There are a number of challenges ahead for the graduates of year 2006 and one of them is to pay off their student loans. Feeling bogged down?? don’t be, as along with challenges it also brings with it opportunities for getting finances on track and putting money aside for it. It is very important to get clear of those debts but it is also essential to differentiate between the various types of debts.
As per Myron Knodel, Manager, Tax and Estate Planning, Investors Group, Winnipeg:
I don’t you think you should just totally disregard other aspects of financial planning but definitely you will want to get a handle on your debt and you should categorize it into what is deductible and what is non-deductible.
Deductible debt is the financial obligation which could be written off taxes and student loans comes under this category.
He further said:
Generally, after your graduation, you have a six-month grace period and then interest begins to accrue. Any interest that you pay on that will be eligible for a tax credit. In 2006, it’s 15.25 per cent of a federal grant and then you’ll get another depending on the province. This could be perhaps another 10 per cent you get provincially.
One should put these debts aside and start by paying off non deductible debt. One should also keep in mind about the good and bad debt and what kind of credit vehicle one should use to manage it. Further use your debt responsibly in your early 20s in order to establish a good credit rating which would stay with you for your whole life. Finally get the help of a financial adviser to follow the right path. This is a crucial time when you could shape your life in a perfect manner.
