Twenty-three-year-old Patricia Leonard estimates that by the time she’s done her post-secondary education, she will have racked up almost $50,000 in Ontario Student Assistance Program (OSAP) loans.
The young woman is about to enter her sixth year of post-secondary school, and likely won’t be done her studies until 2012.
She has already graduated from Cambrian College’s child and youth worker program, and is currently entering her fourth year of a bachelor of social work degree at Laurentian University.After she’s done her university degree, she plans to enter a one-year child life specialist certificate program at Cambrian.
Leonard said she tries not to think about what it’s going to be like to pay back her student loans once she gets a full-time job.
“I have a tendency not to stress over things that aren’t coming up, especially with having to pay all this money back,” she said. “I’m not going to fuss over it when I don’t have to.”
She said although she’ll have heavy debt when she graduates, she’s grateful to have received an education.
Another young woman, who did not want to be named, said she was able to get through an undergraduate science degree at Laurentian without much debt because her parents were able to assist her financially.
However, once she went to law school at the University of Windsor, she was forced to take out large OSAP and private bank loans because her tuition was so high.
She said the payments she now makes on her student debt are higher than her mortgage payments.
The young woman and her husband also had a baby eight months ago. She said she is returning to work soon partly because it was difficult to pay down her debt while on maternity leave.
We have some (clients) who are underemployed and not employed, and are in a panic over their student loans...
Linda Morel,
executive director of Credit Counselling Sudbury
“I have to say, I don’t think my situation is uncommon amongst anyone who has attended a significant amount of post-secondary education,” she said.
“I think that when people hear that you’ve started working as a professional, it’s automatically assumed that you’re going to be doing well for yourself...but you have to balance that with the debt.”
Suzanne Brunette, manager of Laurentian’s student awards and fees office, said students at the university took out $22 million on OSAP loans in 2009-10.
However, the university also tried to help students with their finances by handing out $4.7 million worth of scholarships and bursaries, she said.
As the executive director of Credit Counselling Sudbury, Linda Morel said she’s used to seeing stressed-out, debt-laden college and university graduates coming into her office to get financial advice. Credit Counselling Sudbury is a not-for-profit service and a division of the Sudbury Community Service Centre Inc.
According to numbers provided by the Canadian Federation of Students, the average Canadian post-secondary graduate is about $30,000 in debt. Morel said she knows of graduates who have up to $70,000 in debt. Those who have taken out OSAP loans have a six-month grace period after graduation before they have to start making payments.
“We have some (clients) who are underemployed and not employed, and are in a panic over their student loans and what they’re going to do after their six-month grace period is up,” Morel said.
Francine Hebert, a certified credit counsellor with Credit Counselling Sudbury, said there are a number of options for those having trouble paying back their student loans.
After the six-month grace period is up, if the graduate is unable to make their payments because they don’t make enough money, they can apply for interest relief.
“So basically, the government will pay the interest for them, and the principal will just stay there, and won’t increase,” Hebert said.“The interest relief is for three years. After that, they may extend it for another two years, bringing it up to five years.
“At that point, they can ask for a debt reduction... (and) the payments will be lowered. After 15 years, they’ll just completely waive the debt.”
Some graduates also decide to go bankrupt to rid themselves of student debt, Morel said. But before deciding to go with this option, it’s important to understand how bankruptcy works, and all of the consequences, she said.
Student loans must be at least seven years old before they are erased as part of a bankruptcy.
“The other consequence is your credit rating,” she said. “For seven years after (bankruptcy), your credit rating is dirt. You won’t be able to get a car loan.”
Morel said her organization can help clients by stopping collection calls, reducing payments, eliminating or reducing interest, arranging one monthly payment for debts and providing free budgeting and financial counselling.
While many students are forced to take out large loans, Morel advises them to avoid taking on additional debt through the use of credit cards.
“We have seen scenarios where students are given credit cards, and they see it as free money, as opposed to money they haven’t earned yet, and have to give back.”
Many students say they use credit cards because they don’t get enough money from OSAP, Hebert said. She advises all students to come into her office to receive budgeting help.
“If you have a proper budget, then you get to know where you stand, and learn if you can live with (what you receive from OSAP). If not, you need to start working part-time.”
For more about Credit Counselling Sudbury, phone 705-560-0430, or visit www.sudburycommunityservicecentre.ca.
