A university or college degree is considered a necessity for many careers, but tuition costs are rising higher each year.  For those who are not able to pay the full costs of school outright–which is many students and their families–student loans can be the best way for these students to pursue higher education.

In Canada, students attending college and university have access to student loan programs that are run through the government, such as the Ontario Student Assistance Program (OSAP) and other provincial loan programs, as well as private loans through banks and other financial institutions. Depending on your initial financial situation, such as how much you already have saved up for school, and what you family can contribute, OSAP and other loans can cover most or all of your educational costs.

School expenses add up quickly, including tuition, books, lab fees, rent or resident payments, and food or a meal plan.  Knowing you have access to student loans means it can be tempting to take out loans to pay for all your school costs, and then take summers off to have fun and relax without classes or a job.

However, this generally isn’t a good idea.

Loans are not free money; when your education is completed, loans are a debt you need to repay.  Depending on the costs of your school and degree program, these loans can be significant.  Canadian university programs have an average tuition of $6,500 per year, which adds up to over $26,000 for a 4-year degree, and doesn’t include the costs of books or living expenses. College tuition will often be lower, but the costs still add up.

If you use loan money to cover the whole costs of this tuition, plus other living and education costs, you can end up graduating with $20,000 to $50,000 or more in debt, which will significantly affect your post-school life while you work to pay this money back.

The more debt you have, the longer it will take to pay off–sometimes as long as 10 or 20 years.  You could find yourself struggling to pay bills on top of loan payments, or be living paycheque-to-paycheque even with a high-paying job.  It can also be hard to put aside savings, since a certain amount of your pay each month will automatically be destined to go toward loan payments.  Being unable to save up a sum of money will prevent you from being able to buy a house or car, and can delay when you are able to financially support getting married or starting a family.

And this is just for an undergraduate degree.  Students who want to pursue graduate studies for a Master’s degree, or even post-grad for a Ph.D., and take out loans to pay for these degrees as well, will just be piling new debts on top of the old ones.  This will extend the effect your debts have on your lifestyle, and will take even longer to pay back.

The best advice is for students to work as much as they are able without it affecting their education.  This can include part time work during the school year on evenings and weekends, a work study program through your school, and working full-time over the summer.  Internships and apprenticeships, depending on their availability for your program, are a great way to earn money while learning at the same time.

When you are planning for school, work out a budget that accounts for all your educational costs, from tuition and textbooks to rent and food, as well as the amount you have saved, how much your family can contribute, and how much you can earn over the summer.  Use this to determine how much of your schooling you can cover yourself, and only take out loans to make up any shortfall.

This will ensure you graduate with the lowest amount of debt possible, and opens the door to a successful future.

Sources:

https://www.ontario.ca/page/osap-ontario-student-assistance-program

http://www.cbc.ca/news/politics/statscan-university-tuition-1.4276740

http://www.macleans.ca/education/university/want-free-university-changes-to-osap-canada-student-grants-could-help/