Student debt causes trouble for graduates

As graduation draws near students need to start thinking about how they will pay their student loans.

According to Statistics Canada, in 2007, two years after completing bachelor or doctorate degrees, students owe an average of $20,000.

Some students have a large amount of debt, and that can bring a lot of stress and pressure on them. Students need to find a job that can bring in enough income to live off of, and pay down their loans.

“Secondary education must be looked at as an investment in Canada’s future and not as a money grabbing scheme as it appears to be today, where the benefit of a post secondary education comes at too high of a price,” says former student of University of New Brunswick, Thomas Rodriguez.

St. Thomas University. Photo by Alaina Nugent.

Joseph Geizer, Regional Student Loan Representative for the Atlantic Provinces, held an information session at St.Thomas University, Thursday February 25, on repaying student loans.

Geizer explained that one of the most important things students need to do if they are moving away after graduation is to notify the National Student Loans Services Center (NSLSC). This may seem to be common sense to most, but Geizer explained that it happens and students end up owing a lot more money because they haven’t been receiving their bills, notifications of their payments, and interest has accumulated.

“You can only go so far until a decision is made by the NSLSC that you know what, we have done everything we can to reach you, we can not find you so now were going to pass it on to the Federal Government, Revenue Canada, and they can begin looking for you.”

Geizer explained that once the Federal Government has found the students, it will be put on their file that they didn’t pay their loan, and this will impact their credit ratings, thus impacting when they go to buy a home, car, or anything else they need a loan for.

“There have been situations where all of a sudden former students find that their wages are garnished from their paychecks, they don’t understand why. There have been students that go to a bank to buy a new car, and of course there is always a credit check, if you go past due on your student loan, it hurts your credit rating,” said Geizer.

Students who don’t run into this problem may run into the plain fact of life that they don’t have the money to pay off their loan. Most students don’t get their dream job after university. There is a lot of hard work put into getting the position, and pay that students really need to pay off their loans.

Students can apply for the re-payment assistance plan. The term of the repayment plan is six months. Within that time students may not be required to make payments above an affordable level. The federal government will pay the interest for that six month period, and students will not be required to pay that back. The money paid towards the loan will go towards the principle amount owed, and the amount of payment could be lowered or put on hold.

Geizer said students must be aware of their consolidation, which is how they are going to pay their loan back. They can arrange the amount of their loan payments; they can look at interest rates, their amortization period (how long they want to take to pay the loan back), and their payment date.

When it comes to interest rates, Geizer said students can choose between a floating rate, which is the prime rate, or a fixed rate which is prime plus another five percent. Geizer summarized by letting students know there are many options and choices when it comes to student loans. The website he suggested for more information is Canlearn.ca.

Student on Canlearn.ca Photo by Alaina Nugent.

Thomas Rodriguez, former student of the University of New Brunswick and Seneca College in Toronto, feels strongly about student debt, and what the government should be doing.

“Student loan debt impacts your life in many different ways as does any other type of debt. Providing you have a good job coming out of university then you can spend the next 7-15 years of your life paying it off as much as possible. Just like anything else they require you to make monthly payments, which can tie up a lot of your income. If you are unable to make payments they can ruin your complete credit history in several months.”

Student debt can become a major stressor and have a negative impact on a student’s life. Rodriguez explained that he has seen those who have to pay loans off working a minimum wage job, or those who have their degree and still can’t find a job.

Rodriguez was lucky enough to find a great job that he decided to stick with and postpone school.

“I was given a rare opportunity by getting a great paying job before I was finished with my degree, the looming debt really made the decision easy to stop going to school and start working. Unfortunately, this does not happen to everyone and several people I went to school with had to stop and work a low paying job just to manage their debt.”

Rodriguez feels very passionate about what the government should be doing to help students when it comes to their education.

“Students and youth in general are the future of New Brunswick and of Canada as a whole. While big businesses like ATCON and the paper mill in Nackawic have received multi-million dollar bailouts from all levels of government. Where is the help for students? The government is not providing working solutions to the ever-increasing student debt, yet they allow universities all over the country to hike tuition prices, which further increases the endless downward spiral of perpetuating debt.”

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Posted by Alaina Nugent on Mar 3, 2010. Filed under News, This Week's Edition. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.