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With student loans, it’s buyer beware

Nadia Helal | Fulcrum Contributor

THERE IS NO joy in being a broke student. If you’re at the University of Ottawa, you likely spent the latter part of your adolescence waiting to move out of your hometown and start living an independent life. There’s just one catch: University—and the independence it brings—requires money. Student loans can be something like diseases, and it’s important that one understands the risk in contracting them, as they can take years to cure and are usually a debilitating, scar-filled experience.

The main difference between your average credit card debt and student debt is that the latter is designed to help students pay their university fees and all the things that a scholastic year entails. There is a false assumption that student loans are friendlier than credit card loans. Although this may be true to some extent, the end results are exactly the same. Generally, the rules set by banks for student debt are less rigid, since the loan is based on a person being in school full-time; however, both types feed off of desperate or clueless segments of the population, and bank CEOs have no vested interest in letting debtors escape from their clutches.

Much like any other money lending plan, The Ontario Student Assistance Program (OSAP), is designed to make repayment as painless as possible. It’s simple for naïve young people to feel rich as soon as that government cheque gets deposited into their savings account, but by Christmas, reality and panic sets in. Minimum payments can be so low it’s easy to forget how much you’re borrowing until it’s close to a decade later and you realize your tuition has more than doubled due to the interest incurred. Shows like Til Debt Do Us Part are thriving due to the increase in this sad phenomenon—a trend that I haven’t been able to avoid, either.

Low levels of interest are nice but deceiving. Add extended grace periods to that, and you get masses of carefree students living dangerously beyond their means. Student loans are not like a box of chocolates; you know exactly what you’re going to get.