In 2014, Canadian post-secondary institutions saw graduation numbers climb to 515,865. Even more impressive were enrolment numbers, with 2,054,943 students signing up for the 2014/2015 school year. This is great news for Canada as a whole, because it means a more educated workforce is propelling itself into the economy. But, with Canadian student debt reaching an average total of $34,000 according to the Canadian University Survey Consortium 2015 annual report, footing the bill for an education can be overwhelming.
Here are different ways you can not only pay back your loans, but also turn the financial burden into a worthwhile investment for your future.
Setting Up a Payment Schedule
When you first leave school, you’re offered a six-month grace period in which you are not required to begin paying back your loans. However, during these six months, interest does continue to accumulate.
To begin paying back your loans, you have to contact your loan provider before your six-month grace period ends. This means finalizing details concerning how much you owe, the interests you’ll be paying, and how much your monthly payments will be – make them higher than the minimum if you can to lower your daily interest rate. If you find yourself unable to meet your payments, contact your loan provider right away. You may qualify for lowered or halted payments, preventing any consequences that come with missing payments.
Claiming Tax Credits
Many students may not realize they can boost their tax returns by claiming tuition and loan interest.
Students can log in to their student portal with their respective schools and get their tuition tax slip with their total eligible fees paid for the tax year, which can be claimed so long as it is not paid for by your employer or parent’s employer, by a training program, or by a federal athlete program. And while you will no longer be able to claim the textbook and tuition tax credits as of January 1, 2017, students can still claim these credits for their 2016 tax return.
People paying off student loans can also claim interest they’ve paid on those loans. If you didn’t know this and haven’t claimed the interest, don’t worry. You can claim up to five preceding years, as long as you haven’t claimed those amounts on previous CRA tax forms.
Furthermore, if students haven’t filed their own taxes before, UFile tax software is an excellent and easy way to start. As a student in Canada, tax filing with UFile is always free, regardless of income.
Living on a Student Budget
To pay off your loans as soon as possible, you must have the means to do so. Graduating may mean working full-time and raking in an average of about $70,000 per year, but living below your means will make repayments significantly easier and lower your interest payments over time.
Choosing transit over a car is also a great way for students and graduates to save on insurance, gas, and parking, all while upping their tax returns with the public transit pass credit. To claim this credit, make sure you hang on to all transit passes and receipts for filing during income tax season.
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