‘ASK AN ADULT’
Personal finance coach Chantel Chapman takes on student loan debt
Welcome to Ask An Adult, a series on money management for millennials by Mogo’s financial fitness coach Chantel Chapman. A self-proclaimed “adult in training ”, Chantel has made it her mission to educate millennial audiences and their parents on financial literacy basics. Share this with the millennials in your life and help them grasp the essentials of personal money management.
This week’s questions on student loan debt come from all-around artistic badass Taylor Reynolds.
Q Hey Chantel! I’ve been using OSAP (Ontario Student Assistance Program) while in university and I am starting to stress about how much my debt has been racking up. What are some tips you have when it comes to paying it all off ?
A Hey Taylor! First of all, you need to change your perspective on your student loan debt and not feel so guilty about it. Sometimes you need to borrow money in order to purchase an asset and to get yourself ahead in life. Education is an asset. It’s not like you borrowed to pop bottles at the club! Don’t forget, you don’t actually have to pay it off until six months after you’re done school, so this means you’ve got six months to get your act together quick!
If you’re concerned about how big your debt is, get a side hustle and start paying it down early. If you have any credit card debt, you’ll want to get that under control ASAP before you start worrying about the student loan debt. Otherwise you’re coming out of school with both credit card and student loan debt.
Student loan debt is the cheapest debt you can have — and you get an income tax credit, too. Always pay
off gonna your cost other you debt more. first Oh cause yeah, that’s and you’ve got 9.5 years to pay off your student loans, so if you can only make the minimum payment for a while, that’s OK when it comes to student loans. Obviously once you start making more chedda, you can pay more towards this debt. I would hope that the more you spend on school means the more you can potentially can earn one day. “You’ve got 6 months to get your act together quick!” Basically, you gotta budget and not rack up anymore debt especially when you’re done school, because you’ll have this new thing to pay off that will eat up some of your income. So, to sum it up: 1. Get a job 2. Budget 3. Don’t rack up credit card debt 4. Don’t ball out at the club and waste your money If you do all of the above, you should be in a position to make your student loan payments!
Q I’ve heard that credit cards with a cash back feature can be great when dealing with tons of student debt… but a “cash back” feature almost seems too good to be true. Would you recommend them when you have student loans to pay off ?
A Good question! You could use a cash back credit card to get cash to pay off your student loans but only a small amount of super responsible adults can handle this. Credit cards use rewards programs to lure you in, so if you think that you’re smart enough to play this game and win, then do it. Ten million Canadians carry credit card debt, so it’s pretty risky. Also, some cards have an annual fee — what’s the difference between how much cash you get back versus how much you’re paying for the annual fee? Sometimes it’s worth it, sometimes it’s not. If you trust yourself to put a balance on the card, pay it ALL off every month and not get screwed, go for it. It’s free money. But if you can’t say no to Yeezys or if you swipe your card irresponsibly like you’d swipe on Tinder in a new city, then do not go for cash back. The average credit card is 19.99 per cent. Student loans are 5 per cent max. You do the math.