Avoiding student debt problems

Here's an idea. Instead of spoon feeding your childs education to them and blaming a University or College for not protecting their students, why don't parents and students take a quick lesson in basic logic and take some ownership of their own ignorance... If a student can not understand that actions have consequences, simple financial math, or how to fend for themselves without having parents dropping money into their chequing accounts or credit cards when they are in trouble, then maybe they shouldn't be in university or college to begin with. As a university graduate who paid for every cent of my post secondary education, I have no sympathy for any student who can not live within their means and can not understand self restraint or patience just because they haven't had to before.

Re: Bail- out dollars should go to graduates from 2000 to 2008! As a parent of "four" graduates, I have seen first hand what they're debt has done. It causes anxiety, stress, and a sense of "why did we bother." These young adults are now saddled so far in debt ..it will take years before they are out because of student loans. In addition alot of these grads did not realize that for what ever reason if these debts were not paid on time the damage to their credit rating is devastating. In an era where government is bailing out large corporations or wasting tax dollars on useless programs...why not forgive these students their past mistakes and let them become more contributing productive citizens. Imagine if they did not have these loans, what they can now do. Most now have families, would buy a new car or a home if not for these burdensome debt repayments. Why can't the so called "smart" people of our society see this. I would rather see monies go to these struggling kids then to bail-out companies that were greedy, dumb business minds. Thank you for listening and please pass on the word. "Help our young adults!". Tom Peterson

In response to "I have seen first hand what they're debt has done. It causes anxiety, stress, and a sense of 'why did we bother.' "... Quoting Derek Bok - 'If you think education is expensive, try ignorance'. Try appreciating what you have been given, and not be so short sighted.

Dear A+: Not sure what you mean by being short sighted. Them, me or you? I agree that these kids were ignorant "at that time"! I agree that they did not make good decisions about money OR their time. Do they regret all this now? For sure! Were mistakes made by investors of Enron, with Madoff or were the thousands of so called educated financial wizards of the banking institutions and the automotive industries that caused most of the mess educated or ignorant? These young adults know they were wrong so do we help them or just say Oh well you made your bed...blah, blah. You were wise, they were not, hope that makes you feel better.

It is unfortunate that so many get into trouble with student debt. It should be mentioned that this porblem is not only related to student debt but debt in general. It applies to many young and a lot of older people too. If everyone who gets into financial difficulty is bailed out, who will pay...where will the money come from and how many chances do you get? One...two..... Should it only be students who are " saved" from thier mistakes or should we include persons without post secondary debt but with childern to feed? What about older people with health issues that are having trouble making ends meet. How about the people who made good money, spent it ,and have no money for retirement The problem is there is no end to the people who could use assitance for mistakes they have made or circumstances they are in due to no fault of their own.

There is lot said about the taxation rates in Canada. All of them negative. Bailing out those who cant manage will not improve this situation. Maybe part of the answer is to include personal financial management teaching during High School. We educate our childern but ignore this one area that would benefit all our childern, whether they choose to attend a post secondary institution or not.

Response to Don: Couldn't agree with you more! My suggestion of "bailing out these students" is in lieu of many other monies being spent by our governments. Not sure about yourself but I am too old now to help jump start our economy, not so for our youth. There are many sad stories about people who are in need of assistance, young and old. We can't help everyone but we should be better at who? gets it. Regarding educating about finance, money, retirement, etc. etc. I think the education should start before high school. I have heard they can teach a two year old how to read (without the use of iphones or computers) why not start in Grade One! Thank you for your comments, it is an endless topic this education thing, that unfortunately will always be the "endless pursuit of perfection.".

Tomwpeterson: Are you kidding me? If your kids didn't know that they had to pay a student loan back after they graduated then they were not smart enough to go to university. How about a crazy concept called getting a job during university and a summer job?!!!

Bailing out university graduates who are in debt will just teach them that they can get in debt again and then be rescued (ex. more credit cards, line of credit, consolidation loans, bankrupcy). And what about all of the hardworking students who were able to pay for their degrees and graduate without debt?!

