Last year, the Ontario Students Assistance Program (OSAP) helped 384,000 Ontario residents access their post-secondary education. But when many of these students leave school, OSAP payments will become a serious financial responsibility.
As of August 2017, over 67 per cent of Canadian university students graduate with some form of debt. According to a BDO Canada survey, the average amount owed per graduate is just over $22,000. At Queen’s alone, 36.8 per cent of students receive an OSAP payment. This means nearly 8,200 undergraduate and graduate students on campus will leave with debt.
For thousands of Queen’s students every year, graduation marks the beginning of their loan re-payment period. According to OSAP, this period is designed to last less than 10 years. However, recent reports indicate this repayment period extends well beyond that point.
For students that fall behind on their OSAP or federal loan payments, there can be serious consequences. If no payments are received for nine months, the individual is referred to the Canada Revenue Agency and the Ontario Ministry of Finance (OMF). The OMF can turn to private collection agencies in order to recover the money owed, meaning students in this position will be reported to the credit bureau. This can have devastating effects on their ability to get a mortgage, a credit card, a car loan, become employed or even sign a lease.
When Iain Reeve graduated from Queen’s with a PhD in political studies in 2010, he felt hopeless. The job market was at an all-time low and he owed over $80,000 in loan repayments to his home province, British Columbia.
“It was mostly when I left Queen’s and was transitioning to my first job, making the payments was tough,” Reeve said. “It had a big impact on my lifestyle.”
“At that point I was paying as much in loans every month as in rent.”
When Reeve graduated, he relocated to Vancouver. Eventually, the skyrocketing real estate prices, combined with Reeve’s crippling debt, forced him and his fiancée out of his home province. “At that point, I had a really good job, I was making good money but I felt that [my loans] were the one thing that was holding me back from being secure in my housing, saving for retirement and starting a family.”
In spite of what he’s gone through, Reeve doesn’t regret his time at Queen’s in the slightest. Although he sees education as a valuable investment for most students, he considers the current debt burden on students to be problematic.
“The amount of debt that students are carrying into an inhospitable labour market is just too much. It’s going to cause a huge problem a couple generations down the line,” Reeve said. “We need more access for people that want to have some upwards mobility.”
According to his own experience, Reeve said postponing his post-secondary education for a few years after he graduated high school helped him save up some of the money he needed for Queen’s. However, trying to finance his entire education on a minimum wage salary proved to be nearly impossible.
To navigate student loans, Reeve suggested students do their research before borrowing money, as well as plan their summer jobs ahead of time. Looking back, he regreted not pursuing a trade in the summer months.
“Students should think about it more,” Reeve said. “You need to do your due diligence before you take on loans. It’s easy to say you’ll worry about it later but costs creep up as you get older and it will have an impact on your life.”
Reeve also mentioned the stigma of borrowing money for university and struggling with the payments is a part of the issue.
“Most people I know aren’t super upfront about how they’re doing with their loans. People are super worried about feeling ashamed if they’re behind. To me, that’s a part of the problem if people are secretive and embarrassed about it.”
Ontario has made significant progress in the last year in of giving students different options to help repay their student loans. As of 2018, OSAP loan payments won’t begin until the graduate is earning at least $35,000 a year. Prior to the amendment, the minimum salary for repayment was $25,000 — a figure barely above the poverty line in Canada for a single adult working full-time.
The criteria still present a serious burden to students who struggle to themselves straight out of university.
Rapid-onset loan repayment plans force many graduates to put a large portion of their starting salary into repaying their debt. Things like beginning an exciting career, travelling and starting a family often end up on the back burner for students in debt.
“It’s really important for students who are experiencing challenges during repayment to the [National Student Loan Service Centre] (NSLSC) as soon as possible,” Teresa Alm, associate university registrar, said via email to The Journal. “There are options available through the NSLSC. For example, a student may be able to change the of repayment or apply to the Repayment Assistance Plan.”
The Repayment Assistance Plan (RAP) is a system put in place to help former students in the difficult situation of struggling to repay their loans. Students that apply to the RAP before they’re behind on their payments may have their payments readjusted in accordance with their income. Many applicants have the interest they’ve accumulated waived.
According to their website, 75 to 90 per cent of applicants to the RAP program are granted at least a temporary absolution from their payments.
The role of any university in handling student loans is limited. According to Alm, the federal and provincial governments put all OSAP policies and regulations in place. University and college financial aid offices are only there to help ister the program.
Repayment for the federal portion of the loan is also beyond the jurisdiction of campus istration. Repayment for these loans must begin six months after graduation and if someone were to miss a payment for three months in a row, individuals lose their right to access the RAP.
The burden of student debt is wide-reaching and the road to solvency is complex. While students have a responsibility to research their options and ask for help before it’s too late, the situation is often riddled with more barriers than it seems. Obstacles including graduating income levels, home systems and the shame associated with debt hold certain students back more than others.
“Students should make as much of a financial contribution as they can, but their responsibility should be tied to their capacity to themselves,” Reeve said, “For students like myself who were working-class or lower-class or first-generation immigrants — reducing the barriers would be a good step.”
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