Managing Student Debt

Your post-secondary education is a worthy investment in yourself that may require you to get a student loan. So, when you graduate, how will you manage your daily expenses while also managing your student debt? According to Stats Canada (2009–2010), 64% of bachelor graduates take more than three years to fully pay back their loan. That could be a long time to carry such a large financial obligation.

But, just like studying for an exam, doing a bit of prep work can set you up for success. To help you prepare for the future, consider TD Credit Protection. Having TD Credit Protection means the insurer would pay TD the outstanding debt on your TD student line of credit, up to $1,000,000, if you pass away, suffer a covered accidental dismemberment1 or an unexpected but covered critical illness2.

That’s one way to be a good debt-management student, but here are some other tips that you can use to potentially save money in the long run. After all, the sooner you pay off your student debt, the sooner you’ll be able to start saving.

Tools to help you get ahead

Before you start paying back your student debt, you should think about how you’ll handle your everyday expenses during the repayment period. Creating and sticking to a budget can be the difference between that feeling of security and that feeling of uncertainty. But thankfully, tools like Personal Cash Flow Calculator and Personal Loan Calculator can help you get a better handle on your everyday expenses. These can be useful resources that can help you determine a repayment plan that works with your finances.

It pays to make payments

Now, if your primary loan is through the National Student Loans Centre, you’ll have a grace period of six months after you graduate before repayment begins. This means you can take that time to find employment in your field, get a few pay cheques under your belt and have time to prepare. But once you do start to make payments, here’s what you can do to repay your student debt faster.

Lump sum payments

One way to reduce the length of your loan is to make lump sum payments in addition to scheduled payments. The extra amount you’ll be able to put towards your student debt will depend largely on your financial situation. However, even if you believe your finances may not allow you to take this approach, all is not lost. It’s possible to find room in your finances by using the two calculator tools above. You could also make small adjustments to your day-to-day spending to allow for the occasional lump sum payment that would help you pay off your student debt faster.

Raising your payment amount

This is another option that will be heavily influenced by your financial situation, but for some people, it may be preferable to making the occasional lump sum payment. And, as before, using the two tools above can help you determine by how much you can afford to raise the payments on your student debt. For starters, figure out what you can reasonably afford to pay. Next, find your financial comfort zone by factoring in your month-to-month expenses in the Personal Cash Flow Calculator. Then use that to determine how much more you can add to your student debt repayment plan. By increasing your student debt payments, you can reduce the length of time it takes to pay it all back.

The Government can offer you help too

If you’re having trouble making payments on your student debt, you’re not alone. You can find more information about getting loan repayment help through the Government of Canada. You could also look at a Repayment Assistance Plan, if you meet the income criteria, or consider an affiliate-based option if you’re a doctor, nurse, Canadian Forces Reservist or are severely or permanently disabled.

Don’t forget TD Credit Protection

While some students receive their loans through the National Student Loan Services Centre, you can apply for a TD Personal Line of Credit to have more flexibility with repayment. Doing so would make you eligible for TD Line of Credit Protection. As mentioned earlier, this is a form of TD Credit Protection that can protect you or your loved ones in the event of a covered accidental dismemberment or death up to an amount of $1,000,0001.

Use our Credit Protection Assessment Tool to see what options are available to you. Credit protection on a personal Line of credit doesn’t have to be purchased when you apply or receive your loan. It can be added later to provide coverage if you’re eligible. It’s also worth noting that TD Credit Protection premiums are generally cheaper the younger you are, so acting now could save you money down the road.

Managing your student debt for the future

Being in debt is not an ideal financial situation, yet it’s one that many people deal with on a day-to-day basis. If you’ve recently graduated or are about to graduate from a post-secondary institution, now is the time to start planning for your future. By using the tools, help and strategies mentioned above, it’s possible to get a handle on managing your student debt so that you can pay it off sooner — and begin saving earlier as a result.

The content on this page is for general information purposes only and does not constitute legal advice. Coverages described herein may be subject to additional eligibility criteria, limitations and exclusions. In the event you make a claim, potential indemnification is also subject to the receivability of the claim and the type of coverage you bought.

In the case of conflict between the content on this page and your policy wordings, your policy wordings shall take precedence. Please speak to an Advisor or consult your policy wordings for further details.

1The insurer pays the benefit amount to The Toronto-Dominion Bank to be applied towards the outstanding line of credit balance subject to maximum coverage, limitations and exclusions as outlined in the Certificate of Insurance.

2As defined in the Certificate of Insurance. Exclusions and limitations apply.