Wednesday, March 1, 2017
Hey OSAP…..**** YOU (The Student Loan Dilemma)
My mom always told me I have to get an edu-macation. Yes, that is how she said it, jokingly of course. So here’s what I did, I went to school. The beautiful University of Western Ontario in London, Ontario, Canada was my life for 4 years. To be honest I don’t remember most of the lectures. I definitely don’t remember most of the parties I attended. I did make some good friends. I had some great professors as well. Sadly, there is one thing that I remember quite vividly about my university experience. The Ontario Student Assistance Program, otherwise known as OSAP. It was the everlasting memory from my university days. In this post, I am going tell a bit of my OSAP story. I’m also going to provide a few insights into what people can do to remedy their OSAP woes.
My OSAP journey began in 2004 when I was accepted into university. I was so stoked that I was accepted into 4 schools. I thought everything else would fall into place. I then got trapped in a weird money zone. This is the zone in which my parents made too much for me to receive OSAP but yet too little to help me with school. Sorry, Joe, no university for you! Well, I found a way out. I had to jump through a few hoops to prove financial hardship in order to receive funding. This was funding that I thought I wanted at the time. Sure enough, I received my OSAP money in October of my freshman year. As university rolled along I borrowed more money from OSAP. My total bill by the end of school was 25K. Not too shabby eh. The money seemed fictitious to me. It was like it didn’t exist. That was until one fateful day. 6 months later my first bill arrived. $633 was now due at the end of every month. Puke, puke, cough, cough. What’s worse is that the repayment period was 8 years. “So to borrow $25,000 I now have to crush my monthly cash flow and then pay back $60,768. Seems about right??” Sounds a little like loan sharking to me. Here is the question I asked. The third word in OSAP is assistance. Was the assistance provided the “privilege” of borrowing their money? Gee thanks for the help. I was in a gross place.
I had no clue what to do. I could barely afford rent let alone this ridicules bill every month. I claimed poverty, which wasn’t far from the truth, and reduced my bill to a far more reasonable $50 a month. The problem is this $50 wasn’t even paying the interest let alone tackling the principle. I did that for several years until I found myself in a better position where I could actually start attacking the principle. Once I could do that I went super aggressive to pay it off. The day when I walked into the bank and handed the remaining balance to the teller was a good day. I do wish I got a cookie or a balloon. Sadly I didn’t. I tell this story for one simple reason. Debt sucks, big time. Well, there is good debt and bad debt right? Nope, it’s all bad debt. Some are just worse than others. Is OSAP as bad as a high-interest credit card? No, but both will hamper your mobility moving forward. Here are a few tips that might help you out when it comes to nasty student loan debt.
1) You have to pay more than the minimum.
You have to! Paying back over 60K for a 25K loan is unacceptable to me. So now you say, “Well I’m already broke man.” Yep but how long do you want to be broke for, a few years or the next 10. Plus do want this nasty loan killing your chances at getting a good investment like a mortgage? If it takes working 50-60 hours a week, do it. If it takes living with mom and dad for a few years while you save, do it. You have to be aggressive. As much as you may not want to believe me, the government doesn’t have your well-being at heart. OSAP is a business, not a gift for you to enjoy.
2) Bust your butt while in school.
Also bust your butt while on summer break, reading week, etc. I had a friend that borrowed more than me for her education. What she did though is made sure she kept pace with her borrowing with savings during the year. She spent any extra time during the school year working, not partying. What this meant is that she saved 7K a year, matching her borrowing rate. By the end of university, she had a nasty $28,000 OSAP bill. She also $28,000 sitting in the bank. Pretty sweet eh? Smart girl that’s for sure. I was super proud of her accomplishment. Be like her.
3) Don’t rack up other costly debt during school if you can’t keep pace with OSAP.
Getting out of school with a 30K OSAP bill is gross. Even grosser is having that and 15K line of credit along with a few maxed out credit cards. School is the “necessary debt.” Not new shoes or bar tabs. Discipline is vital to anything in life.
Prioritizing Your Spending – Budget Boss
4) Find flexibilities in your loan.
Being able to pay only $50 a month allowed me to get my act together. Once I did I mashed that OSAP loan quick time. There are options out there, so find them. Debt forgiveness, even partial, is huge. If you can snag a few scholarships, grants or bursaries along the way even better. Make it a priority to find free money. It’ll be worth it believe me.
Also, you are an adult now, which means you can vote. Use your power as a voter to put people into office who have the future in mind when making decisions for our city/province/country. Part of that is putting people into power who have education at the forefront of their platforms. In recent years university tuition has become heavily subsidized and thousands of dollars have been saved by students. That was not the case when I was in school. Think about that when you go to the polls, and make sure you do go to them.
10 High-Paying, In-Demand Careers for 2018 – Budget Boss
I will conclude on this note. Education can set you free. It can be the best time of your life. It can also hurt you for many years to come. Education is considered “good debt” by some. Why they consider it “good debt” is because it is an investment in yourself. That sounds like a business decision to me. Well if it is a business move then treat it as such. Make an OSAP plan and follow through. Do it before you head off to school. If it’s too late for that then make it now. Don’t wait until you are in over your head to do so.
“Education is the most powerful weapon which you can use to change the world.” Nelson Mandela
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Email – joe@budgetboss.ca
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