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Considering a Student Loan? Read This First.

Considering a Student Loan? Read This First.

How to Avoid Student Loan Debt Horror Stories

Are you heading off to school this year, but wondering how to avoid student loan debt and the horror stories that come with it?  This doesn’t have to be as scary as it sounds.

Student debt in Ontario is a major cause of stress for many young people. It oftendelays certain milestones, like buying a home or getting married. However, for many Canadians it’s unavoidable.

The best way to navigate around your student debt is to understand how student loans work.

Student Loans: How to Avoid Crushing Debt

Over the past 25 years, tuition rates in Canada have more than tripled, requiring students to rely much more heavily on student loans.  As a result, undergraduate students are leaving school withmore than $25,000 in debt, on average.

Student Loans in Ontario: What Are Your Options?

As a student, you can choose to get a provincial loan through OSAP or a private one through your bank.

The Ontario Student Assistance Program (OSAP ) is designed to offer students a loan that will assist them in paying their tuition. It takes into account an applicant’s financial background, living situation, educational program, and income from any employment.

When you go through your bank you’ll be subject to their specific regulations and conditions. Some banks offer private loans through an education line of credit. Some banks give you a little longer after graduation to pay off your loans, but the interest rates will be higher.

How to Apply for Student Loans

Depending on which type of loan you choose to apply for, there are certain steps you need to take.

When you apply for OSAP, through the online portal, you are automatically considered for a number of grants as well as the 30% off tuition credit. You do not need to apply to these separately.

Grants, bursaries and scholarships are amounts of money paid to eligible people who are not obligated to pay them back. Essentially, it’s gifted money that is awarded based on the requirements of the specific grant. For example, some scholarships are awarded for high marks, while others are given for other reasons, such as financial need.

Changes to OSAP in 2017:

OSAP is changing for those applying in 2017. The changes will make average college and university tuitionfreefor the majority of eligible students, whose parents make a combined household income of less than $50,000 per year. The grant will be available to full-time students only.

The changes also apply to students whose parents make a combined household income of $83,000 per year or less

Repaying Your Student Loans

OSAP repayments begin 6 months after the student leaves school; however the federal portion begins accruing interest during that time.

Approximately one in seven (14%) people who receive federal student loans have defaulted within three years ofgraduating . The Canadian Student Loan Program says most students take about 10 years to pay off their federal debt.

Student Loan Forgiveness

You might have heard about something called student loan forgiveness and wondered what it was all about. The bad news is that this is something that only applies in very rare circumstances. However, if you are having trouble making your required monthly payments, you could be eligible to lower your payments so they’re more affordable, if you meet certain criteria.

If you are a very low income-earner you would not have to make any payments until your income grows to a certain level.

What Happens if I Can’t Pay my Loan?

Defaulting on Your Student Loan

Defaulting occurs when you stop paying your loan payments because you can’t afford to make the payments any longer.

This can have seriousconsequences in the future. If you do this, the Department of Education can take a number of things including your tax refund, any benefits you collect, your paycheck, or any professional licenses you have.


A discharge from bankruptcy releases you from your obligation to repay your student loans if you filed for bankruptcy at least seven years after the date you ceased to be a part or full-time student. 

Struggling With Student Debt? Crawford, Smith & Swallow Can Help

Our licensed insolvency trustees are experts in helping people eliminate their debt and get on with their lives. If you’re crumbling under a pile of student debt, don’t wait until it’s too late.

Talk to a trustee at Crawford, Smith & Swallow for debt help in the Niagara region. We will help you consider your options and make sure you’re on the right path with your finances.
Contact us today for a free consultation.

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