In years gone by a student going to university had a part-time job or at least a full-time job during the summer to help finance his tuition and other costs. If your parents could help, great, if not there were a few scholarships and bursaries that you would try to get. If a student could not afford to go to university, they would apply to a college or trade school where you could earn some money as an apprentice while you studied.
Times change. Now, there is a sense that every person is entitled to a university education regardless of whether they can afford it or not. The Federal and Provincial Government have now set aside hundreds of millions of dollars to assist those students whose ability to pay tuition, even with help from parents, falls short of the actual tuition costs. That is the good part – money is available to those who need it.
However, there are those students who apply for and receive Canada or OSAP (Ontario Student Assistance Plan) funds that are more than they need for tuition. I understand that at age 17-18, there has been little financial training in your life for budgeting and you really want that TV, lap top, Canada Goose jacket or trip to Fort Lauderdale at spring break. And, hey, the loan is interest free and it is several years until you graduate and have to start paying it back. That is the trouble. Over the years at school, you can build up a huge debt so that when you do graduate and find a job, you are saddled with debt payments which will take many years to pay off. And this is the time when you are building a personal relationship with someone and starting a life career.
We do not advocate taking the loans that you do not need. We do ask that you consider the long term effect of taking a loan higher than you actually do need. This is not “play money” like when you were a child. This is real money that will eventually have to be paid back by yourself with interest. Decide wisely what is in your long term best interest.
Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.
University students will often receive unsolicited and/or pre-approved applications for credit cards. Perhaps financial institutions specifically target students to apply for credit cards? It is a tempting offer for someone on a tight budget who needs the extra cash for books, pub night or a pizza delivery. The cards usually have a low limit of about $1000.00 so it is not a “big deal.”
However, banks are not targeting students to be “nice”. They want to be the one of the few credit cards that you have in your wallet because after you graduate and start your career the card limit can be increased. In the meantime, financial institutions rely on students only making small or minimum monthly payments on balances. Not only do students usually only pay minimum payments, they also don’t usually think about the extra interest they are paying on top of the original balance. In other words, financial institutions make more money from minimum payments each month. Be cautious, look at the interest rate and look beyond the advertised low introductory rate.
We live in a “plastic society.” There is nothing wrong with having a credit card for emergencies and for large cash purchases. Just make sure that you stay financially responsible, pay off your monthly balance every month and use credit wisely. Be financially responsible now and you will reap the financial rewards in the future.
Stay Financially Savvy.
Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.
It is most often true that the higher your level of education is the higher your income will be in the future. The trouble is that education in Ontario takes time and costs money. If your family pays the education costs, wonderful, but that is not the case for most students. For the student that has to pay for all or part of their education costs in Ontario and do not want to have a significant debt load on graduation there is help available. Prepare a budget showing what your tuition, books and living costs are for the year and then look how to pay for it. Help can be obtained from the school’s financial aid office/the internet or the personal banker at your local bank. If you do get a student loan do not treat it as a piggy bank for vacations, clothes or partying. It was borrowed for education- use it for that purpose. Consider getting a part-time job. Just make sure that you balance the working hours and school hours so that one does not affect the other. Before borrowing the student loan see if there are any grants, bursaries or prizes available for your course. Some companies in Ontario will sponsor you at university and provide summer jobs if you agree to work for them after graduation for a couple of years.
Beware of the credit cards that are mailed to students during the year. They usually have an attractive low introductory interest rate but they also have to be paid each month.
After you graduate the student loans need to be repaid. In Ontario, OSAP loans are repayable starting six months after graduation (12 months if you are working in a not-for-profit job). If it has taken too long to get a job or if you are only able to find a low paying job it is likely you will get into trouble and not be able to make you payments. ASK FOR HELP! Whether you owe student loans, credit cards or bank loans, if you have a problem making the monthly payments, phone the institution involved, explain what is going on and ask if they can help you. In most cases you will be pleasantly surprised that they will set up a reduced repayment plan with you which may even allow for a grace period of “interest only” if you have not yet, reached your income potential.
Contact Rumanek & Company Ltd. for more information on bankruptcy in Ontario and debt solutions. Please fill out the bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt in Ontario for more than 25 years.
Ways To Clean Up Your Credit Rating By: Leslee Mason
“You went on a spending spree that lasted two years. Now your credit rating is so bad even the public library turned you down for a card. Whatever the reason for your debt – a student loan, you lost your job or over used your credit cards- You’re not alone. It’s a situation thousands of Canadians, from all income brackets, experience each year. You can’t erase the past, but you can put those debts behind you and get on the road to credit recovery in as little as three years.”
