Getting through post-secondary with less debt

Students face many challenges but two stand out — achieving that precious diploma or degree and doing it without a crushing debt load

Post-secondary students face many challenges but two stand out — achieving that precious diploma or degree and doing it without a crushing debt load.

That’s why you need a financial plan, so here’s your required tutorial on practical strategies for effectively managing your money.

Consider the cost of sleeping

Where will you lay your head at night? At home, the least expensive money-saver, or in student housing or a rental unit perhaps in a different city or province? Much depends on where you choose to go to school.

Budget realistically — and don’t budge

Start with the many expenses you’ll encounter during your school years, fixed costs such as tuition, books, accommodation, travel, food and variable costs like entertainment. Balance those costs against your known resources, RESP withdrawals, family contributions, personal savings and so on, and expected income from summer or part-time employment.

Investigate other income sources

Before applying for a student loan, check out scholarship or bursary possibilities from the school, provincial governments, foundations, religious groups, service clubs or civic groups.

Careful with credit

A credit card can drown you in debt or be helpful in an emergency or for establishing a credit history. Make the responsible choice.

Pay yourself first

Put away a little money each week as an investment in your future, a source of emergency funds, or to save for a major purchase.

Make the most of government tax relief for students

• Scholarships and bursaries — not taxable if you are eligible for the Education Tax Credit.

• Student loan interest — eligible for a non-refundable tax credit when the loan is part of a federal or provincial student loan program. Carry forward and apply unused amounts of the credit in any of the next five years.

• Moving expenses — deductible when you move more than 40 kilometres to be closer to school or a job.

• Child care expenses — may be claimed by the higher-earning spouse/common-law partner of a lower-income student spouse.

• GST rebates — apply for this rebate when you file a tax return.

Other available tax credits:

• Canadian Employment Credit on the first $1,065 of employment income.

• Tuition, Education and Textbook Credit — transfer unused portions of up to $5,000 minus the amount used by the student to a spouse/common-law partner, parent or grandparent, or carry forward unused amounts indefinitely.

• Public Transit Pass Credit — receipts needed for claim.

Talk to a professional adviser about these and other strategies for achieving a debt-free education and a sound financial future beyond your school years.

J. Kevin Dobbelsteyn is a certified financial planner with Investors Group Financial Services Inc. His column appears every Wednesday.

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