The high costs of going to college or university

Hilary Doyle’s tips to paying off your student loan

Tip #1:
Pay yourself first. As soon as you find work, wet up an automatic savings account that takes money directly from you paycheque and deposits it into an account dedicated to paying off your debt.

Tip #2:
Prioritize your debts. Don’t be overwhelmed if you’re juggling multiple loans. You can take it one at a time. Time is your enemy when it comes to borrowing money, so pay off the loan with the highest interest rate first, not the one with the highest dollar amount.

Tip #3:
Consolidate debts. If possible, combine all of your loans into one: One loan, one interest rate and pay that off as fast as possible. Consider borrowing money from your parents. Remember this is a loan, not a handout. Suggest an interest rate lower than what you’re paying at the bank but higher than what they would get if they invested in a GIC or savings account. A line of credit at the bank is another low-interest way to clear out your debts.

CIBC Personal Finance expert Jamie Golombek answers viewer questions on saving for school.

What is the fastest way to save money for school?
-Michelle, Vancouver

The RESP (Registered Education Savings Plan) is by far the fastest way to save for school. Parents should open this account for their children as soon as possible. All you need is a social insurance number for the child. The lifetime RESP contribution limit is $50,000 per child and contributions can be made until the child turns 31. There is no annual maximum contribution limit.

You can also get free money through the Canada Education Savings Grant (CESG). The government will contribute up to $500 per year per child until the child turns 17. That’s a maximum lifetime payment of $7,200, and all you had to do was open an account.

I have a family RESP that is currently invested in a 2-year GIC and it matures a year from now. My son is heading to university in the fall. Can I withdraw this money?
- Melanie Foreman, Thornhill, Ontario

Unfortunately no. Investing your RESP contributions in a Guaranteed Investment Certificate (GIC) is a great way to maximize your savings, but there are strict rules and conditions. You can’t withdraw until that specific GIC matures. The good news is there are a variety of GICs to choose from. Try investing in a bunch of different GICs with different maturation dates, say a 1-year, 2-year, 3-year and 4-year. This way your investments mature as you need them.

Also, consider saving your money in a Tax-Free Savings Account (TFSA). You can grow your money quickly (and tax-free) and you can access the funds whenever you want and for whatever reason.

I’m starting my second Master’s degree in September. I’m already $16,000 in debt and borrowing another $10,000 this fall. How do I manage these two loans?
-Suzanne Fernando, Toronto

As with any loan, start planning how you’re going to pay off the money the minute you start borrowing it. If these are government loans, you won’t be charged interest while you go back to school. So your existing debt won’t get any bigger. Remember this is an investment in yourself. You are going back to school to improve your earning power after graduation. Put this new power to good use and get out of debt as fast as possible.