Dealing with Student Loan Debt
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Dealing with Student Loan Debt - Money Problems Radio Show |
| Originally aired on September 2, 2006. | |
Show Topic:
On today's show we discuss the topic of student loans and dealing with student loan debt. We'll outline what programs are available to students, what the rules are with respect to repayment, and how they can or cannot be used in an insolvency proceeding.
Guests:
Ted Michalos and Scott Schaefer joined us from the firm of Hoyes Michalos Trustees in Bankruptcy. Ted and his partner Doug Hoyes started the firm in 1999 and have helped thousands of clients deal with their money problems and get a "fresh start". Scott is an Insolvency and tax professional based in the Kitchener office of Hoyes Michalos.
Show Summary:
There are many types of financial assistance programs available to students. In Ontario, OSAP is the most widely known. The Government of Canada offers a student loan program as well. The major banks have also created student lines of credit but, as our guests warned, these are not government programs, provide no interest relief and can be a risky way to finance your education. With government programs, graduates should begin to re-pay their loans 6 months after they complete their studies.
Scott talked about interest relief as an option on government plans if re-payment becomes challenging. It is important to remember that tax refunds can be taken by the Student Loan Program for non-payment of student loans. In regards to dealing with student loan debt, parents or guardians are not responsible for re-payment unless they have signed as a co-signer on the loan. The student that borrows is responsible for re-payment.
Our guests also spoke about the "10 Year Rule" according to which you cannot use student loans in an insolvency proceeding until you have been out of school for 10 years.
Question of the Week:
Q: I graduated 2 years ago from a university program and am finding it hard to keep up on living expenses, let alone pay off my student loan debts. A friend suggested that I should consider personal bankruptcy as a possibility. Is this wise?
A: Our guests suggested that due to the 10 year rule and its regulations, a consumer proposal or bankruptcy may not be feasible and that, instead, a Debt Management Program may be the best recourse. Scott pointed out that it is vital to have a plan; you have to look at income, expenses - including your student loans, and plan how to deal with your obligations and responsibilities.
Don't let your money problems overwhelm you, contact a licensed bankruptcy trustee today for more information about student loans and options available for dealing with student loan debt.