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.
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!