Ryfujk

I've got one year of University left and luckily I've managed to stash around ~$18k in savings that my expenses never cut into. My tuition for my last year will probably be around $13k.

I hate the idea of being in debt - but aside from emptying my savings account, the alternative is that I take OSAP to cover my tuition and pay it back +3.5% over the course of five years or so. Roughly $300 a month. I'm a bit paranoid about money - I keep two checking accounts as buffers with between 500 - 1000 dollars available at short notice in each of them in case of emergency, and then my savings account is there to accrue interest on money I never intend to spend. That's why I hate the idea of emptying out my savings on tuition - I feel like I'm removing a large portion of my stack of hay that'd catch my fall.

1. Does anyone think the direction the Ontario Government is moving in
   will mean my OSAP payments may get less forgiving rather than more?


2. Am I setting myself up to be bamboozled by my government?


3. Should I bite the bullet and live paycheck-to-paycheck until I get a job in order to avoid that bamboozling?

To note, my prospects seem ok - I'm on a well-paying internship right now for 14 months and they seem willing to take me on once I graduate. Any advice appreciated. Thanks.

According to the OSAP website you will not be charged interest until 6 months after you graduate for the Ontario portion of your loans (Canada portion accrues interest immediately after graduation). The loans are interest and payment free while enrolled full-time.

That means for the next year or year and a half you could earn interest on your savings and have extra cushion at no cost to you.

Live frugally while in school and you can pay off all or most of the loans before you start accruing interest. Even if you can't pay it all off, you'll be paying a relatively small amount of interest. The rate is not fixed currently, it's based on prime rate when your first payment is due, so the main risk is skyrocketing interest rates in the near future, but this is unlikely.

If the lack of savings will cause you anxiety over the next year, then taking a loan seems worth it. If any portion of what you can get from OSAP is grant, you can take that without hesitation.

Both your aversion to debt and your aversion to living paycheck-to-paycheck are admirable. Many people live in both of those states.

Fortunately, if I am reading your question correctly, you can avoid both. You currently have $18k in your savings, and your tuition for the upcoming year is only $13k. This means that if you pay cash for your tuition, you will be left with $5k in your savings account. That is a great emergency fund for a student. In addition, you are currently employed at a "well-paying" job, so your income should cover your living expenses for the next year.

Congratulations on saving up so much in your savings account, but you don't need to be afraid to spend it. Education in a marketable skill is a great thing to spend money on, and you will still have enough cash left to cushion you from unforeseen situations.

3.5% is not exactly a high interest loan, but it is certainly much more than you are earning in your savings account. It doesn't make sense to sit on a pile of cash that you don't need and borrow money at the same time.

This question has the ability to degenerate into a political argument, so I will not address the potential "Ontario bamboozlment".

Its great that you hate debt despite the avocation of taking on debt from the media. Guess who the media works for? Banks, and others who profit from consumers taking on debt. Your instincts are right on.

First I would go to my current employer. Do they want to take you on after you graduate? Would they be willing to help you with your current tuition? Can you negotiate something where everyone agrees on post graduation salary and they either help you with tuition or even bump your salary? That could solve your issue right there.

There was a study done where most emergencies people experience are less than $1,000. You will have 5 times that amount, and it will only be for a short time.

Failing that I would use savings. You will still have some buffer and that small buffer will help you curb spending until you have your savings replenished anyway.

Even if you do decide to do the student loan, I would not take the three years to pay it off. Get that thing paid off in a year or less. Just continue to live like a student, and throw all extra cash at the debt.