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Thread: Should I Consolidate?

  1. #1
    Frosh Canuck
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    Trying to figure out if the best move for me right now would be to try to get a bank loan or line of credit to consolidate some debt...
    Here are the details of my situation.

    I have about $46000 in student debt right now -
    $30 000 on a student line of credit from the bank (RBC) at 4% interest, and $16 000 due to OSAP at 5.5% interest.
    The OSAP was originally about $20 000 (less than a year ago) but I have had a very well paying contract for the past 4 months, and I've been paying it down agressively.

    I also have about $5000 in savings. I also have a part time job, which will help me with expenses and whatnot until I can get something else full-time, but the hours there can vary greatly from week to week.

    Currently my line of credit is still interest-only payments, but that's going to change soon.
    As I said, I've been working on agressively paying down my OSAP, but with my current contract ending soon, I'm going to be pulling back on that plan for a while. I will still pay extra when I can, but I need to make sure my living expenses are covered first, each month. As long as the LOC is still interest-only, I shouldn't have trouble making the payments but once it goes into full repayment that could be an issue.

    Thoughts?

    thanks!
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  2. #2
    searching for answers i_forget's Avatar
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    Look into repayment assistance. You need to be able to live so they can adjust your payments based on your income and situation.

  3. #3
    Luv Saving People Money MortgageQueen's Avatar
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    Don't touch your savings. . . you say your contract is ending soon, but not what your future employment or finances are?? you keep those savings as an emergency fund and don't touch them unles you have a Real LIVE emergency.
    Give us a few more details in order to advise? . . . .

  4. #4
    Canadian Genius Insane's Avatar
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    Don't consolidate your OSAP just yet. Once you do that you don't have access to repayment assistance. Check out canlearn.ca for more info.

    Also it has been my experience that not all banks "remember" to switch you over when your interest only period ends. I can't speak for RBC but some of the banks take years to finally do it.
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  5. #5
    Financial Advisor ashedfc's Avatar
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    I would say, its too premature to consolidate..
    RBC is interest only at 4% (why bother)
    & OSAP as the previous post mentioned the benefit of repayment assistance..

    Leave them as it is (the benefit of consolidation is too insignificant/or isn't there at all),
    Save some more money & plan ahead.

  6. #6
    Canadian Genius Insane's Avatar
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    Quote Originally Posted by Insane View Post
    Don't consolidate your OSAP just yet. Once you do that you don't have access to repayment assistance. Check out canlearn.ca for more info.

    Also it has been my experience that not all banks "remember" to switch you over when your interest only period ends. I can't speak for RBC but some of the banks take years to finally do it.
    I should add that when the bank finally sent me a letter about my student LOC they said I needed to come in and sign papers to convert it to a regular LOC or a regular loan or I would no longer be able to withdrawl from it (which was no big deal to me!!) Why would I go in and sign papers making me pay a higher interest rate? So I refused to go in and sign new loan papers meaning I was able to keep the low interest rate on my loan (and interest only status) until it was done.
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    I'm not sure if I'm correct because I'm in BC but isn't the student loan interest from your OSAP tax deductable and your RBC line of credit is not. If RBC is likely to raise your rate I would be paying the least amount on the OSAP loan and put as much as possible on the RBC loan.

  8. #8
    Frosh Canuck
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    Quote Originally Posted by MortgageQueen View Post
    Don't touch your savings. . . you say your contract is ending soon, but not what your future employment or finances are?? you keep those savings as an emergency fund and don't touch them unles you have a Real LIVE emergency.
    Give us a few more details in order to advise? . . . .
    Starting on Thursday (last day of this contract) my only income will be the part time job, until I can find another "main" job. The P/t job pays $14.30/hour and the hours can really vary - some weeks I could get close to full time hours, and other weeks I might get one or two shifts (it's a security job at a convention centre, so number of hours for part timers are based on how busy the centre is any given week). My plan is to do my best to survive off of that income, but the savings are there for the months where my hours aren't quite enough to cover rent...

    Quote Originally Posted by Insane View Post
    Don't consolidate your OSAP just yet. Once you do that you don't have access to repayment assistance. Check out canlearn.ca for more info.

    Also it has been my experience that not all banks "remember" to switch you over when your interest only period ends. I can't speak for RBC but some of the banks take years to finally do it.

    Yeah, I'm sort of hoping that this becomes the case!

  9. #9
    Frosh Canuck
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    Quote Originally Posted by Kayotic View Post
    I'm not sure if I'm correct because I'm in BC but isn't the student loan interest from your OSAP tax deductable and your RBC line of credit is not. If RBC is likely to raise your rate I would be paying the least amount on the OSAP loan and put as much as possible on the RBC loan.

    If my RBC rate rises, this is the strategy I'll take, but right now the interest on the OSAP loan is (slightly) higher.

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