All Posts Tagged With: "student debt"
Eating spam, stealing cutlery and embezzling
The crazy things students do when they run out of cash—and how to avoid budget crisis yourself
So it’s January and you just got your bank account topped off with this semester’s student loan. You’ve been told to draw up a budget and stick to it, but budgets are for poor people and with all that new loan money, you’re rich, right? So it’s time to go shopping!
Blowing your budget and then ending the semester broke and hungry is almost a rite of passage for university students. There are so many temptations out there, particularly at the beginning of a semester, when everyone is going out and partying and many people aren’t seriously hitting the books yet.
Maybe you have someone who will bail you out if you spend all of your money, but on the other hand, maybe that someone will surprise you to teach you a lesson. The lesson is this: being so broke that you can’t afford food is no fun; it’s easier to plan a budget and stick to it from the beginning.
Get a load of this confession:
“When I was in my first year of college, I’m not sure that I realized what debt was, or that all this seemingly free money pouring into my account could actually run out. Student loans were a given, and in my mind, they were a right. So when that fat cheque came in the mail in September, it was shopping time. The day it arrived, a friend and I went to Metrotown and splurged on new clothes, jewelry and — of course — a big bottle of gin. In that first semester I felt richer than I had ever been because I had so much scholarship- and loan-money in my account. My spending habits reflected that feeling: I went out whenever I felt like it, ate at restaurants, and bought whatever I desired. I didn’t realize that the money had to pay for tuition next semester and feed me until April.
“I ran out of money in the end of February. I actually didn’t see it coming because my feeling of wealth was so complete that I didn’t pay attention to my account balance. I was simply shopping one day and my debit card was rejected: insufficient funds. I panicked. How was I going to eat and pay my rent for two more months?! But I figured that someone else would bail me out. I was still a kid, right? I called my mom, and she – wisely, I now realize – gave me $50 and told me to figure it out myself.
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N.L. gov’t eliminates interest on all provincial student loans
Loans will be paid off earlier, saving students up to $1,800
At midnight tonight Newfoundland and Labrador will eliminate the interest on all provincial student loans.
Education Minister Darin King says his province is the first in Canada to take such action to help students reduce debt.
King says government’s plan to ensure quality, affordability and accessibility across the system is yielding results.
He says students are getting the highest quality education, but don’t have to break the bank to do so.
The elimination of interest is automatic, with no requirement for individuals to make calls or complete forms.
There will be no change in the monthly payment schedule, but the loans will be paid off earlier saving individual students up to $1,800.
- The Canadian Press
University students concerned over debt-cap requirements
Student alliance canvassing students on debt-cap concerns
In New Brunswick, once a student has completed their university degree they can apply for the new Timely Completion Benefit, which caps their student loan debt at $26,000.
The president of the New Brunswick Student Alliance, Duncan Gallant, has raised the issue that students can be disqualified if they have not completed their degree within the time limit set by their specific program.
For example, if a student takes longer than four years to complete a four-year undergraduate degree due to illness or other extenuating circumstances, they will not be eligible for the debt cap.
Post-secondary students are being asked to contact the New Brunswick Student Alliance if they are one of the students ineligible for the benefit, in the hope that they can appeal the restriction.
For the complete CBC News story, click here.
Student loan activist says feds misuse term ‘grace period’
Debt-ridden students are still on the hook for interest six months after graduation
The term “grace period” as it applies to student loans is misleading and confusing and should be scrapped, an advocate for the rights of borrowers said Thursday after filing a formal complaint against Human Resources and Skills Development Canada.
The term has come to mean two different things depending on which federal policy is looked at, argues Mark O’Meara of Canadastudentdebt.ca.
According to new credit card rules adopted by Ottawa this month, “grace period” means banks can’t charge interest on new purchases for 21 days.
But O’Meara has been fighting with the Human Resources Department for months over its use of the term as people with student loans are still on the hook for interest during the six-month “grace period.”
The term merely means students don’t have to make payments for six months after graduation while they look for work.
“Here we have one legislation using grace period as one thing and another legislation using this term inappropriately,” he said.
O’Meara said grace period “implies” an interest-free/no payment term and meant that up until the early 1990s with regard to student loans. The government has since changed its policy and, as such, should change the name of the provision as well.
“(They should) use something that’s more appropriate,” he said. “Something like payment and interest deferral period. That would be clear.”
Yes, there will be shrinkage
Ask any accountant or business analyst: the juicy material in annual reports and corporate filings is usually not what you see headlined on the first page of the document. It’s generally buried. Or hiding in plain sight. So it is with the recently released annual actuarial report on the Canada Student Loans Program. The report [...]
