Tips for leaving college with a degree, not debt

College and university students across Canada may be knee-deep in their studies, but they don't have to graduate knee-deep in debt as well. According to Aurele Courcelles, a financial planning expert with Investors Group, a Canadian financial services company, there are ways students can limit their post-grad debt.

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That's no easy chore, however, given a university or college degree's significant price tag. According to Statistics Canada, university tuition fees in 2009/2010 were up 3.6 percent and compulsory fees such as administrative charges have increased 6.8 percent from the year before. What's more, student living costs for rent, transportation and food can range from $500 to over $30,000, depending on where a student attends school.

"Tuition fees have been going up faster than inflation in recent years," says Courcelles.

No wonder student debt reached an all-time high this past year -- exceeding $13 billion in Canada. In fact, the Canada Millennium Scholarship Foundation found that the average level of debt for a student with a private loan in Ontario is $7,500.

That's why it's critical that students have a plan in place to better manage rising tuition fees and the cost of living during the school year -- and beyond. Courcelles offers these tips for controlling and managing your student debt.

Your homework should start before you even step onto a university's campus, advises Courcelles. Sites such as Schoolfinder.com are a perfect place to look for comprehensive information on college and university tuition, facilities, programs and admission requirements.

Before you apply for that loan, "you should first explore sources of income that don't have to be repaid," says Courcelles. Keep an eye out for non-repayable funding avenues (many of which are tax-free) such as scholarships and bursaries.

Look to the government. The Canada Student Loans Program and the Canada Student Grants Program can help by providing student financial assistance in the form of loans and grants to those attending post-secondary education. The best part: "Once you finish school you start paying interest on a Canada Student Loan, but you can actually claim a tax credit for the interest that you're paying," says Courcelles.

Beware of credit -- and recognize its benefits. Says Courcelles, "If used responsibly, credit cards can be helpful in an emergency and for establishing a credit history, but you have to make sure that you can control your spending habits and ensure that you can repay it in full every month to avoid any interest charges."

Don't wait to launch your debt reduction plan. After all, it's a lot easier to target your debt when you're not paying loans. For this reason, Courcelles recommends setting up a pre-authorized contribution account at your bank that will automatically deduct a specified amount from your savings account every month.

While it's true that "for many students, money sense often ends when they leave home," Courcelles says that doesn't have to be the case. By taking the necessary steps to control your finances, today's grads can walk off campus with a degree rather than debt.

Published October 22, 2010

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