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In my opinion

Let OSAP teach financial management

How students on scholarship could learn to manage their debt.


An average Canadian full-time undergraduate student in the 2012-13 academic year paid $5,581 in tuition fees, according to Statistics Canada. That is five percent more than the previous academic year, which in turn was 4.3 percent higher than the year before that.

Despite rising tuition fees, enrolment in postsecondary education shows no signs of slowing down. In 2012, more than a million students confirmed their acceptance to first-year undergraduate studies, according to the Association of Universities and Colleges of Canada. That figure doesn’t include college applicants.

Each year, high school graduates decide to pursue postsecondary education because it’s almost become a necessity in today’s job market. Students know that it is not cheap, and many students in Ontario must rely on Ontario Student Assistance Program (OSAP) to cover their tuition.

OSAP is a great way to invest in one’s future, because of the six-month grace period after graduation (note: be aware that interest still accumulates during these six months). Moreover, OSAP takes cost of living expenses and school supplies into consideration, calculating the needs of students based on their (or sometimes their parents’) income and living situations.

However, the problem is that OSAP gives out a large amount of money to young students who have no understanding of how to control spending.

Students, upon graduating high school, are 17 or 18 years of age. Most of them have never moved out of their parents’ home before, and so never had to budget their money for food, rent and other necessities. OSAP expects students as young as 17 to spend large amounts wisely throughout their school year.

It’s wrong to assume that students can manage large sums of money, and OSAP should not hand it out without offering personal finance workshops to postsecondary students.

A personal finance workshop can be something as simple as a one-day presentation, explaining spending and debt management and the importance of a savings account. It could even be offered as an online course that requires a test, to ensure that the student understands the information thoroughly.

During my undergraduate years, I’ve seen so many students treat their OSAP loan as free money. I remember a friend’s roommate who blew about $10,000 of OSAP money on partying by the start of her second semester. I’ve also met many undergrads who indulge in vacations with loan money. “I need this vacation” or “I can just pay it off later” are common responses.

We need to do more than shake our heads at these unwise spending habits, which don’t in themselves mean that students are “stupid.” Rather, the practice just shows students’ lack of money management skills. While they understand the concept of interest on debt, they don’t understand how it can affect their future. Young people are deeply immersed in today’s consumer culture, with lots of expensive “toys” marketed towards them. In our consumerist society, even adults often have a hard time differentiating their needs and wants. How do we expect recent high school graduates to do so?

Although not everyone will qualify for the maximum loan, nonetheless a single student can receive up to $12,240 for a school year that consists of 34 weeks. At 18 or 19, students have a hard time understanding that the average salary for recent graduate won’t be enough to pay off the average student debt of around $26,000 by the time of graduation (for those who graduate with debt). That’s if they’re lucky enough to find a job after finishing undergraduate studies.

Recently, OSAP added the option to have the Ontario program pay the school’s tuition directly, on behalf of the student. While this is a good start, it’s not enough. Students in their last of high school will be applying for universities and colleges soon, for the 2014-15 academic year. Many of them will also be applying for OSAP.

If we’re going to raise the requirement of education for our children, we need to also provide with training, especially when it comes to money. Some say money can’t buy happiness, but bad money management certainly can lead to unhappiness, and future woes.

Julienne Bay, who graduated from the University of Toronto in 2008, is in her second and final year of a journalism program at Humber College.


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  1. Jennifer / October 23, 2013 at 16:17

    I would like make a correction to the article.

    As per the National Student Loan Service Centre website (which is the body to which students must repay their OSAP loans), OSAP loans are NOT interest free during the 6 months grace window once they are no longer in full-time studies. Interest is accruing, however loan recipients are not expected to start repayment until the end of the 6 month window.

    Please make this correction as it is a common misconception among students receiving OSAP which can have significant financial implications.

    Thank you.

  2. Chris / October 24, 2013 at 09:39

    Average student debt is not $37,000, it’s closer to 24-26 thousand for those with debt. If you average ALL students (those with and without), it’s lower.

    37,000 is for students with both public (OSAP) and private (bank loans) debt, this is only about 15-18 percent of students, and is FAR from the average.

    Here’s my source for that:

    CFS is not a reliable data source for anything related to financial aid.

  3. Nicole / October 27, 2013 at 13:52

    I completely agree with this article. Ill be attending university next year and am trying to understand how osap works, their sites aren’t very helpful. Is the loan interest free while your still in school? For example would you be able to pay it back while still in school without having interest accumulate on it? And what if I don’t need all the money their going to give me. What do I do with the money. Ex my parents are paying for everything except living expenses so I only need osap for that. Is there anywhere I can go where they can explain it to me?

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