- You have to pay it back (duh!): Ok, so this may seem like a trivial point, but its really the most important point of a student loan. When you first receive your student loan, it may seem like a lot of money, but try not to spend all that you receive. Instead, try to live cheaply throughout the year, and the money that you have saved, pay it back. The same goes for those of you who are done school- pay that OSAP back ASAP!
- Find money for your schooling: search for grants, scholarships, and bursaries to help pay for school.
- There is good news for those of you who fall below the poverty line (hurrah!): If your loan is greater than $7000, you will not have to pay the remainder, at least under OSAP. For example, if your loan is $10,000, you will only be required to pay back $7000. Check to see if this is the case for your student loan.
- Don't lie: on your application to try to get more money (ie. don't say you're poorer than you are), 'cause it will cost you in the end (see #1), especially if they find out.
- Pass your class: "really?" you say with a sarcastic undertone. Classes are expensive, and so you should do your best to avoid failing because not only does it mean you may be shelling out $1000 or so per class, but you might end up having to take a summer school course, which is also expensive. The summer is the time when you should be making money to pay off your student loan, which brings me to my next point.
- Set aside a portion of your money to pay off your loans: seriously, just do it! If you can afford it (i.e you've moved back home where you get free rent and mom buys you your favourite groceries), set aside at least 15% of your monthly cheque to paying off your loans. For example, if you make $700 a month, you should at least pay $105 per month to paying off your loans. This means you will still have money to do whatever floats your boat. This is the minimum though, and you'll thank your lucky stars for it later.
- You get interest free status in between your studies, as long as you're going back to school. For example, if you're enrolled in a 4 year program with the summers off, you won't be charged interest during those carefree summer months.
- You will be charged interest AS SOON AS your studies are finished. Literally, the day after your studies are finished, interest starts accumulating. And its not at all nice interest, contrary to what you've probably been told about OSAP. Rather, depending on the size of your loan, it can amount to amost $5 per day. This ends up costing about $155 a month and $1860 per year just in interest. That's enough to take you on vacation!
- Pay off your loan- FAST! The faster you pay your loan off, the less you pay for interest. For example, if your debt is $20,000 at a floating interest rate and you decide you want to pay it off in 10 years, the total amount you will pay back will actually be approximately $24,890 because of interest. That means you're paying about $5000 just in interest! However, if you are able to pay that loan back in 5 years it will only cost you about $22,380, indicating interest will only be approximately $3000. That means you are actually saving about $2000 by paying it off faster! Calculate how much it will cost you by visiting the National Student Loans Service Center Loan Repayment Calculator at http://tools.canlearn.ca/cslgs-scpse/cln-cln/40/crp-lrc/calculer-calculate-eng.do
- It's not always that bad: if you can't make payments at all, you can apply for "interest relief status". This means that you won't be charged interest on your loan for a certain period of time because you aren't making enough money.
Thursday, July 2, 2009
10 Things You Should Know About Your Student Loan (OSAP)
Ah yes, the infamous student loan. Many of us have one, many of us are thinking about getting one. Education may be almost a necessity in this day and age, but that doesn't mean that it comes cheaply. I'm specifically dealing with the "wonderful" (disgruntled look on face appears) folks at OSAP- the Ontario Student Assistance Program. But many of these points apply to all student loan receivers. Either way, these loans aren't exactly fun to deal with, and here are a couple of things you should know about your student loan: