In my first two years of university, my grandfather co-signed for a student line of credit of $20,000 (10k/year). I was able to put myself through third year without borrowing any additional money. My fourth year, I was "given" $13,000 from government funding. I have been "given" another $12,000 for teacher's college. So I have a total of $45,000** in student debt experience to draw from.
Bank Student Line of Credit
- Full access to the entire amount instantly (I applied in July '07 and had access to the money the same month)
- Revolving credit: any amount I pay off I have access to again.
- Low low interest rates (mine is prime+1%)
- Monthly interest only payments. (Interest only is great but its still a payment)
- Interest accrues
- Co-signer required (for most people)
- Possibility to mismanage money as its all available immediately (think 3 months beer fund... no tuition payment made)
Provincial/Federal Integrate Loan (OSAP)
- (In Ontario) No matter how much is loaned the government caps your debt at $7,300/year. ** So my actual student debt is only $30,000. I also received some low-income family grants.
- No payments to worry about until after graduation, but I have an account number I could pay if I wanted.
- No co-signer (for the first 4 years following highschool graduation parental income information is used to determine need but they are not responsible for the loan)
- Interest doesn't accrue until after graduation.
- I have no idea what my interest rate is. While I've found some sources that say is low (prime+ 1-2%), I've also seen some sources that show it being much higher (17.9% or more)
- Extremely lengthy process at the beginning of the semester to get your funds. Including a trip to 2 different rooms on campus and the post office in some cases.
- Application is due in June and funds aren't available until the beginning of the semester. And it takes about a week (or more) following the procedure in the previous point for the funds to find their way to your account.
- 60% of the funds are deposited in September and remain 40% are deposit in January.
- Lump sum payment not revolving credit
Overall, both have their positives and negatives but I would recommend that EVERYONE should apply for their government funding first and subsidize with bank loans if necessary. The benefits of no interest, no payments and the grants makes the extremely complicated application and collection processes worth it (at least from my experience)!!
Please share your student loan stories.. Are your experiences similar?