Fruga/amy: Slow down there. Never said they didn't have jobs during their education nor did I say they didn't pay loans back. Careful what you assume. Have you ever researched information at the Federation of Students website and how many are in this boat. It's only a suggestion. How about other countries where education is "free"? Why do they think it is so important to have their young get free education regardless of financial status? Governments are giving billions of our tax dollars to the greedy, unworthy big business who will turn around and give bailout money to some CEO as a retirement or compensation payment. Have you got any suggestions?

Ok for all you people that say the student should fend for themselves and know what they are getting into before they get into student debt. What about the one's who did everything right like my Fiance? She left h.s. and went stright to university. Took her 5 years cause she was also raising a child that was obviously not planned, now she is $ 70,000 in debt. She does have a Bach degree, but there is no work!! And to get a good job you need experience! Her payments would be close to 800/mo. She cannot get any new credit lower then 30% interest rate cause she has this massive student loan debt, not even a car to get her to her $ 18/hr. part-time job. All this money for banks and car companies that have been making Billions for years?? WTF is all I have to say. What about all the people who did the right think and got education so they could get that good job, but now come out of school into a recession and jobless market. Why should they not get help? What could they have done different that would suddenly fix our economy? Why the banks? and not the "smart Kids" deciding to stay in school rather then take off to teach english in a country where they respect people with an education??? Someone else said it, the smart countires are letting the "smart kids" go to school for free!!! Will this not in the long run create a smarter population? Which would probably lead to higher tax brackets for these people and more productivity from their country! GIVE YOUR HEADS A SHAKE PEOPLE!!!! School should be free! Yes, minimum grades and all that hooplaw, but it should be free for those who can, and are willing to do it. I dropped out in grade 10 cause I moved out of my abusive fathers house (mother died when I was 12) I thought I could not do it and I had no cash so I started working. I realize now that I have a natural gift. I could have been a lawyer or doctor, maybe an honest political fuigure. But i did not get the chance cause my country failed me. I grew up poor and that was that! If you dont have the $$$ in this country well ya better get a job as a stripper or escort or something to pay for your education cause it is expensive and there are no bailouts!!! And all you snub nose, inconsiderate, probably silver spoon fed cry babies, say students dont deserve a break! You are lost people and so is a country that values bailing out big biz and not the country's future leaders and move makers!! Canada was once a country I was proud to say I was born in...... Now..........?

I paid for my own schooling and I definitely took it a lot more seriously than students whose parents paid their way and the native students who went for FREE. I agree that tuition fees are outrageous right now, especially with the current recession, but I thought paying for my tuition helped to teach me responsibility and money management. (I graduated 5 years ago so tuition was approx. $5000/year)
Perhaps we can find a way to make university prices more comparable to college prices ($2000-$3000 per year). I think one way to do that would be to stop giving handouts to the natives. I know they inhabited this land first, but I think we've more than paid them back. How about, no more free tuition to the natives and use that money to create scholarships and bursaries for everyone else.
Some of you had mentioned making post secondary education free so that students have more of an opportunity to succeed. But natives have that opportunity and few are taking advantage and becoming productive members off society.

Most students I know who graduated without debt were either able to live at home while in university, had a large scholarship, and/or had substantial help from their family. The ONLY way I managed to pay my way through university without either debt, or a lot of help from family is by living at home while in university. It is just about impossible to pay for tuition, books, rent, utilities, food, clothes, moving expenses and the occasional trip home by working part-time and during the summer at the type of jobs students are usually able to get. Not everyone is so lucky enouth to have a program that they wish to attend nearby, and I think it is a real barrier to many kids from lower income families that they have to take on so much debt to pay for their education.

At the very least, I would like to see a change to the way a persons credit rating is established. For students or ex-students with education loans a lowering of a rating should not be allowed because of students loans, slow payment or missed payment. Particularly while a young adult is still going to school. A quick example: My step-daughter had to leave one university to go to another. One reason for the change was due to the death of her biological father during her first year. During the months between the switch she made the fatal mistake of not informing the student loan body in an appropriate time limit and as a result her loans kicked in as "not being paid". Now apparently you do not have to make payment if you are continuing with your education but you must inform them which I agree. However this one little mistake is costing her, SEVEN YEARS OF POOR CREDIT RATINGS! Now is this fair? She has since graduated, has a wonderful job that requires her to have a credit card for entertaining clients, booking hotels and renting cars. As everyone knows the reality, you do not exist in this world if you do not have a credit card. We had to co-sign for her to get a card. She is in her late twenties. All this because of a silly mistake regarding a student loan years ago!

