If you check out my page, The Facts, you’ll see that I started on my debt journey owing about $27,000 in student loans. This isn’t really the whole story. I used student loans to finance my school tuition (highest in the country) and living expenses (highest in Atlantic Canada), which amounted to more than $27,000. When all was said and done, after my four-year undergraduate program, I’d borrowed $42,082.00.
I’d never really paid much attention to how much I was borrowing while I was in school. At the time, it seemed very necessary. It wasn’t like I was blowing my money on trips or clothing. I didn’t own any expensive purses, and when I was out of school, I had a full-time job that paid above minimum wage. How had I possibly managed to rack up so much debt, and more importantly, how the heck was I going to pay it all off?
I suspect beer played a major role in my excessive debt accumulation.
Once I started figuring out what my minimum monthly payments were, I really started to squirm. Federal student loans must be paid off in 10 years. If I picked the variable interest rate of 5.5% over 10 years, my minimum monthly payment was going to be $456.70. That seemed too high for me to stomach.
So, being the internet researching fiend I am, I immediately hopped on Google and started trying to figure out how to get out of this. I’d heard that some friends of mine had qualified for student debt repayment assistance, so I went to my provincial government website to learn more about that.
Not surprisingly, as a full-time employee with an above minimum wage job and no dependents, I didn’t qualify for debt repayment assistance. I was about to close the browser when a small link caught my eye. It was called the Timely Completion Benefit, and it rocked my world.
The Timely Completion Benefit is only available to residents of New Brunswick. Sorry!
This is how it works: When I took out student loans, a portion of them came from the federal government and a portion came from the provincial government. In order to encourage students to graduate from University in a timely manner, the province is willing to forgive their portion of the loans. The only catch is that you have to owe at least $26,000 and they will only forgive their portion down to the $26,000 threshold.
That was ok with me! I owed $42,000, so I had $16,000 in debt eligible to be wiped out, erased, gone-zo.
Needless to say, I hopped on this opportunity. All it took was a single form filled out, and a copy of my transcript. Six weeks later, I logged into my student loans account and saw this:
Beautiful. Just, beautiful. After taking my grace period interest into account, my actual minimum monthly payments came out to a much less scary $301.46 per month.
But Wait, There’s More!
Now that I’ve become wise to the wonderful world of government grants, I made sure to keep my eyes and ears perked for anything else available to new graduates struggling with student debt.
It turns out there are options in almost every province for student debt relief if you look hard enough. I found another rebate for New Brunswick that essentially turns all provincial income tax paid into a rebate after tax season, up to a maximum of $20,000 over 10 years. (This rebate has since been cancelled). There also appear to be options in Ontario, and British Columbia for student debt relief, with a few qualifications of course.
Taking Advantage of Student Debt Relief is Better for Everyone Involved
Now I haven’t come across this opinion often, but occasionally someone (usually someone who had their education paid for by their parents) will haughtily inform me that I knew what I was getting into when I took those loans out, so I should do the honest thing and pay them back, instead of taking advantage of government incentives.
To these people I say: You’re only looking at a small part of the bigger picture.
You see, if I spend the next ten years paying back a massive amount of student debt, d’you know what I’m not going to be doing?
I’m not going to be buying things, things that have sales tax. I’m going to be putting my money into my student loans instead of spending that money on tax generating activities like buying houses, getting married, having babies, or investing.
I might put off going back to school and thus delay putting myself in a higher income tax bracket, or I might decide to forgo additional schooling altogether, forever limiting the amount of income tax the government may collect off me.
Most importantly, if I’m not paying my giant monster of a student loan back, I’m less likely to move out west to get a better paying job, and therefore, less likely to leave the province altogether.
The government isn’t losing out by forgiving my student loans. What they may be losing on principal and interest, they’re gaining in sales tax, income tax, and a lifelong resident of their province that they can skim money off for years to come.
So do it! If you have outstanding student loans, check out your provincial incentives, you might be very pleasantly surprised by what you find.
Have you ever taken advantage of a debt relief program? I want to know!