OSAP, and Interest, and Debt…Oh My!

27Jan11

If you are a high school/secondary student living in Ontario, I’m sure that you are being bombarded with information about local and national public colleges and universities. As such, I’m also sure that you’re trying to figure out which post-secondary institution to attend; you must also be trying to figure out the reasons why you feel you should attend that specific school.

I am, however, unsure about your financial status, and how you intend on paying for your post-secondary education. If you are one of the lucky ones who can rely on your parents or have saved enough money yourself, or even have been awarded a full-scholarship to the school of your choice, then kudos to you…this post may not interest you.

If you are, like most of us, struggling in some way, financially, then you should be aware of all of your options before making a decision that may impact the rest of your life quite significantly. I’m speaking here, of course, about student debt.

We are fortunate enough in this province to have a plan put in place for those who are unable to pay for their post-secondary schooling immediately; it’s called OSAP. If you are not familiar with the term, it pertains to the Ontario Student Assistance Program, in which students are given a loan of a certain amount of money, based on certain criteria, including which program you will be studying, current income of your parents, etc. which dictate how much you will receive, or if you even qualify.

So, thankfully, we live in a province that makes our educational needs a priority in which everyone will have an opportunity to advance their knowledge. I must point out, however, that as a future post-secondary grad, you should also be aware of the debt that may accumulate over the years while you are completing your diploma/degree; it can be frightening. It is important to take into account how much has been/will be loaned to you over the years, and what the interest rate will be (oh yes, there is interest attached to an OSAP loan); it is usually prime+2.5%.

It is also important to note that a student was obligated to start repaying their OSAP loan immediately upon graduation, but there is now a 6-month grace period in which a student has the opportunity to find and secure a job before having to begin paying back the loan.

So, upon understanding the OSAP loan a little more, the next step is to decide which school to attend, and whether you’d prefer to attend a public or a private post-secondary institution.

Should you choose to attend a public college/university, there are a few things to consider:

1)      Most university undergraduate degrees take at least 3 years (if not 4) to complete, thereby the student needs to take into consideration the amount of debt accrued  over the specified amount of time.

2)      There is a 36% drop-out rate of public college/university students that cite their fear of debt as the reason for dropping out.

3)      In the last decade, the cost of tuition has increased 59% for public colleges/universities (now an average of $6,307 per academic year), and, since it is controlled by the government, there is no guarantee that tuition costs will decrease or be frozen.

If you are interested in attending a private/career college, there are some things that you should note as well:

1)      A registered/accredited private college can offer you programmes that will prepare you for your career in one year or less, usually; this dramatically decreases the amount of a student loan.

2)      Since the programmes do not take as long as those from public colleges/universities, there is a lower drop-out rate due to fear of looming debt.

3)      Private colleges assess the programmes/diplomas that are offered, and set tuition costs accordingly. Since they are privately run, a career college can set its own standard for the cost of education, allowing for lower rates if even public colleges/universities increase their rates.

So, ensure that you’ve taken into account the true cost of your education before making a decision as to which post-secondary educational institution you plan to attend. It is important that you look into the situation for yourself to ensure a complete understanding of what you will owe, should you need OSAP, when you have completed your studies.

After all, you don’t need to be fearing a large debt-load once you graduate; you need only to focus on starting a great new career.

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Tags: career college, College, cost, debt, debt-load, Education, graduate, Ontario, Ontario Student Assistance Program, OSAP, OSAP loan, post-secondary education, private career college, Student Loan, University