Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

When the federal government set the interest rate for federal student loans at zero and provincial interest rates were set at a low 3.5 per cent in Ontario, Chantelle Gubert decided it was a perfect opportunity to divert more money toward her long-term savings.

“What I’ve come to realize is I have enough of an investment that if my investment does better than about 4.5 per cent right now, that it actually makes more sense long term for me to invest into that,” said Ms. Gubert, who is in her 20s and lives and works in downtown Toronto.

She’s now adding more funds each month into a tax-free savings account, after she previously tried to pay off as much of her loan as possible through a second job in the restaurant industry before the pandemic.

Story continues below advertisement

“The student loan is going to be there forever and the interest is tax deductible, but you don’t have forever to start your nest egg,” she said.

Ms. Gubert’s new strategy comes as the federal government announced that the interest rate on the federal portion of student loans will be frozen at 0 per cent until 2023, which some financial planners say could be an opportunity for young Canadians to look at diverting money into long-term saving plans for things such as retirement.

Jason Heath, managing director of the fee-only financial planning firm Objective Financial Partners, said Canadians could look to the federal government’s announcement as an opportunity to invest, but they’d need to be confident that their investments will perform.

“The biggest thing that worries me right now is there’s a lot of volatility, and things like cryptocurrencies and GameStop shares that people think they can make a killing on,” said Mr. Heath, who is based in Markham, Ont.

“If someone takes a risk with money that they would have otherwise put toward paying down their student debt, they may regret it in the future and years to come.”

Mr. Heath said diverting money from loan payments to personal savings would make sense for stable investments such as a group savings plan or a pension-matching program with a workplace.

He said the low interest rate could also help people who need the cash flow to pay other high-interest debts they may be dealing with, such as credit card debt.

Story continues below advertisement

One of the proposals in the 2021 federal budget stipulates that Canadians will only be required to make student loan payments if they’re making more than $40,000 a year, — up from the previous threshold of $25,000. Mr. Heath said that could be another opportunity for people to deal with high-interest debt first.

Ian Collings, a fee-only financial planner based in Vancouver, agreed that using low interest rates for student loans to leverage investments could be a good way to move your financial life forward.

But he said people should be aware that the rosy picture around student loan repayment could change down the road.

“It’s possible to get used to not having that bill and not having to pay off the debt,” Mr. Collings warned.

“When 2023 or 2024 rolls around there’s not a continuation of that program, having that bill show up again could be a surprise.”

Back in Toronto, Ms. Gubert said her plan will require her to keep an eye on her investments, and she’ll be watching whether the provincial interest rate for her student loan changes.

Story continues below advertisement

“It’s just about trying to predict what my long-term gains are going to be, but interest rates will be a hard thing to predict, too,” said Ms. Gubert, who said the projected postvaccination economic boom could change her situation.

“It’s a bit of a balancing act, I’ll have to do my own due diligence.”

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies