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db0db4.89204136@news> <35DC2AFE.29A0@inter.com>
<6rjvib$840@freenet-news.carleton.ca> <35DD956C.67DF@inter.com>:
Organization: 

In can.politics Ed <ed@inter.com> wrote:
: Elat Lerner wrote:

:> The student loans program seems to be geared towards the "have nots".
:> Apparently, you cannot get a student loan if your parents are considered
:> to be "haves". And again, I am really not familiar with details, those
:> who do qualify for loans get them at very generous
:> interest rates/ forgivable portions (?), not to talk about the thousands
:> who promptly declare bankruptcy as soon as they graduate.

: When I went to university back in the late sixties, I applied for a
: student loan, more or less out of curiosity.  I received not only a
: generous loan but a grant! 
 ... deletia ...
: I decided to use the money to travel Europe for 14 weeks.  Once I
: graduated, I waited the six months of interest-free time, then paid the
: loan in full.  I must emphasize that I told the truth on the application
: for all questions.  I guess I just never realized how poor we were, or
: maybe it was that I didn't drink mass quantities of beer.

: It's 30 years later so maybe things have changed.

Speaking from the perspective of a person with a large student loan debt
load...

How student loans are regulated and granted does depend upon the
individual province administering the program.  I cannot speak for all
provinces, but, as my loans are in Alberta, I can speak about their
program.

As a single student with no dependents and not disabled, living away from
home, I could qualify for a student loan which is supposed to cover
tuition, fees, books, and living expenses up to $655 per month. In
addition, I could make part-time earnings up to $200 per month without it
affecting my student loan.  Summer earnings would affect the student loan
and --- for any period (such as summer) that I was not a full-time student
I was expected to save some money regardless of what my employment
situation was.

Until 3 years after I graduated from high school, my parents were still
expected to support the costs of my education (that is, my student loan
was reduced dependent on their income).  My father did not have a large
income, about $30,000 per year, but he was nevertheless expected to
subsidize me. 

Typically, I never received as much loan as I applied for.  As I
understood the formula, in addition to the $655 per month (unchanged over
at least 5 years; govt didn't feel cost of living was subject to change),
tuition and fees, $80 per course was added for cost of textbooks. I always
had to estimate tuition and fees since the exact increase was never
provided by the time I applied (averaging about 10-12% increase per year).
After typically appealing my loan, I generally got close to what I had
thought I was eligible to receive.

BTW, advanced textbooks are typically in the $110 range. As a student
planning on continuing to graduate school, I kept most of my texts for
future reference, and thus had to bite the full costs.  Some texts could
be bought used but those were generally only available in the more popular
less advanced courses --- i.e., first/second year.  Other study materials
are also required.

So, I was living off less than the $655 per month.  Of that, $300 went to
rent & utilities.  Now, I confess to being a big eater and a poor chef,
but my food bill was easily $200 - $250 per month. Some fast food is
included, but next to no meat to be thrifty.  I almost never bought
clothes, had cheap haircuts, biked instead of bused to save money on
transportation, did not own a car, drank next to nothing (I went to the
campus pubs and drank coffee which didn't give me a reputation for being
exciting), and entertainment generally consisted of renting a movie.
Eating out was at Subway, and the vegetable and cheese sub was my choice
because it had the greatest filling ability per dollar.  I couldn't even
afford to date.  My most frivolous expense, I figure, was that I owned two
cats.

Now, some people can live off that amount better than me, I am sure.  In
hindsight, I presume that I could have economized even more on food.
However, I did not have time nor money for cooking courses, and had
limited time/energy to cook due to the demands of senior level courses and
that I was often taking more than a full load of courses in the hopes of
graduating earlier.  I feel I did economize in a lot of areas, but I was
always worried about running out of money (another stress to affect my
academic work!).  

When I started my studies, the student loan board would loan up to $5900
and then provide grants for the remainder.  Part way through my program,
they canceled the grants and made the whole amount loans.  This increased
my expected debt load upon graduation by about $6000.  At one point, the
Canada Student Loans had a "cashing fee" of 3% --- 3% of the money loaned
to you had to go to right back to them.  They later got rid of that and
reduced the interest free period upon graduation from 6 to 1 month.

It is still possible, in Alberta, to get some forgiveness of debt,
provided one's debt levels are sufficiently high (which mine are).  What
this will work out to be, I don't know.

When I have to start paying back these loans, I have the option of Prime +
2.5% floating (currently 9%, subject to change with the Prime rate) or
Prime + 5% fixed (i.e., 11.5% for the duration).  This compares to the
loan rate for unsecured lines of credit.  Since some of my loans still
have a govt guarantee on them and the govt has paid the bank extra for the
risk of the non-guaranteed loans, I am incensed at the level of interest
rates charged, but powerless to do anything about it.

To try to put some perspective on my situation:  I have a small mortgage
at above market rates but no house to show for it.

As it works out, right now, it is cheaper for me to pay the cost of
tuition and fees as a full-time student than to make the payments on my
student loan.  That is, if I can figure out how to be a full-time student
(keeping my loans interest free; not even applying for new loans) and work
full-time, I am further ahead.

As for default options:  I heard once that you could default and it might
not even affect your credit ratings.  That, if it ever was the case, has
changed.  I do know that it is not necessarily the case that going
bankrupt frees you from student loan debt.  There is a huge cost in going
bankrupt --- in addition to the damage to your credit record for the years
it remains on your record plus the time it takes to rebuild a decent
record, there are careers such as in the financial services sector where
regulations can prohibit licensing if one has ever been bankrupt.

So, even if I did swallow my pride and opted for bankruptcy, I would
probably be no further ahead and likely farther behind.

In hindsight, I am still very glad that I got my education despite all
that it is going to cost me for the next 100 + years... I wish that I
wasn't one of the victims of rapidly increasing tuition and rapidly
reduced govt support for education.

My parents felt that funding education was the responsibility of the
children (not that they were in much of a position to fund our education
anyway).  As the youngest, I was the only one unlucky to get caught going
to school in a recession with higher tuition costs and reduced grants.

I urge anyone today to open an RESP for their children and take advantage
of the Canadian Education Savings Grant. Get the children to contribute
(when they are old enough) if you want them responsible for their
education (at least in part).  Even if it doesn't add to their standard of
living during school, every reduced dollar of student loan debt is
incredibly important upon graduation.  And perhaps, just perhaps, your
kids will be able to go to school, live within a decent standard of
living, not have stress about money affect their studies, perhaps even
drink beer once in a while, and graduate debt free.


-- 
Tim Huyer				| "Money, says the proverb, makes
4th8@qlink.queensu.ca			| money. When you have got a 
http://qlink.queensu.ca/~4th8 		| little, it is often easy to get
MY OPINIONS DO NOT NECESSARILY REFLECT  | more. The great difficulty is 
MY VIEWS OR THOSE OF ANYONE ELSE	| to get that little." Adam Smith