Readers blog about their pursuit of higher education in response to the Financial Post’s series of stories on student debt:
Posted in: Personal Finance Tags: education, interest rates, student debt, student loans, student money, university, young moneyThere are some common misconceptions about student debt that people seem not to consider when they are taking out loans that should be cleared up.
1) Student loans are just that…. LOANS. That means that you do have to pay them back. When going through university to get my undergrad degree, I received absolutely no support from OSAP. My parents are in the upper middle class and their income prevented me from receiving any loans. Unfortunately, having five children (four in university at one time I might add), they were unable to pay for any of my tuition and left that for me.
Don’t get me wrong, they did spend money to provide me with shelter and food which is greatly appreciated but the educational expenses (tuition, books, and bus fare) were all my responsibility. I spent four years in undergrad (with a year off in the middle during which I worked in a factory) and graduated with absolutely no student loan. Others in my class did things a little differently.
A friend of mine received about $10,000 a year from OSAP while his parents paid his tuition and every year he bought a new computer, or got a car to drive to school (so much for public transport) or took vacations and other non-education related expenses. For those years, I was constantly jealous of all the belongings he seemed to be able to afford and I couldn’t have. Well it’s finally come back to him and he is doing the right thing and paying back his loan.
He currently works for a job making about $38,000 and is paying back something like $1000 a month off his loan and is only 6 months away from finishing. It has taken him TWO YEARS to pay off his loan. He understands now that the frivolous spending of his student loans has delayed his adult life for a few years and he accepts responsibility for that.
2) I was recently reading an article about student debts from a different newspaper and I noticed a research error in the article. It is a common misunderstanding (one that I shared) that student loans are interest free for the first 6 months after you graduate (called the grace period). Although it is true that you are not making payments on this loan, the interest is accumulating and being added to your total loan during these 6 months. So if you can pay it off, do it early!
3) I actually ended up going back to university to get a B.Ed. degree and I received OSAP for that. In total, the funding I received in OSAP and bursaries was $14,500 of which I only needed to pay back $6,500. OSAP has a maximum of $7,000 per two semester year that can be owed so I basically got $8,000 FREE!!
I was more than glad to make the interest as well as principle payments on the OSAP loan after that. When my six months ended and I needed to start paying it back, I was working for $15 per hour at a maximum of 20 hours per week (incredibly irritating after working to get two degrees) trying to get experience in the education field. My gross income per month was around $1,000 and I was unable to pay my loans. What did OSAP do? They PAID the interest for me until I was able to find a new job with a full time salary and able to make the payments. I can’t complain about the system as it has been very good to me.
I do understand the plight of some who have accumulated massive piles of student debt (I know someone in my family who has more than $40,000 owed and continues to work on it slowly) and I definitely agree that 8.5% interest rate is ridiculously high in comparison with other lending options. I also understand that there are students who truly need OSAP in order to finance their education (unlike my friend with all the toys) but it is a choice. You have chosen to attend a university and you have chosen to accept this student debt.
There were other options. You could have saved money before attending university or you could have worked part-time (as I did for the whole of my university education). Whether you depended on OSAP or you used it to finance four years of good times, you borrowed money from the government which means you borrowed it from every citizen and it is your responsibility and no one else’s to make sure that you honour the agreement.
Matthew
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