I agree we should be better at who our government gives money to. However I do not feel post
secondary education should be totally free. I do not think it will work unless the student has something invested, If we made education free how would we control the "professional student"
How would we make the decision about who is allowed in? Where would they be allowed to go. For example would someone in the Nova Scotia be allowed into a school in Alberta or would it be decided on the most cost effective school in relation to thier residence. What if the student does not meet the minimum requirements (what if they fail) The variables are to numerous.

I am not so sure that the problem lies in the cost of the education (tuition and books) but the iving costs associated with life while in school combined with the loss of income while in school. The students who work while in school are at a disadvantage when it comes to the commitment they can make to their classes.

If we decide to fund students, will we fund living expenses and if so what standard of living are they allowed to have while the government pays? If we did I am sure there are many students who would not be happy with the standard of living supplied. That being said there would be many upset taxpayers if the standard of living given to students was to high.

In this country we have the right to make decisions concerning our futures because we hold the responsibility for the outcome. Are you willing to give this up and accept what is offered and terms it is offered under?

As it's been said, living at home with minimal expenses and / or having family paying for your tuition fees is a privilege and unfortunately not reality for most students, as it's been my own experience.
On the other hand whitout sounding too leftist, we live in a flawed model of society. In my opinion, free education as well as healthcare should be a fundamental human right and not a privilege.
This said, I'm not condoning irresponsible spending, on the contrary, people often live beyond their means and this cannot be blammed on credit card companies or governments. I do point the finger at parenting however, where it should be stressed that financial responsibility is as important as teaching the child how to be wellmannered. It has become a trend to blame the wrongdoings of young adults while choosing to overlook the actions or inactions of the parents or guardians in question. Taking responsibility also involves acknowledging when mistakes have been committed and learning from them as to not reiterate them...given we're all imperfect beings and often reaching success on the condition of having tasted failure. Budgeting is an acquired skill easily mastered when paired with common sense...and as most things in life within our control, ultimately a choice.

Read a few of these comments.....wanted to pass along my own experience.

I knew what university cost and went because I felt that I would be better trained and the "education" would result in a better career in the long run....

I went as a married student and my wife also went to college.....we worked but without student loans we could not have gone to school --- neither of our parents (hers or mine) had saved or planned to help us with our educations. As a result after completing my bachelor and Masters degrees, I owe somewhere around 120k. She completed her college and owes somewhere around 30k.

Why so much you ask -- well a couple of reasons: first, student loans are not given for tuition alone but are made for your living expenses as well (and I worked during school and every summer). I worked as much as the loans system would let me without removing my funding. Thats right, make too much and they will remove your funding --- but in my case I had to pay for my family's (my wife, myself, and our daughter) living expenses over the summer.

When I originally went to school, I was told not to worry about the high loans (because yes I added this up before I left and was worried about the projected dollar figure) because there is a loan forgiveness done at the end of every year. Well let us just say that the government cut these programs while I was going -- so I didn't get this at all.

Fast forward to now -- I work and make a good salary, have three children, wife works, and we live in one of the most expensive cities in canada in order to make that "good salary". Well when the student loan program decides about the terms of repayment this starts to get very screwy....we are paying back my wife's loans and have been doing this diligently for the last five years....However, my loans have been an on-going problem and here is why --- interest relief charts are the same no matter where in Canada you live --- thats right! make 60,000 in a city and you have to pay them back. Make 60,000 in a rural setting and you have to pay them back....why am I complaining about this you may ask?

well in my case, once rent is paid and all of our basic expenses are paid we are left with a few hundred dollars to have extra --- ok, this is normal at this point in life -- if we save and use those few hundred dollars wisely we can pay off debt faster -- save for a house etc etc etc......but now in comes student loans and says --- well you made this much and you need to pack back your student loans, now please pay me 1300 dollars --- and my question to them --- I can show you my budget and prove that we are repaying my wife's loans -- I can't afford this yet, but when my wife's loans are gone then we can afford this -- there answer --- pay up or they go into collections.......

