The value of post-secondary education has diminished significantly over the last couple of decades. The law of supply and demand works in the labor market just as well as it works with commodities, real estate and everything else. Twenty years ago college education could guarantee you a better living standard. This lead to a disproportionate number of people pursuing higher education and today, a typical college grad in Canada starts at $12 to $15 an hour while uneducated assembly line workers make $70 and some skilled tradespersons as much as $100 an hour. There are some exceptions, and certain occupations that require post-secondary education, such as dentists, lawyers and accountants, still earn higher incomes. But with the large number of students enrolling in these programs today, a few years from now those professionals will be a dime a dozen.

Given the relatively low value of education in today’s Canada, we wouldn’t recommend anyone to use student loans to finance it. It’s okay to pursue education if you can afford it. You may have significant savings or be able to study while working. But getting into debt and crippling yourself financially for many years to come is definitely not worth it, unless you have a strong passion for a certain type of work that requires education and you don’t have any other ways to finance it. Student loans are far from being free. In some cases you may have a grace period of a year or so, but eventually you still have to pay the interest which is typically not lower than regular commercial loans. Besides, if you fall under the burden of your debts, student loans cannot be written off by filing for bankruptcy.

But if you already have a student loan, going back in time and getting read of it is not an option and the best thing you can do is pay it off as soon as possible. Generally, as any unsecured debt, student loans charge higher interest than secured loans. Therefore, it is common practice to refinance student loans by adding them to the existing mortgage balance. The debt becomes secured and in most cases your interest expense will be lower.

An even better way to reduce your interest expense on a student loan is to make the interest tax deductible. If you own investments of commercial properties, you can sell them, use the money to pay off your student loan, and then take a commercial loan to repurchase what you have sold. Now your loan becomes a loan “for business or investment purposes” and your interest can be tax deductible. This means that if you are in a high tax bracket, your interest expense may be reduced by almost a half, while adding your student loan to your mortgage can only shave off a point or two.

Nikolay Sisan is a Certified Financial Planner and freelance writer in Vancouver.