I often said that the best thing I can do for myself was to pay off my student loans ASAP! I owed thousands of dollars – $17,293.39 to be specific. Rather than letting my debt feel like an anchor for years on end, I challenged myself to paying it off within a year. With careful planning, I ended up student debt free in 7 months and I’m going to share how I did it! Before I start, let me quickly explain what OSAP (my student loans) is.
What Is OSAP?
Note: There has been a few changes to OSAP with the current provincial government.
“The Ontario Student Assistance Program (OSAP) is a financial aid program that can help you pay for college or university.” (Ontario, 2019). OSAP gives grants and/or loans to pay your tuition. Nonetheless, you’re required to repay the loan portion after completing your program or if you leave school (i.e. non-completion/dropout).
Moreover, the amount you receive from OSAP varies based on the following:
- Expenses (tuition, books, child care, personal living expenses for full-time students, supplies and equipment)
- Course load (whether you’re a full-time or part-time student)
- Your personal financial situation (you and/or your family’s income, family size, dependents, etc.)
Additional funding could be available for Indigenous, current or former Crown Ward, or individuals with a disability. With that being said, no one receives the same amount. When I was in receipt of OSAP, around 10% of my funding was a grant and the rest were loans. The funding is interest free until you complete your studies or leave your program.
Sooooo without further ado, here are the steps that helped me pay off my student loans (or shall I say: the steps that helped me pay off OSAP ASAP lol!)
**Please note that I’m not guaranteeing that everyone’s loans will be paid off within this time frame. I’m cognizant that personal circumstances play a role on how soon you can pay it off. However, you could gain an idea on how to pay off your student loans in an efficient manner. With that being said, let’s begin!
The Debt Payoff!
1. Have an Emergency Savings!
You may think this has nothing to do with paying off debt and technically you’re right. Having an emergency fund is important! It has helped me on many occasions. I finished school in April 2018 and didn’t find a job until June. In that time, I was able to survive off of what I had saved while I searched for employment.
After I started the job in June, I managed to save $2000 within 6 months! Trust me when I say it was the best idea because I had some unexpected payments pop up during the course of my debt payoff!
2. Make Some Changes
I knew I needed to live differently in order to be debt free. When I first started university, I thought I could pay off my loans before graduation to avoid interest. However, that was unrealistic (at least in my situation). Instead, I stopped applying for OSAP before my 3rd year into undergrad and I worked as much as I can while going to school full-time. In addition, I was living at home with my family and commuting to school. I wasn’t required to pay rent while in school so that helped me cover my tuition, textbooks and other expenses for the remaining years of my program.
Luckily, I applied for any bursary I could find and received a few so that saved me some money. Along the line, I also had car payments so I really had to buckle down on my spending. Then graduation came and eventually the notice that I need to payback my loan. For these reasons, I made a lot of changes in my life.
Funny enough, I imagined that when I graduated, I would have secured a job that same week (wild right?) and that I’d be able to move into my own place within a few months (in Toronto??! Again, wild right?!?). Well life didn’t work out that way (again in my case. Some people have a job lined up by the time they finish which is amazing!). I was unemployed after graduating and continued to live at home with my family as I couldn’t afford to branch off on my own. In reality, the first job I landed was underpaid. It made me feel like I was in debt for nothing. I knew that job wouldn’t help me tackle my debt as fast as I wanted or be sustainable for my lifestyle long term so this leads to my next step…
3. Increase Your Income
Honestly, I wasn’t in the mindset of creating my own side hustle therefore I had to explore other options. I figured my best bet would be to put my
debt-ridden degree, I mean education and work experience to good use! For this reason, I started job hunting again in hopes of finding something better. Needless to say, it took 4 months, but I found a better paying job!
4. Have a Financial Plan
Now that I managed to secure another job, I created a budget. I was now able to contribute to household bills (i.e. mortgage, utilities, etc.) and estimated that I could pay off my debt within 9 months or 8 months if I really wanted to challenge myself! Based on my calculations, I would have also been able to pay my debt off within a reasonable frame if I were renting a place with at least one person. The difference is that it would have taken me 20-24 months to pay off my student debt (which isn’t bad if you ask me!)
Keep in mind that paying off debt doesn’t mean that you have to stop spending money on anything else but bills and groceries! As mentioned earlier, I made some lifestyle changes, yet I still had fun on a budget!
5. Make More Payments
I made the decision to make more payments instead of the one minimum monthly payment. My payments varied due to unexpected events (hence why the emergency savings came in handy!) so I had to budget to make sure that I’m not stretching myself thin.
In short, I want to reiterate that it’s possible to pay off your student loans sooner if you make a few changes and remain disciplined. It may feel difficult at times, but remember that it’s a short-term “sacrifice” for long-term gain!
What’s Next For Me?
Now that my student loans are paid, I only have my car to pay off. I owe about $9000 more. “Fun” fact: I was initially $29 000 (approx.) in debt due to my student loan and my car. I spent most of the time between October 2019 and April 2019 paying off my student loan so I didn’t have much to pay off my car debt at the same time. Now that I eliminated my student debt, I can follow the same steps for my car! I can’t wait do my debt free scream!! (The Dave Ramsey Show fans get this reference!!).
All the best!
- Learn About OSAP. (2019). Retrieved from https://www.ontario.ca/page/learn-about-osap