I learned something new about my student loans today: while I knew there was a ‘grace period’ of six months between finishing school and starting repayment, I did not realize that you got charged interest over the course of it. On the first day of the seventh month, you need to either pay the interest for both your federal and provincial loans (about $500 on every $10,000 of loans) or have that interest added to the principal, increasing each of your subsequent monthly payments.
In any particular month between then and when your loans are fully paid, you cannot pay less than 1/120th of the total amount you owe. This is to ensure that full repayment takes place within ten years of the first payment. Both the federal government and the government of B.C. offer you the choice between a fixed interest rate (prime plus 5%, based on the rates at the time of your first payment) or a floating rate of prime plus 2.5%.
I guess I know what I will be doing with that ‘extra’ paycheque.