Tapping into Student Loans

As high school students and their parents receive the acceptance letters from the various Colleges and Universities they’ve applied to; many parents are now wondering how these very important post-secondary educations are going to be paid for.

University costs about $5,000 per year for courses alone. If your child is going out-of-town for school you can add another $10,000 for accommodation and meals. A basic four-year program can cost $60,000.

In addition to contributing money earned from part-time and summer jobs, students can also apply for help from a number of loan and grant programs. In fact, in Ontario about 55% of post secondary students receive some type of loan. 

The Canada Student Loans Program provides loans and grants to Canadians attending a University, College, Trade School, or Vocational School, if they need help financing their education. There are also provincial programs.  Depending on what province you live in you may have to apply for two loans. Certain provinces like Ontario have integrated their provincial programs with the federal one.

Loans are awarded on the basis of financial need. For example, a single student could receive up to $350 per week or $11,900 per year from the Canada-Ontario integrated student loan. The amount of loan your child will get depends on the child's income, the parent's income, how much the program will cost and how much the student can pay towards those costs. Students have to start paying the loans back six months after they leave school. Interest rates are different for provincial and national portions of the loan.

Students can also apply for grants that do not have to be paid back. Changes in the 2008 budget introduced a consolidated Canada Student Grant for the 2009 school year which will pay students from low-income families $250 each month while students from middle-class families receive $100 per month. These grants do not have to be repaid.

A post secondary education can be a very important investment in a teenager's life. There are many different ways to pay for that education, planning early always helps.  However, for those with post-secondary school looming in the fall and don’t have enough in the RESPs; you might want to contact the various organizations that offer loans, grants and scholarships so that if your children want to extend their studies, they can.

Have a great weekend,

Tracey

Source: Dynamic Funds, original article by Terri Williams, CFP, is Vice President, Editorial Services and Production for DundeeWealth Inc.

Canadians CRUSH Their ‘Bad’ Debt

The growth of Canadian non-mortgage debt has dropped 30% over the past year; according to Canada’s National Credit Trends report from Equifax.

The report also points out that even while Canadians are continuing to reduce the balance owing on their credit cards, they are not increasing their overall debt levels through bank loans and lines of credit.  

Total consumer non-mortgage indebtedness; or what we Financial Planners call ‘bad debt’ only increased 3.1% over the past 12 months ending June 30^th 2012, in comparison to 4.4% during the same time period last year.

“Non-mortgage consumer indebtedness has increased at a very moderate rate, with most of the growth coming from people’s existing credit facilities, as opposed to opening new accounts,” says Nadim Abdo Equifax’s vice president, consulting and analytical services, “We are also seeing a continued decrease in serious consumer delinquency and bankruptcy.”

The credit product that showed the largest increase in outstanding debt was auto financing, this number jumped 8%.

 

With debt being the major issue causing the 2008 Financial crisis; and the more recent media obsession with the European debt problems; it is not surprising consumer demand for new credit is now 6% lower than it was four years ago.

Managing debt is an important part of your overall Financial Plan; if you haven’t already joined the trend, don’t be embarrassed or afraid to ask me how to prioritize debt payments or strategize a debt payment schedule.  Like I always say, you increase your wealth two ways, saving and investing; or paying down your debt.

Have a great weekend,

Tracey

Source Advisor.ca

Are Summer Hours Bad for Business?

We all like to take off early on a Friday afternoon when the sun is shining during the summer months; but according to a study by Captivate Network ongoing summer hours are indeed bad for both businesses and their employees.

Summer itself has a negative impact on the workplace – productivity dips 20%, employee attendance decreases 19% and 45% of workers are distracted.  Furthermore, of those who opt for summer hours and leave early on Fridays report higher stress levels (23%), as well as reduced productivity (53%), as they try and make up those hours Monday to Thursday.

So while everyone enjoys four-day workweeks or shorter hours, Mike DiFranza of Captivate Network feels it is time we reconsider these policies.

The News is not all bad;

On the positive side, telecommuting is one summer option that actually has a positive impact, with 26% of respondents reporting an increase in productivity.  Unfortunately, only 4% of companies offer this option.

Additional Findings:

·         12% of companies offer increased hours M-TH; of these 52% of the employees report a decrease in productivity and 23% report increased stress

·         4% of companies close early on Fridays; 80% of their employees report decreased productivity

·         10% of companies offer early arrival/departure; 51% of employees report decreased productivity; 21% feel more stressed

·         23% of companies don’t have a specific summer hour policy; 52% report decreased productivity

Well regardless of what the study says summer is short; I believe the distraction is more about getting outside and enjoying the warm weather while it is here.  Before we know it the leaves will be changing colours and we will be racing around getting back into our busy routines.

Working from the cottage on a Friday afternoon, have a great weekend,

Tracey

Source: Advisor .ca

Housing Bubble Burst? So What

So far, we Canadians have avoided the kind of catastrophic housing crash our neighbors south of the boarder experienced during the 2008 financial crisis.  And although a popping of Canada’s housing bubble would unlikely affect the global markets, it would be a downer domestically.

 Most people calculate their net worth largely based on the value of their homes.  The average Canadian household has a net-worth of $400,000 and home equity accounts for about 38% of it.  According to a study by the debt-rating agency DBRS; housing values could drop up to 40% and the average household could withstand it, providing their other assets remain intact.

Recent changes to the Canada Mortgage and Housing Corp. rules; was one of the latest moves by the federal government to slow the accumulation of debt by Canadian households.  These changes include the maximum term for insured mortgages was reduced from 30 to 25 years, and homes that cost over $1 million will no longer qualify for coverage.  Furthermore, the limit on refinancing loans was reduced to 80% of the value of the home, down from 85%.

Although Canadians are in a better position than most; mortgage debt has made a serious impact on disposable income.  Debt has risen from 73% to 153%.  The goal of the DBRS study was to make Canadians feel more secure about their debt levels.  So even if the housing bubble bursts; most likely people won’t default on their mortgage, they will have simply paid too much for their house.

I have always said you increase your wealth two ways; invest your money, or pay down your debt.  If you are nervous with the markets being so volatile lately, maybe it is a good idea to use that extra cash to pay down your mortgage.

Have a great weekend, and stay cool!

Tracey

Source: Advisor.ca