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In fact, the average student loan debt per person upon graduation in Canada was $15,578 as of July 2022, with 1.9-million Canadians owing the federal government a total of $23.5-billion in student loans, according to Employment and Social Development Canada. If a client does have a line of credit or another loan from a financial institution, it’s important for advisors to go over what recent interest rate increases have meant for the monthly payment. In most cases, the impact has not been that dire, says Sean Ryder, certified financial planner with Loreto Ryder & Associates Private Wealth Management at IG Private Wealth Management in Toronto.
Using tax refunds to pay loan In terms of strategies to pay off student debt faster, putting money into registered retirement savings plans to get the tax break, then using the tax return to pay down the loans is one Mr. Ryder employs with his own student debt. He also recommends it to clients regularly.Mr. Ryder looks at clients’ current income and the RRSP tax refund they’d be entitled to, which could be upward of 30 per cent.
“If you had $8,000 or somewhere close to that, you would save about 30 per cent in taxes. So, that would get you a $2,300 or $2,400 [tax] refund,” that could then be used to pay down the student debt, he says.