So now I do some digging and uncover a very interesting problem -- the interest relief charts have a maximum loan amount --- what does this mean???? well if you borrow more than say 90k in total (you and your spouse) then your minimum salary to qualify for repayment might be say 6000 gross dollars every month......but if you borrow more than 90k (combined) what happens -- well you loan payment goes up for the gross salary to qualify to start repayment....IT STAYS THE SAME.....

and the best part of all of this ..... if all of the other examples in this forum regarding bailouts apply .....or financial mistakes (i.e. planners etc) ....what is in your power to do.....welll declare bankruptcy.......but as a holder of student loans .....my loans are not elegible to be removed due to bankruptcy for ten years!!! from the date I leave school.....

so what was my solution.....seeing as reason could not be proved with budgets or modification of interest relief charts.....I went back to school.....at least I only spend 5k in tuition versus on the order of 18k a year in payments....and yes I fully intend to pay my loans back .....but we need to pay my wife's loans out first.....

oh...forgot another good point.....I am not drawining any new loans now that I am back in school, but the mere fact that I have re-enrolled in a new program means my 10 year bankruptcy clock has reset to ZERO....thats right I have to now what another ten years to be eligible....wonder if they would like to do that the CEOs or financial planner who try to declare bankruptcy....hmmm?

I agree I knew what I was getting into (with some false promises attached) and that I would be able to have the job I have without......but the system is broken and could be made much better -- you would find MOST students WANT to pay back their debt --- but fairly and not a a whopping 8% interest rate.....

my two cents...

Dave

This whole idea of "free" is not reality. Someone pays. There is and never will be such thing as free
health care or free education. Not unless everyone works for $0.00. and i cant see doctors, nurses teachers or anyone else doing that in the foreseeable future. Lets face it....we all pay.
If not directly out of pocket and then through the tax system. Maybe if we quit throwing around the term "free" we would all be better off and the younger generation would have a more realistic idea of how the world actually works.

check the back of your birthcertificate theres a number there it is called a bond tracking number it will pay for your student loans check,,,, thinkfree.ca ,,,,for more info on how to apply

:(

Just yesterday I hired a 17 year old technical entrepreneur in the UK to help me with some WordPress issues. After looking over his blog and sending emails back and forth, it was clear to me that this young man has one word clearly in his vocabulary - financial responsibility. I can't get a kid in my neighborhood to run a lawnmower or rake the yard if my life depended on it. Parents - wake up. This problem of financial responsibility, in my opinion, starts at home.

As a former debt counsellor who talked to many students and former students, I can speak to this from my various counselling experiences.

Young people are under a lot of pressure from society, their teachers, and their parents to "just pick something" (a career) at an age when they don't really know what they want yet. Did you know that the frontal lobe of the brain (the rational part) is not fully developed until you reach your 20's? So why do we expect high school kids to be able to pick a career? Parents and school counsellors need to encourage these kids to consider their strenghts and weaknesses in regards to academics, consider the tuition costs vs. eventual salary of the career they are considering, and to actually go out and speak to some people who have this particular career. Better yet, try to arrange a job shadowing day before signing up for a degree. University education is privileged above all other means of supporting oneself. How about encouraging more people to go into trades or to start their own businesses? These kids are not given enough information about their options.

If a young person decides to borrow a student loan, they need to understand how the student loan system works and they need to be responsible enough to handle a loan. The provincial and federal governments need to provide more information about the student loan system works, not wait to give people the fine print when they've defaulted on their loan. Parents need to teach their kids about finances or send them to a financial counsellor so they can learn. Actually, a financial literacy course should be compsulsory in high school.

It is shocking how many former students can barely afford to live let alone pay their student loans back. Because they can't pay, they just default on their loans, avoid the collection calls, and file bankruptcy 7 years post-graduation. Many of our tax dollars can be saved by revamping the whole system so that there are less defaults.