What Should I Do About My Student Loan Debt?

What Should I Do About My Student Loan Debt?

Navigating Through Student Loan Debt: A Comprehensive Guide

Student loan debt is a concern that has affected a significant portion of the population, especially those in their 20s and 30s. With the current economic instability and the consequences of the pandemic, the resumption of student loan payments has only added to the financial strain. This piece aims to guide individuals on what to do about their student loan debt.

The Pervasive Issue of Student Loan Debt

The burden of owing student loans is not a hidden phenomenon. It has significantly impacted an entire generation. Those who exited college or university with a substantial debt load can attest to this. During a phase of life when financial obligations may seem unending, student debt can pose a significant challenge as you try to progress in life.

A survey on Student Debt Regret revealed that three-quarters of graduates under 40 had regrets about the debt they accumulated while studying. This is not surprising since six-in-10 college and university graduates are still paying off their student loans. The stress of student loan debt, combined with an unpredictable job market, high living expenses, and skyrocketing rent and property prices, has only amplified the financial struggles of the millennial generation.

Understanding the Current State of Student Loan Debt

According to Statistics Canada, the average student loan debt in Canada amounts to approximately $28,000. A significant number of graduates in their 30s and 40s are still paying off their student loan debt, years after they have completed their education. This scenario has led to many individuals regretting not making specific financial sacrifices to avoid such debt.

Factors Contributing to the Financial Struggle

The financial stress induced by student loan debt is affecting significant milestones in people’s lives. Many are postponing significant decisions like starting a family or buying a home due to this financial burden. The uncertainty surrounding the job market and the reduced income caused by the pandemic has only added to the struggle.

An affordability index conducted by BDO in 2020 revealed that nearly 40% of individuals between 18 to 24 years old, and a quarter of those aged between 25 to 34, consider paying off student loan debt as their most significant financial challenge.

Strategies for Dealing with Student Loan Debt

1. Budgeting and Tracking Spending

One of the most effective strategies to manage student loan debt is by budgeting and tracking your spending. It’s essential to set up a budget and then monitor your actual spending. This practice will help you understand where your money is going and identify areas where you can cut back on non-essential expenses.

2. Debt Consolidation

If you’ve done your budgeting and find that you can’t afford high-interest credit card debt, you might want to consider debt consolidation. This involves obtaining a single loan to consolidate your debts, typically at a lower interest rate.

3. Speak to a Licensed Insolvency Trustee

If you still can’t keep up with student loan payments after trying the strategies above, it might be time to seek professional help. A Licensed Insolvency Trustee can guide you through your options and help you determine if a formal solution like a consumer proposal or bankruptcy is viable for you.

4. Government Assistance Programs

The government offers various assistance programs to help individuals struggling with debt. These programs allow individuals to reduce their payments, extend their payment terms, and even receive grant extensions.

5. Consumer Proposal or Bankruptcy

In cases where individuals can’t keep up with student loan payments, a formal solution like a consumer proposal or bankruptcy might be an option. However, it’s crucial to remember that these options should be considered as a last resort and not the first course of action.

Conclusion

Managing student loan debt can be challenging, but with the right strategies and guidance, it’s not impossible.

Remember, it’s essential to live within your means and spend your student loan wisely. As the saying goes, “Live like nobody else so when you’re older, you can live like nobody else.” Living frugally now can help you enjoy the fruits of your labor in the future, without the burden of student loan debt. So, if you’re wondering what you should do, start by implementing these strategies and consider seeking professional advice.

Speak to a licensed insolvency trustee today about your money problems to learn more about your options.

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