Graduation one day, bills the next
AUTUMN LADOUCEUR
“There’s pressure on students. It’s not just finding a job when you graduate; you owe debt and you’re desperate for [employment].” That’s how Amad Baig, Guelph-Humber Business Administration undergraduate, described debt–a problem that roughly 30 per cent of graduating students face.
Image by Autumn Ladouceur
By second semester, students may have already used most or all of the money they saved during the summer months. Students on OSAP (the Ontario Students Assistance Program) have received 40 per cent less funds than they had in first semester.
Baig says his experience with OSAP has been both good and bad.
“First semester, I actually got extra [money],” he recalls. “[But] I didn’t know…[OSAP] just covered my [school] fee[s] so I had to work [to pay] for all my other expenses.”
Mahwish Choudhry, Registrarial and Financial Aid Coordinator for Guelph-Humber, says paying off loans makes getting started after graduation difficult for students.
Since OSAP assesses students based on their need, debt may range anywhere from $4,000 to $40,000.
Students are not required to pay back their loans until after graduation. One year after the big day, students must start paying interest.
More difficulties may arise, however, for students who do not qualify for OSAP. The program usually turns these students away because they work part-time jobs or their parents make a higher income.
On average, students take ten years to pay off their debt, assuming they start on graduation day. Despite a debt load that may take a student into his or her 30s, OSAP does relieve financial stress for both the student and their parent or guardian (only if their applications are approved, of course).
Undergraduates are limited to a bank loan, line of credit, or student visa. Lines of credit allow students to make interest payments throughout their study period.
“Rates aren’t comparable to OSAP but if you can’t get it, [these options are] the next best thing,” Mark Camilleri, TD Canada Trust Financial Planner, says.
Camilleri said students can pay their bank loans back monthly. He also warns students against getting a credit card.
“Credit cards are limited to $500-$1000 [and] students don’t want to get caught with a loan and a credit card bill at the same time,” he cautions. “If you’re only making $500 a month, you can’t be maxing out a $500 visa.”
Elroy Dennie, first-year Computer Engineering student, had a TD student line of credit. Though he says he enjoyed the sense of having a large sum of money when he first started school, he confesses his debt accumulated faster than he could count.
“You don’t realize it until it’s too late,” he says. “My money was gone but there was still more stuff that I needed… After a few months everything is almost used up.”
Lines of credit help students build up their credit rating. If they don’t have good credit and want to buy a house someday, difficulties may arise. These include possibly needing a co-signer or being charged higher interest rates.
Students may accumulate more debt and be forced to work long hours for low pay to finally get rid of debt and move on with their lives.
Choudhry has a solution. If students live at home as long as they can after graduation, they may be able to pay off their debt(s) faster.
Choudhry also says students concerned about loans and debt should find a part-time job.
“I’m trying to work full-time over the summer to pay [my loan back] as fast as I can, rather than leaving [it] until later,” says Baig. “I might [also] stay with my parents for a year or two when I’m done [school].”
Dennie works part-time on the weekend doing warehouse work. He hopes to work for six straight months after graduation to pay off the remainder of his debt.
Payment contracts, where students can pay back their loans on a monthly basis, may also be an option.
Scholarships and bursaries, both internal and/or external to Guelph-Humber, are also beneficial.
Students can visit the Guelph-Humber website to find more information on scholarships and bursaries available to them.
If students are interested in pursuing a line of credit, they can visit their local bank.
OSAP information and forms can be found at osap.gov.on.ca.
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