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Canadian Students: How to Leverage the CESB to Pay Off Student Debt!

Image credit: Photo by CIRA/.CA.

One of the most important concerns for Canadian students is the amount of debt they owe once they complete their education. According to a report from The Globe and Mail, about 50% of Canadians who graduated in 2015 are burdened with student debt with the median debt figure standing at $17,500.

By 2018, around 67% of Canadian graduates had an outstanding debt. With unemployment rates at a multi-year high and consumer spending expected to remain subdued, Canada’s economy is unlikely to gain pace until the second half of 2021.

This suggests Canadian students and recent graduates might find it difficult to find employment right now.

The CESB was introduced amid COVID-19

The Canadian government introduced the Canada Emergency Student Benefit (CESB) earlier this year to provide financial support to post-secondary students and recent post-secondary and high school graduates who were unable to find work amid the pandemic.

The applicants received $1,250 for a four-week period for a maximum of 16 weeks, indicating a maximum payout of $5,000. Canadian students can use this benefit to pay down their debt if they do not have any other financial liabilities or expenses in the near term.

Alternatively, you can also look to leverage the CESB and invest the payout in growth stocks to make a higher payment towards your student debt after a few months. For example, the CESB payment began on May 10 and ended on August 29.

So, if you would have purchased $1,250 worth of Lightspeed (TSX:LSPD)(NYSE:LSPD) stock on the 15th of every month, you would have purchased 163 shares over the 16-week period. This investment would now be worth $12,433.

Lightspeed is a top growth stock on the TSX

Lightspeed has been one of the most popular growth stocks on the TSX. LSPD shares slumped to a record low of $10.5 in March and have since soared by a staggering 626% given its current price of $76.28.

The company provides fintech solutions to small and medium businesses primarily in the restaurants and retail space. These two sectors have been hit hard due to COVID-19, which resulted in a sell-off in LSPD stock in early 2020.

However, the shift to e-commerce and online sales provided meant Lightspeed’s revenue growth was on track and supported the stock’s recovery in subsequent months. Lightspeed continues to expand its portfolio of products and services and is focused on growing via acquisitions as well.

In the second quarter of fiscal 2021, LSPD sales were up 62% year over year to US$45.5 million, while GTV (gross transaction volume) rose to US$8.5 billion, up 56% year over year.

LSPD attributed its strong Q2 performance to an expanding customer base, rising adoption of software modules, and an increase in payment penetration.

The Foolish takeaway

Readers should know that investing in growth stocks carries certain risks. These companies trade at a premium valuation and remain vulnerable in a broader market sell-off. While the TSX was down 35% in March, Lightspeed lost over 70% in market value.

However, growth stocks also crush the index in a bull market and can generate multi-fold returns.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool owns shares of Lightspeed POS Inc. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

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