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What You Need to Know About Student Loans and Debt

If your child needs financial assistance to go to university, they may be eager to accept aid from whomever offers it. However, before they (or you) sign on the dotted line, there are some pros and cons to look into to make the best decision that will help them avoid the most debt.

This podcast is all about how to know your financial limits, and how to help your kids navigate the financial realities of paying for university. We talk about how parents can help their children if they can’t offer financial assistance, and what other ways parents can make sure their kids are ready to manage university level finances.

Here are some pros and cons that might answer some of the questions you or your child have about the different types of financial assistance available. Knowing the ins and outs of loans can help them reduce the amount of debt they end up with during and after university.

Lines of credit


  • Your child only has to pay back what they borrow, and interest is only accumulated on what they borrow.
  • Interest rates are sometimes lower than other types of financing, like student loans.


  • Interest begins to accumulate as soon as the money is accessed, and it must be paid immediately.
  • You may have to co-sign the loan, and your credit could be affected.
  • Interest rates can go up.

Non-government student loans


  • You may be able to help your child negotiate with the bank.
  • Having an existing relationship with the bank can help.


  • Interest will accumulate while your child is still in school.
  • Repayment terms are often stricter.
  • You may have to co-sign the loan, and your credit could be affected.

Government student loans


  • Interest doesn’t have to be paid until your child graduates.
  • If your child has trouble paying off their loan, there are repayment assistance programs for provincial and federal loans that could help.


  • Interest rates can be higher.
  • The government may consider your income when deciding if they will give your child a loan, or how much they will offer.

These are just a few of the facts about loans. Talking with a professional at your bank or with the provincial or federal government loans programs will help you and your child make the appropriate financial decision.

No matter what route your child chooses, talk to him or her about the importance of keeping debt low to reduce their repayment responsibilities (and their stress). Here are some tips on paying off student debt after your child graduates.

This blog from Money We Have is an eye opener. The guest blogger gets honest about his debt, which included gambling, payday loans, and student loans, and how he paid them off and reframed the way he looks at money.

What financial aid options are you considering? Tell us on Twitter. #BackToSchool #DebtSolutions #PostSecondaryEd

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