Here’s How
1. Stop ducking your creditors.
“Don’t wait for a creditor to come to you. Always take the offensive position.” Advises Barb Godin, senior vice-president of consumer lending with The Bank of Nova Scotia.
Calling creditors to discuss reasonable ways of Re- paying your debt, especially in the early stages of financial trouble, can help maintain a good relationship. “Companies will often take smaller payments for a longer period of time while the individual deals with her financial circumstances,” says Gary Heatherington, senior vice-president and general manager of MasterCard International.
2. Go For Credit Counselling
“ People come to us because they’re falling further into debt and do not see any logical way out of the situation,” says Laurie Campbell, program manager with The Credit Counseling Service of Metropolitan Toronto. If you can’t reach a repayment agreement with your creditors or collection agencies, or the fear factor is too overwhelming, some credit counseling services offer no-cost/low-cost confidential help.
They’ll help you with budgeting and money management, give you a financial assessment and suggest ways you can handle your money, creditors and payments without getting further behind. For worst-case scenarios, they’ll deal with your creditors on your behalf.
“ We ask the creditors to reduce payments and stop interest,” says Campbell. Do they? According to Campbell, “Many of them are very cooperative about doing both,”
Getting help from a credit counseling service is nothing to be embarrassed about. “It’s further evidence that a person has a responsible attitude about their debt,” says
Heatherington. To find a service, Campbell stresses, “You should always look” not for profit “because you don’t want to pay high fees for a service when you’re already in financial difficulty.” For free budgeting booklet or information about help outside the Metropolitan Toronto area, call 1-800-267-2272. In Toronto call (416)-593-7434.
3. Read your credit report.
Whether you decide to tackle your debts on your own or with the help of a counseling service, you need to know how credit lenders perceive you. To do that, you need to get a copy of your credit report from Equifax Canada or Trans Union of Canada. Most derogatory information including bad debts or collections stay on your credit file for six years from the time of last activity. Creditors provide Equifax and Trans Union with information about how a person pays their bills. Equifax and Trans Union collects and assembles the information into a credit file, which is then used by credit lenders to help them decide whether or not to give you credit. Michel Globensky, assistant vice-president of administration and security with Equifax, suggests people get a copy of their report because, “The consumer should know exactly what is that Equifax has on file about them so they can be sure it’s accurate.”
The credit report takes four (4) weeks to arrive. It is easy to read and understand. When you get it, look through it carefully, and make sure the info is correct and up to date. If you find a mistake, fill out the form accompanying the credit report and return it to Equifax or Trans Union. The original information is still considered accurate until your comments are verified.
You can also ask that a statement be added to your file explaining your financial troubles.
Once your payments are under way, or have been made, get another copy of your report and make sure this has been reflected.
To get a free copy of your credit report call Equifax at 1-800-663-9980 or Trans Union at 416-593-7434.
4. Buddy up with your bank.
Since many of your finances are handled through a bank, demonstrating fiscal responsibility at one is crucial. Show the bank you can handle your income, expenses and chequing account with care. Don’t bounce cheques, and if you have overdraft protection, use it for emergencies only.
Save money by regularly putting even small amounts in your savings account (or an investment account if you have one.)
Even though you may not have a credit card, your ability to pay other bills such as cable, telephone, rent and utilities on time is an excellent way to re-establish a solid payment track record. Have a word with the assistant manager or the supervisor and make it known to them what you’re trying to do, says MasterCard’s Heatherington. Once you begin to build a reliable track record of paying bills on time, budgeting well and saving, you can approach your bank about a small loan or credit card.
If you’re confident that your days of debt are behind you, consider asking someone with a good credit history to be your guarantor for a bank loan. Beware: if you default, your guarantor is personally liable for the amount. “ If the debtor maintains payments as required, at the end of the term of the loan- typically a three-year term – we release the guarantor, and the customer now stands on her new credit record,” says Scotia bank’s Barb Godin.
5. Apply for a secured credit card.
Although they don’t officially exist in Canada, many banks including The Bank of Nova Scotia, offer this option to some of their customers. “ We have a policy that allows a customer to put a certain amount of money on deposit. We issue a card and they can effectively borrow against it.” Says Godin. After a year- or two, depending on where you do business- the bank re-evaluates whether a security deposit is still required. According to Godin, it’s typically a two to one ratio. For a $500 limit, there’s more than $1,000 worth of security. “ We do not advertise it extensively because we’re trying to target our existing customers who are trying to rehabilitate themselves and get back to financial soundness.”
Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.
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