Cut Your Debt While You're Still in School

The easiest way to pay off student debt is to keep it down in the first place.

To be fair, that's harder for some than for others. We all have different things to deal with. But everyone - everyone - can find their own ways to cut some costs. When you're young, it's often easier to save money than to earn it.

The tips below will get you started. Cut where and when you can. Okay, no one likes feeling poor. If it gets you down, remind yourself that cutting costs now will buy you peace – and cash – in the future. It'll also buy you freedom.

Also, the less debt you graduate with, the more flexibility you'll have when you start your career. The route to your ideal job might require you to intern, move or buy equipment.


Rent is usually your biggest cost. See if you can live at home or in other free-rent situations (campus residence staffer, caretaker, live-in nanny, house-sitter, basement of a family friend). If you're cramped at home, study and hang out on campus - just go home to sleep.


Since tuition is another big cost, consider taking your first year or two in a community college. In the end, your degree will be from a university, and that college campus may feel friendlier and more personal when you're starting out.

Tuition costs vary a lot between campuses, so shop around. But calculate your other costs too. For example, a campus that has higher tuition might end up being cheaper overall if it's near enough that you can live with your parents for awhile. (More fun than loan payments.)

Maybe you can get a break by going on exchange for a term or two through your home campus.


Plan for maximum value from your jobs. For example, a job on or near campus is worth extra because of the time and money you save on commuting. So apply early for those work-study jobs on campus - they usually go fast. Also, jobs that relate to your field of study or let you sneak in study time may give you more value than another job that pays more.

Many students can't save much with typical low-wage summer jobs, so investigate out-of-town options. That includes resorts, where tips can add up. U.S. resorts and camps (some are even in the Caribbean) pay a premium because of our dollar differences. Just be sure that you're dealing with legitimate agencies and that your travel costs won't eat up the difference.

While you'll probably need jobs, remember that they're not the only source of money. You don't want to overdo part-time jobs during the school year if it risks a good chance for scholarships - or if you're in a senior year and you need top grades and school service to land a grad school teaching assistantship.


Look for a co-op program, where you alternate study and work terms. Co-op programs not only cut your debt because you work (and earn) every second term, they often lead to jobs when you graduate.

These popular programs are starting to expand into the arts and humanities. Some provinces (and schools) have more than others. It may be worth moving for a good co-op program. And sign up early, to beat the competition.


Compared with today's high costs, some bursaries and scholarships seem so small that students don't bother to apply. Aside from the fact that even small awards look good on your resume, there is a hidden value to that money.

This is why. First, you'll be paying your student loans with after-tax dollars. Second, you'll be paying interest as well - at rates as high as prime plus five. When you add the cost of interest paid in after-tax dollars, the real value of that $100 bursary could be closer to $200.


Ironically, some students say that their motivation to save suffers because they find it depressing to think about someday paying back all those student loans. Hey, it's worse when you're paying.

Here's a little extra motivation. Remember that money saved has the same hidden value as bursaries. Whatever you save is worth much more in terms of debt you won't have to pay interest on - with after-tax dollars.

So think of everything you want to buy as costing nearly twice as much as the sticker price, once you add in the GST, the sales tax and the real cost of paying back debt. Do you really want to pay $6 - in real terms - for that latte?


Most campuses offer a financial aid talk in the fall - or each term if they're on a semester system. Don't miss this, especially if it's your first year.

If you can't find a financial aid talk or it's not quite enough, make an appointment with your campus financial aid officer. Financial aid can be complicated, so it's best to get personalized advice. If you rely on just the leaflets or what you happen to hear around campus, you could miss out on some free money.


As with financial aid, you may find your campus has a money-management talk in the early fall or spring. Even if you only get a few good tips, it's worth going.

Be creative and think up money management tricks that work for you. Swap ideas with other students on a budget. For example, some students spend their loan money too fast. If you've done that, keep some of your future loans in a separate account. This may minimize that sense of being (temporarily) rich.


Credit cards are discussed elsewhere in this section, but other forms of credit can also be a burn. Always read the fine print. For example, there's usually a very important time limit for payment with those no-interest deals on things like computers, stereos and furniture.

If you can't come up with the full amount owed at that specific time, you're usually hit with a whopping penalty that costs you way more than you've saved.

Pay-by-the-month and rent-to-own deals also look good on the surface, but when you crunch the numbers, forget it. Meanwhile, good second-hand stuff is practically being given away through online posts, garage sales and campus notice-boards – and it's tax-free, too.


Get help early if you feel like you're losing control of your finances. Go to financial aid or student counselling and ask them to direct you.

Don't put it off because you're embarrassed. Plenty of smart and responsible people run into a financial problem at some point. The fact that you'd ask for help simply shows that are smart and responsible.


Make a long list of free or cheap things that make you happy:

Music. Popcorn and hot chocolate. Art projects, sports or social networking. Join a club – or start one. Instead of going out, have dinner or cocktails at home with friends. Knitting, cycling, classic videos from the library. Bad ventriloquism. Whatever makes you laugh…

When you start feeling stressed or depressed, remember your list. We need fun, just like we need vitamins. And fun doesn't need to cost money.