/ Published 8:16 AM EST / Rob Mann, Staff Writer

Ace your student loans with these 6 repayment tips

students sitting against a wall at their university

Another school year is wrapping up, with another crop of fresh-faced graduates heading into the market with hard-earned diplomas, polished new resumes, and an encouraging sense of optimism. And why shouldn’t they? They just finished school, and they have a better shot at living a longer, happier life because of it.

But, the sunshine and rainbows feeling of education does have an asterisk: student loans. 71% of American students and 40% of Canadian students take on loans for postsecondary education, and students with loans are more likely to face mental health problems. Part of the problem may be in the fact that over half of millennials take on loans without understanding the repayment terms, or it could be that nearly a third of students use their loans to fund spring break trips, eating out and shopping sprees. In fact, half of graduates with loans actually admit that they borrowed nearly $12,000 more than they actually needed. And higher loans mean higher monthly payments with more interest after graduation, and missing payments can lead to wage garnishing or make it difficult to borrow money down the line. Not good.

The reality is, without taking on student loans, post-secondary education isn’t an option for many of us. With that in mind, here are a few tips to help prospective students take on less debt, and to make the repayment process less overwhelming for graduates.

  1. Know your loans: Not all loans are created equal, and they’ll each have their own interest rates and repayment terms. Contact your lenders to understand the ins and outs of your loans, and if you need a hand tracking them down, your school should be able point you in the right direction.
  2. Your saving grace: Your loan should have a grace period, where you aren’t required to start paying off your debt right away, but interest may start building. Understanding your grace period is important, as it’ll tell you when your payments begin.
  3. Overpay: Many will scoff at this, but the more you pay each month, the better. Paying more than your monthly minimum will help you pay down the loans faster, and you’ll pay less interest in the long run.
  4. Focus your payments: If you have multiple loans, prioritize your payments for the loans with the highest interest rates. Getting rid of smaller loans may feel good, but focusing on the high-interest loans first will help you pay less over time.
  5. Pick up shifts: Working during school or taking on extra shifts once you graduate may not be the most fun use of your time, but that extra money can go towards your loans, or cover expenses so you can borrow less.
  6. Don’t blow your loans: It’s tempting to use your loans for holidays, rainy days or new devices, but you’ll be better off saving that money for school expenses, or not spending it at all.

students studying together and working on a project at a tableIf you’re borrowing from Canadian federal or provincial student loan programs, there are a few sweet perks in place to help you with repayment. For instance, you won’t have to start repaying your loan until you’re earning at least $25,000 per year, and the Repayment Assistance Plan can reduce your monthly payments, depending on your income and financial situation. There are also specific benefits for Canadians living with disabilities, or working as doctors and nurses in rural and remote communities.

Whether you’re entering post-secondary for the first time or graduating and preparing for the job market, student loans are a reality of life. But they don’t need to be something to face with dread. They’re an opportunity to learn and grow, both academically and personally. If you have any questions about reducing your debt or planning for the future, get in touch with one of our financial advisors today.

Related articles: