How some graduates are crushing student debt during the pandemic
Three years ago, Godwin Scott graduated from Carleton University with student debt of approximately $ 120,000.
Today he has no more debts.
âI’ll be honest, it didn’t hit me that night,â said Scott, 26, who made his last student loan payment last October, amid a pandemic. “I always feel weird knowing that I don’t owe someone anything.”
Scott is one of many post-secondary students who spoke to CBC Ottawa in 2017 about what they owe and how it affected their lives. We followed up to see where they are now and how they are paying off the rest of their debt.
Scott, an international student at the time, had debt related to an Indian bank that was charging around 13% interest. He said he relied on the advice of financial experts and used Canada’s tuition tax credit to defer taxes for a few years, but his best strategy was to pay his tax back. ready abroad as quickly as possible.
“When I graduated I had a conversation with my friends [and family]. I asked them to kind of loan me a few thousand dollars that I could pay them back in a few months, âexplained Scott, who said a handful of people trusted him and loaned him interest-free money.
“[There] was an element of faith involved, âhe said.
Scott used the roughly $ 50,000 he borrowed from family and friends to nearly halve his bank loan. He lived frugally in the basement of a pastor’s house where he paid $ 500 a month in rent, which allowed him to allocate about 80 percent of his paycheck to his student loans.
Over time, he was able to reduce the portion of his income spent on debt repayment to around 60%.
âOne thing I want to share with students coming to Canada isâ¦ you have a responsibility to pay back what you borrowâ¦ quickly,â he said. “Because it is the best path to freedom, financially.”
Fight against credit debt
Troy Curtis graduated from Carleton in the summer of 2019 with approximately $ 17,000 in debt under the Ontario Student Assistance Program (OSAP) and a line of credit. He also had thousands of dollars in credit card debt for his living expenses while in school.
Curtis, 25, who is now a freelance digital marketing consultant and photographer, has about $ 10,000 to pay.
âAfter I graduated, the most important thing for meâ¦ was to make sure I got a job right away,â he said. Eventually Curtis found a job with a nonprofit organization and freelance as a graphic designer and wedding photographer next door.
âThat’s when I was able to really start reducing my credit card debt each month,â he said. It took a year and a half to pay off the card.
During the pandemic, Curtis’ work-from-home situation remained static, but he found himself with more contracts due to greater demand for virtual conferences and other projects. He was making bigger cuts in his debt and saving for the future, maybe for a house, so he approached a financial advisor.
Curtis says he is now optimistic about his financial future.
“[I feel] more comfortable, âhe said. â$ 10,000 of outstanding debt is a lot, but it’s definitely manageable. I can figure out how to pay it back. “
Farewell to $ 30,000 in 2.5 years
Lauren Paulson, 27, graduated in December 2018 from Algonquin College with approximately $ 50,000 in debt, more than half of which was through OSAP and the rest through a line of credit from her bank.
Less than three years later, the radiology technologist at CHEO crushed about $ 30,000, “which I’m pretty happy with,” said Paulson.
Paulson said she was “extremely lucky” to have found a job right after school. She said her strategy was largely focused on reducing her expenses, and she is grateful that her partner was able to buy a house, a “huge factor” in her being able to pay off her debt so quickly.
âIf I was in this situation and spent so much of my paycheck every month on rent, I never would have been able to pay off so much debt until now,â she said. “Luck was on my side in that sense.”
Paulson also targeted his line of credit, which has a higher interest rate. Now she has turned to OSAP, which has given her an uninspiring grace period during the pandemic.
âI’m super lucky,â she said. “I’ve never been very strong financially, or very smart with my finances I would say. There’s a reason I ended up with $ 50,000 in debt.”