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chezjackie

Loan Repayment

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Hello, 

Could you nice folks please share your experience with debt repayment. I am currently taking OSAP and have a line of credit. With one more year of law to go I am starting to think about paying back this debt. 

How did you manage this repayment process? Do banks offer a line of credit through articling? Did you use your line of credit to first pay off osap? 

 

Any tips would be so appreciated :)

Have a lovely day!

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I paid off OSAP with my line of credit as the interest rate is lower. I would also do it asap after finishing school because interest from OSAP begins to accrue right away even though OSAP doesn't contact you for repayment until about 6 months after graduation. 

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Before paying everything off with a LOC, check if you'll be eligible for repayment assistance from the government.

This applies especially to people with kids as the income assessment is based on family size!

If you are, they might cover all/a portion of your interest payment for 6 months after which you will have to apply again (can do that up to 10 times but hopefully your income will eventually rise over the threshold amounts). Repayment assistance doesn't start until 6 months after graduation so you will have to pay the interest that accumulated during that time, but it might be still worth it if you get another year or so completely interest-free after that. 

https://www.canada.ca/en/employment-social-development/services/education/repayment-assistance-plan.html

 

 

 

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On 2018-04-19 at 2:17 PM, GOT123 said:

I paid off OSAP with my line of credit as the interest rate is lower. I would also do it asap after finishing school because interest from OSAP begins to accrue right away even though OSAP doesn't contact you for repayment until about 6 months after graduation. 

for osap, are you still considered a student while you're articling? or does loan repayment begin once you finish 3L?

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7 hours ago, pinkroses said:

for osap, are you still considered a student while you're articling? or does loan repayment begin once you finish 3L?

OSAP does not consider one a student while articling (or doing any kind of [paid?] internship, including the LPP work placement); and you have to make payments starting 6 months after the end of you law school studies. Interest accrues during those 6 months. OTOH, the 4-month "virtual" part of the LPP at Ryerson or uOttawa is considered a hybrid period, during which you may defer payment and interest does not accrue if you apply for that deferral.

Further, if there are periods of low or no income before or after articling/LPP you may aapply for Repayment Assistance, which effectively freezes your loan repayment obligations and outstanding balance for six months [interest payments are made by the government; and you are not expected to make payments, or make partial payments towards loan principal, geared to income].

Caveat: not legal advice--read the applicable information provided by the loan program, and the applicable legislative framework for full details.

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I graduated with a hefty LOC and full student loans (not OSAP but its probably similar).

If your income is below a certain level you can apply for repayment assistance. You can apply more than once. 

When I stopped qualifying for repayment assistance I maxed out my LOC and used some savings to pay off the government loans, because the interest rate is higher. While you can deduct the interest charged on government student loans on your taxes and cannot necessarily do so with private LOCs, not paying a hundred dollars in tax each year is nothing as good as not paying a thousand dollars of interest each year.

The bank charged me interest all the way through law school and articling but didn't ask for repayment until a year after I was done articling. And I had that LOC until that time, too. When the time came it became a normal loan and I got them to stretch out the repayment as much as possible without the interest rate going up. Then I paid off the loan quickly with large lump sum payments (around $20,000 per year on top of the usual payments). Loan was paid off in 3.5 years, just in time before the bank raised its interest rates.

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Could someone explain what is the process for the repayment of Scotiabank Line of Credit? For example, over what period does it need to be repaid, etc. 

I believe when you start articling they increase your maximum credit by 10k. Can someone also confirm this?

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4 hours ago, chirico said:

Could someone explain what is the process for the repayment of Scotiabank Line of Credit? For example, over what period does it need to be repaid, etc. 

I believe when you start articling they increase your maximum credit by 10k. Can someone also confirm this?

Got an extra 10k when articling started. They also count articling as one year of school, so your LOC remains available for one year after articling. Ie. As a first year associate my LOC has yet to convert to a loan. 

Once your one year is up, it converts to a loan with monthly payment requirements

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I'm from kind of a modest background, and when I was working my way through undergrad in Manitoba the minimum wage was still $6.00 -- so I needed my full OSAP and LOC to cover expenses.  I graduated with $130k in debt accumulated over three degrees.

I'm a sixth-year associate on Bay Street and should be killing the last of it off in December.  I know that sounds awful, but I was also supporting two dependents in a (rented) detached house... with >$1k/mo daycare fees... in Toronto; and we made the decision after the kid was born not to minimize our quality of life to maximize repayment chunks.

I guess another way of saying it is, no matter how bad it is or how many obligations you have, the debt can go away even on a comfortable lifestyle over about six or seven years of practicing downtown.  But I certainly wouldn't bank on that.  Virtually no one gets these jobs and guts it out this long.  At this point I can count the number of my classmates still on Bay Street on two hands.

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On 4/26/2018 at 10:17 PM, TKNumber3 said:

Got an extra 10k when articling started. They also count articling as one year of school, so your LOC remains available for one year after articling. Ie. As a first year associate my LOC has yet to convert to a loan. 

Once your one year is up, it converts to a loan with monthly payment requirements

I thought it was 6 months after articling ends, I am glad to see that it is one year.

Do you know what is the maximum of time you can spread the loan over? Is it usually over 10 years?

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On 4/26/2018 at 11:50 PM, Uriel said:

I'm from kind of a modest background, and when I was working my way through undergrad in Manitoba the minimum wage was still $6.00 -- so I needed my full OSAP and LOC to cover expenses.  I graduated with $130k in debt accumulated over three degrees.

I'm a sixth-year associate on Bay Street and should be killing the last of it off in December.  I know that sounds awful, but I was also supporting two dependents in a (rented) detached house... with >$1k/mo daycare fees... in Toronto; and we made the decision after the kid was born not to minimize our quality of life to maximize repayment chunks.

I guess another way of saying it is, no matter how bad it is or how many obligations you have, the debt can go away even on a comfortable lifestyle over about six or seven years of practicing downtown.  But I certainly wouldn't bank on that.  Virtually no one gets these jobs and guts it out this long.  At this point I can count the number of my classmates still on Bay Street on two hands.

Thank you sincerely for sharing your experience. 

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