Debt 202: In depth debt

So you are a debt connoisseur, let’s get deeper into it…

 

You have the basics down, let’s talk about the different types of debt you can go into while funding your education. Yup, yeah you heard us right, there are different types of debt. In fact, there are actually three major types that you will encounter when paying for school. The first being government debt, the second bank debt, and finally private lending.

Government debt

Government debt is probably the one you are most likely to hear about and get while you’re in school. You could get  OSAP, NSLSC, whatever,  as long as you are a student who qualifies you can get it. Basically, if you aren’t lowkey super-rich, the government will help you out.

The process for getting approved for these is straightforward. You fill out a questionnaire, provide tax information and then boom you get a bunch of money, some of it being loans and some being grants. 

Getting grants depends on your background, they have qualifying categories that will make you eligible for more grants or not. It’s a bunch of bureaucratic shit, just pray they give you grants because that actually is free money as long as you follow the eligibility criteria.

Bank debt

Bank debt is a fun one, they’re happy to give you as much money as you need.  But, on the other hand, they have the least forgiving payback schedule. Most banks refer to it as a student line of credit and more often than not it seems to be treated similarly to a credit card. I mean, none of these loan services are particularly forgiving or understanding of life happening, but at least the government gives you six months before you have to start paying back… because apparently, that’s enough time to find a six-figure job to pay off all your debt… more on that later.

Expect something called interest-only payments, what this means is that you don’t pay off the principal, the initial amount taken out as a loan, you just pay the interest accumulating on that loan. Some banks like TD Canada Trust expect you to pay interest-only payments while in school and for 24 months post-graduation, then they want the money for the principal. This is a nice little cushion while trying to find a job, but it’s still not ideal.

Private lending

Private lending means so much more than getting money from a loan shark, which by the way I don’t endorse, I don’t want to be responsible for that. 

If you’re lucky to have some family members with money you can borrow from them. It’s definitely worth a shot to ask and if they are feeling particularly generous, they may even gift the funds to you. At least you can hope, right?

 

Well here is a bit more information about the processes of getting money to pay for your school, remember loans aren’t free money.