The next seven articles are largely geared towards new graduates who are/ or will soon begin to repay their government issued student loans. Although this information is specific to the province of Ontario, most provincial governments adhere to the same policies/rules when it comes to student loan repayment. However, you should still check your provinces regulations to see if this applies.
(1) Why you should pay back some of your student debt while you are still in school:
If you are able to make some extra money while you are still in school it may be wise to start repaying your debt before you graduate. Why? Because interest on your debt is not accumulating when you are full time post-secondary student. All you owe is the principal.
OSAP allows you to earn $103 a week (or $412 a month or $1,648 a semester) without it affecting your student loan amount the following semester. This may not seem like a lot at first but if you saved $1,648 every semester for 4 years (not including summer classes), you would have $1,648 X 2 semester X 4 years = $13,184. This does not even include the odd year you decided to take summer courses, or even any interest in savings. If you put this money in an ING savings account at 2%, the savings can be beneficial over a four year span. So that is over $13,000 you could use to pay towards your student loan without even affecting how much OSAP you could get while you’re still in school.
Of course if you want to earn more than that, even better. Just make sure you weigh the cost and benefit of balancing school and work and not to mention how making more money while in school may affect your OSAP loan the following semesters. However, in the long run, the less you owe, the faster you can think about other investments when you graduate, like a new home or contributing in various investment vehicles. This will be a later topic.
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