The Student Debt Reality

The average Canadian student graduates with $28,000 in student loan debt โ€” and that number is significantly higher for professional programs. For Gen Z entering the workforce, managing this debt while starting adult life is a major challenge. But with the right strategy, you can pay it off faster and save thousands in interest.

Understand Your Loans

Canada Student Loans have floating interest rates tied to prime rate, currently around 7-8%. Provincial loans vary by province. Know exactly what you owe, the interest rate, and the repayment terms. Knowledge is the foundation of any debt payoff strategy.

The Repayment Assistance Plan (RAP) can help if you are struggling, reducing payments based on income. But be careful โ€” extending repayment means paying more interest over time. Use RAP as a safety net, not a permanent solution.

Pay Off High-Interest Debt First

If you have private student loans or credit card debt alongside government loans, prioritize the highest-interest debt first. Credit cards at 20% APR will crush you faster than student loans at 7%. This avalanche method saves the most money.

For government loans specifically, consider making payments during the six-month grace period after graduation. Interest does not accrue on the federal portion during this time, but provincial interest may still apply. Any payments made now go directly to principal.

Make It Automatic

Set up automatic payments higher than the minimum. Even $50 extra per month can shorten your repayment by years and save thousands in interest. Treat debt repayment like a non-negotiable bill. The faster you eliminate student loans, the sooner you can focus on building wealth.