Ask any accountant or business analyst: the juicy material in annual reports and corporate filings is usually not what you see headlined on the first page of the document. It’s generally buried. Or hiding in plain sight. So it is with the recently released annual actuarial report on the Canada Student Loans Program. The report is built on the rather newsworthy but largely overlooked assumption that Canadian university and college enrolment will start shrinking as of next year, and go right on shrinking steadily, all the way to 2026. By the time the great contraction is done, Canadian campuses will have 18% fewer full-time students. The audit was performed by the Office of the Superintendent of Financial Institutions, or OSFI, a federal oversight agency.
The Star was the only major media source to pick up and run a story on the CSLP report. But The Star focussed, not surprisingly, on CSLP’s first order of business, namely student loans. The actuaries expect that tuition will rise 3% faster than the rate of inflation, such that average full-time tuition in 2031 will be $19,000, up more than 200% from this year. And the CSLP program will, as a result, become larger and more expensive, with more students requiring loans, and with average loan amount growing larger. A little over one-third of Canadian student rely on CSL loans now; by 2031, the report estimates that slightly more than one-half of students will be taking out a CSL loan to help pay for higher education.
But the bigger story, with a rather significant impact on the post-secondary sector and the country, went largely ignored. The auditors expect full-time, Canadian post-secondary enrolment—which has been climbing for a couple of generations—to peak next year at 985,000. Student numbers, the auditors assume, will then slowly but steadily fall until 2026, when Canada will have 805,000 post-secondary students. That’s a drop of 180,000 students or 18.3%. How big is that? This big: It’s equivalent to shutting down every public university in Manitoba, Saskatchewan, Alberta and British Columbia.
(Not something I’d recommend; just trying to give a sense of the magnitude of decline in student numbers that OSFI is talking about. Note that these post-secondary enrolment numbers include both colleges and universities; presumably both colleges and universities will see enrolment drop. So don’t start selling off the U Calgary campus to real estate developers just yet).
OSFI’s actuaries are just the latest debating squad to join the “Canadian universities: growing or shrinking?” debate. We’ve seen the Council of Ontario Universities, the lobby group for Ontario’s universities, predict massive enrolment growth in the province over the coming decade. The four universities in the Greater Toronto Area last year similarly said that they were bursting at the seams, and the future would bring so many new students that the city would need another university. At the same time, however, the Maritimes Higher Education Commission said that universities in Atlantic Canada could see enrolment shrink by 14 per cent in the near future, because the number of young people in Atlantic Canada is falling. Last year, the Millennium Scholarship Foundation and Statistics Canada similarly noted that the pool of university-age (and college-age) Canadians is about to shrink sharply. Absent a substantial increase in participation rates—the percentage of young people in higher education—that should spell many thousands of fewer students at Canada’s colleges and universities. The fact that OSFI’s actuaries have joined this debate unwittingly, and from a position of disinterest—they’re just financial institution supervisors, trying to understand whether the CSL program will remain solvent in years to come—is a powerful argument in favour of taking their conclusions seriously. They aren’t biased one way or the other.
Deeper in debt
Students borrowing more, taking longer to repay; average student now borrows $5,631
Full-time students owe more in federal student loans than ever before, according to new numbers released by the Canada Student Loan Program. The latest annual report to be released next week reported that full-time students received an average annual federal loan of $5631 in 2005-06 — $802 or 17 per cent more than in the previous year.
The jump is likely due to changes to parental and spousal contribution levels that came into effect during the period. The changes to policy lowered the amount parents and spouses were required to contribute. The move was designed to make student loans available to more middle and upper-income students.
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From the source: full interview with Human Resources and Social Development Canada
Read the report yourself: CSL Annual Report 2005-06
Julian Benedict, co-founder of Coalition for Student Loan Fairness, says that the reasons for the jump in average loan amounts don’t change the issue: students are getting deeper and deeper in debt. “The government is facilitating more debt for students, but providing less assistance to reduce debt,” he said.
The government distributed less money through the interest relief program in 2005-06 than in the previous year. 6,000 fewer borrowers benefited from the program and the government distributed $4.3 million less than the year before. Also, 1,000 fewer borrowers used the Debt Reduction during Repayment program.
According to Murray Gross, HRDC departmental spokesperson, the decline in borrowers using the assistance programs is a good thing. “Interest Relief recipients have decreased by 13 per cent over the last three years,” he said. “This decline suggests that fewer students are having difficulty repaying their loans, so that they are less likely to need interest relief or debt reduction.”
But Benedict says that the statistics show that borrowers are extending their repayment period and lowering monthly payments to avoid defaulting on their student loan. 25 per cent of borrowers revised the terms of their loan in 2005-06, a jump of 12.6 per cent.
Murray says that one third of those revisions are borrowers shortening the period of repayment. “In fact, relief recipients have decreased by 13% over the last 3 years,” he said.
