Canadian Student Loans (OSAP) Part 2

I couldn't hold out long, Ive got to get back to my favorite topic...STUDENT LOANS.

For this second installment, I'm going to address the scam that is "The Grace Period".
For those of you still in college/university, or for those about to start, you should find this valuable. When I graduated from university two years ago, I called the student loan center to inquire about what I needed to do to arrange repayment. I was told that all students received a 6 month grace period before repayment. "Fantastic", I thought. I could focus on getting a job and not worry about repayment. Besides, I was moving back to Toronto. I had things like first and last months rent, work clothes etc to worry about.

Fast forward to November. I've landed a job and Ive started to stash money away for a house and for my good friend student loan. Sure enough, I receive forms in the mail so that I can arrange for my monthly payments to be taken out of my bank account. I receive 4 of these forms to fill out and send back in. You see, while I was in school, the government couldn't make up their mind on who was going to fund student loans and how they would be administered, but I'll save that story for a later post.

So I look at these forms that are sent to me. The form outlines what you owe, what the minimum payment is, how many months it will take you to pay off your loan at the min payment etc.. But there was one line I didn't understand, "Capitalized Interest". Between all 4 forms this amount exceeded $1200. I called to find out. I was told that this was the interest that was adding up over the last six months. I questioned: "but what about the grace period I was told about". Response:" Sir, during the grace period you don't have to make any payments, but you still owe for interest".

I WAS FURIOUS!!!! I tried to be proactive about my loans, I wanted to start paying back sooner. I didn't have $1200 extra to be handing to the bank. WHAT A SCAM!!!! There was nothing I could do. I just had to suck it up.

Fast forward to 4 months ago. My fiance is graduating from school and already has a job lined up. She will be starting the second she is done. I tell her about what I went through and to start paying back your loans immediately. So I call the student loan center on her behalf (She had to log in and then hand the phone off once she was speaking to one of the administrators). I tell the person on the other end that my fiance would like to start paying back immediately. I have our banking information ready and would like to set up recurring withdrawals.

Her response: "Sir, you realize your fiance is in her grace period".
I'm upset now: "Yes I realize that, but we can afford to pay now and we don't want to deal with compounding interest".
The attendant: "Sir, recurring payments cannot be set up during the grace period".
Even more upset: " What do you mean I cant make payments? Do you mean to tell me that we just have to sit back while the interest runs up (see my first posting for how big the interest is on student loans in Canada)? They don't tell you about this part of the scam while you are in school?"
Her reply: " You can make payments during the grace period, you just have to make them manually."
I'm told that in order to make manual payments, I need to use online or telephone banking and set up a payee with the account number equal to my fiance's student loan number. Here is the catch, we don't know her loan numbers. Had we not called, we would have waited until the end of the grace period to receive them.

Anyway, the moral of the story is that Canadian student loans are a big bloody scam. Call them the day you graduate. Get your loan number and start repayment immediately. Otherwise, its like dealing with the mob, the juice gets added to the principle and the clock keeps running.

Thanks for listening to my rant, I hope you learned something.

Until next time.