One Gauntlet reporter takes a critical, student-oriented look at the student loan program, revealing the hot spots and pitfalls every student should be aware of.
If high tuition is getting you down, take heart: you're not alone.
"We're now seeing over 50 per cent of U of C students turn to student loans to finance all or part of their education" explained Oliver Bladek, Vice-president External of the University of Calgary Students' Union.
The average student in Alberta now graduates with over $18,000 in debt due to the student loans needed to finance the rising cost of education. Student loans come in two portions: federal and provincial. Some of the rules covering the two are similar while some are not. In Alberta, Edulinx Corporation Canada now processes both federal and provincial loans. Edulinx is a private company owned by an American corporation and CIBC, and the change has resulted in loan processing by Edulinx at Canada Post outlets instead of at banks. Edulinx will also be present on campus to process loans until the end of September.
If you have ever applied for a student loan you are aware of some of the frustrations that go along with the system. Students are often refused loans or do not receive enough to meet their needs. Alberta's Minister of Learning has often stated that tuition is not a problem for students because students can get loans. The Minister has often acknowledged, however, that student debt is a problem. And when it comes to student loans Alberta students don't appear to be sharing the "Alberta Advantage."
The loan application process works by examining your income and expenses. There are problems with how the government calculates both, however.
The provincial government allocates just over $700 per month for a living allowance, and Bladek outlined other unrealistic expense assessments currently used by the government.
"The government only allocates $160 per month for food," he said. "Try and find me any sane individual that can live off of $1.75 per meal. In addition, you're only allocated $310 per month, including utilities, for housing. If you find a place like that let me know! The average cost of residence even with the smallest meal plan costs far more than these amounts."
Bladek lobbies for changes to the Student Loan Program provincially as Chair of the Council of Alberta University Students, and federally through the Canadian Alliance of Student Associations. He emphasized that changing the needs-assessment system for provincial loans is one of CAUS' priorities for the year.
Your summer income is required for your application, but it's not just your income that is looked at. When examining income for a loan application, the government considers both the student's income and the parents', a move that has been criticized by student lobby groups.
"Unless you've been working for two full one-year terms, or are four years out of high school, the government expects your parents to contribute financially to your education," explains Bladek.
"Most students aren't aware that there is an expectation that parents must contribute as well," stated Jerry Bellikka, a spokesman for Alberta Learning.
If your parents refuse to contribute money to you, it is still considered in the calculation of your income. Likewise, if your parents are unable to contribute because of their own financial burdens there is no break from the government.
There is also a maximum loan amount of $10,700 per year, even if your need is calculated higher than that. There are some exceptions made for very high-needs individuals, however.
Those students hoping to work to make up the shortfall from their student loans should think again. The government even makes that difficult. Any wages you make above $225 per month are deducted.
"Don't try hiding it from the government," advised Bladek, "they compare Income Tax records against what you claim on your loan application."
Despite all the inherent problems with the loan system there are some tips that can help to make the most of an application. There are also some programs in place to help students. All advise being completely truthful on applications, as the government does audit them.
Bladek recommended students report all their expenses on their application and to budget realistically for the year. He also advised students against "blowing" their loan in September.
"It's much easier to be frugal in the first few months, then have extra leftover at the end, instead of the other way around," he said. "Take the 'living allowance' portion of your loan, and promise yourself that you'll only use one quarter of it for each month that you're at school. This will be hard, but it will help you in the long run."
It is important to maintain full-time student status while you are collecting student loans as well.
"Going from three to two courses can really screw up your student loan," said Bladek. "If you do make such a change, chances are that when you report this to the government, as you are required to do, then they will require immediate repayment of a majority of your current loan."
If you are considering dropping to part-time status you should visit the Financial Aid Office or talk to the Students' Union to find out how the change will affect your loan.
One positive aspect about the Alberta Student Loan Program is that it provides some relief to those with high debt. If you take out loans greater than $5,000 per year the government will absorb everything after the $5,000. The remission is also now automatic. This is great for students who qualify, but it does not help students who take out less than $5,000 in loans.
For more information regarding student loans, contact Student Financial Aid at 220-6925, the Student Finance Board at 297-6344 or 1-800-O-CANADA for federally-administered loans.