Borrowing money to get an education

Borrowing money to get an education
Dian Cohen (Photo : Courtesy)

By Dian Cohen

My father was an old-fashioned dad who believed that girls go to school to meet a fellow to marry and look after them for the rest of their lives. But he was also ahead of his time in that he took me to his office almost every Saturday morning. That’s where he taught me double entry bookkeeping when I was 12. That simple skill put me through university – in those days, part-time work was easy to come by — Toronto had lots of small manufacturers along Spadina Street, and I got five morning jobs where I made coffee, tidied up and did the bookkeeping. That left me the afternoon and evening to take classes.
Not everyone is so fortunate. At this very moment, 1.5 million Canadians are repaying student loans. These are people who are at least six months out of school. There are another 2.5 million students in Canadian universities and colleges. According to Statistics Canada, back in 2009-2010, over 40 per cent of them financed their post-secondary education with borrowed money. At least 75,000 left school owing money. These are pretty old statistics, but it’s safe to assume that the burden of education is not much lighter since the recent federal budget had four separate items to lighten the load:
• waiving the interest accrued on Canada Student Loans and Canada Apprentice Loans until March 31, 2023;
• doubling the Canada Student Grant (a maximum of $6,000 for full-time students and $3,600 for part-time students) extended to the end of July 2023;
• Students and borrowers with permanent disabilities get an additional $428.9 million over four years starting in 2022-23;
• Adults returning to full-time school get a $1,600 top-up to the full-time Canada Student Grant extended until July 2023.

Interested readers of this column fall into two categories: those who are moving into the workforce and getting ready to start repaying and those who are just getting ready to go into post-secondary education.
For those who are getting ready to repay: List all your debts and the interest rates that go with them. You can’t just aim to pay off the highest-interest debt and ignore the rest, but this list will give you the ability to plan how much you repay each regularly. Do some research on student loan forgiveness: many provinces offer student loan forgiveness if you’re working in specific professions. Quebec has a 15 per cent loan remission if you’ve received a bursary or completed your program on time. If you’re also setting up your own pad, think small. It’s exciting to have a job and an income but living small for a year or two will get that debt discharged faster. (And even faster than that if you can find a side hustle for a few extra bucks.) Make sure your student chequing account gives you unlimited transactions, no fees and no or very low interest.
For those who are just going into post-secondary education, you have a lot of choices for borrowing money. But before you look at them, start looking for “free” money – the kind that doesn’t have to be paid back at all. Every year in Canada, thousands of dollars worth of grants, bursaries and scholarships are left on the table because no one applies for them. A quick google of “Quebec scholarships” got me a list of 400.
Back to borrowing money: the federal government offers student loans and most provinces and territories offer their own funding as well. Applying in Quebec is one of the best deals, as they charge only 0.5 per cent on top of prime. But right now, neither are charging interest for the next two years. Beyond government aid there’s the bank of family or friends, bank loan or bank line of credit. Check out the rates and conditions of repayment.
Whatever you do, choose carefully and work hard. There’s no guarantee that you won’t get hit by job loss, divorce, or some other equally unpleasant event. Setbacks don’t prevent eventual success. Having a plan and adapting it will give you an edge.

Dian Cohen is an economist and a founding organizer of the Massawippi Valley Health Centre.

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