Here’s what you need to know about paying it back.

How do I pay back my student line of credit?

You pay interest when you’re in school by pre-authorized payments, for the length of your studies. Now that you’ve finished school, depending on your employment situation, you could have a grace period before you have to pay back the principal. You may be able to delay the first principal repayment up to 24 months after you leave school. You’ll have up to 10 years to pay it all off.

Although interest rates vary depending on the type of student line of credit you have, the repayment terms are similar. Contact your financial advisor for more information.

Finishing your education is a huge milestone, and when it comes to paying back your student debt, our experts are here to help you get off on the right track.