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It can be a tough, but exciting transition from full-time student to full-time employee (or job hunter); and of course it's time to start thinking about paying off your student loan too. Most students deal with paying off their student loan by: A) Moving to a small island in the South Pacific and hoping the student loan collectors never find them, or B) Setting up a student loan repayment plan that works within their current and future income potential and budget.

The exact repayment terms of your student loan will be outlined in the loan agreement that you signed with your lender or bank. For federal and most provincial government student loans your re-payments generally start six months after graduation. However interest on your student loan usually accrues from the day you graduate.

It is important that you keep your bank (lender) up to date on any change of address, and always respond to any communication you receive from them. You are responsible to pay back the full amount of your student loan regardless of whether you graduate or not. (Hopefully you graduate!) With the thought of owing thousands of dollars in student loan payments, it may seem easier to just avoid paying it back altogether. This is generally considered a bad idea.

If you default on payments, or refuse to pay back your student loan, your debt will be forwarded to a collection agency that specializes in finding people who owe money. Your failure to pay back your student loan will also be reported to credit bureaus like Equifax and TransUnion and will impair your ability to secure credit (and loans) in the future. This will normally make you ineligible to get a home mortgage, car loan, a credit card or even retail store credit. The government can garnish your salary or withhold any income earned until your student loan debt is repaid in full.

Other consequences of not paying back your student loan may include: additional interest charges, legal action, poor credit rating (mentioned), forfeiture of future income tax refunds and other personal or credit penalties. If you are having trouble making payments, make time to speak with your bank! Sticking your head in the sand won't make the problem go away. Ask your lender about lower monthly payments, debt reduction plans and re-financing or loan consolidation plans.

Do not jeopardize a bright future by not paying back your student loan!


The Pros & Cons of Paying Off Your Canada Student Loan - Hint: Pay it Back!



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