New, upcoming grads struggle to pay OSAP loans amid COVID-19 employment crisis

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By Heidi Lee and Mariam Nouser

In March 2020, the Ontario government announced it would temporarily pause all Ontario Student Assistance Program (OSAP) payments and interest until the end of September 2020. Since Oct. 1, OSAP loan borrowers have been required to pay back their loans as normal. 

The National Student Loan Service Centre (NSLSC), which is responsible for the distribution and collection of student loans, announced that students in Ontario, British Columbia, Newfoundland and Labrador, New Brunswick and Saskatchewan were granted a freeze on both federal and provincial student loan repayments from March 30 to Sept. 30, 2020.

On Nov. 24, the House of Commons unanimously passed a motion to defer student loan repayment until May 2021. However, there has yet to be any update on whether or not there will be another extension for student loan moratorium. 

With the unemployment rate hitting an all-time high of 13.7 per cent in May 2020 according to Statistics Canada, new graduates are struggling to find jobs that allow them to make their monthly loan payments.

Fifth-year sociology student Roshanak Aktefan is planning to graduate in June, but she currently doesn’t have a job lined up. 

Although she is currently on the hunt for a job, she said she is still worried about finding a suitable occupation that could help her pay off her student loans. 

“Whether it be returning to my current job at Ryerson in the summer or finding a retail job, I am flexible as long as it pays,” said Aktefan.

She added that she wants to go to college for a social work diploma because she doesn’t think she could get “a well-paying job” with her current degree in this job climate.

“In some academic literature, young people aged 18 to 24 and new graduates are called the lockdown generation”

Behnoush Amery, senior economist at the Labour Market Information Council, said young people aged 18 to 24 and new graduates are being called the “lockdown generation” in some academic literature. 

She added that this “lockdown generation” is “facing multiple shocks from this pandemic” that’s creating both short-term consequences such as unemployment; and long-term consequences, such as longer periods of unemployment due to the difficulty of finding a job. 

Another consequence of the pandemic is “prolonged underemployment,” meaning students are finding inadequate jobs for which they are overqualified based on their degrees. These jobs pay low wages and offer limited hours. 

The impact of prolonged underemployment can be very severe, especially for young people who are also immigrants, women and persons with disabilities, according to Amery. 

Amery said prolonged underemployment for youths would not only create a negative impact on the economy but also on the wellbeing of those in the lockdown generation.

She said underemployment usually occurs when a new graduate or an experienced individual works part-time involuntarily because there are no proper full-time jobs available. This also happens when an individual takes a job that “does not reflect their actual education and skill sets.” 

“In both cases, they may earn lower than what they are capable of,” said Amery. “Earning low income for a long period of time may affect their ability to pay off their loans [and] may take longer than expected which, again, impacts the wellbeing of this generation.”

Ontario grads petitioning for another repayment freeze

When the federal student loan repayment freeze initially ended last October, Patty Facy started the Freeze NSLSC campaign to advocate for an extended deferral on student loan repayments. 

Facy, who graduated last spring from the University of Toronto’s Faculty of Information, said she and her colleagues felt like a six-month non-repayment grace period wasn’t enough for recent graduates.

“The whole point of the campaign is to bring attention to the government to the fact that recent grads are struggling a lot during COVID,” said Facy. “Not just recent grads, but also any former student with loans.”

When everything shut down back in March, Facy said she was stressed about getting a job because she needed to start repaying her student loans. 

“I am worried [that the class of 2021] will end up doing the same things that we had to do,” she said. 

The campaign launched a petition last November urging the House of Commons to extend the federal student loan non-repayment period for an additional six months.  

“The petition was initially made in the fall for the class of 2020, but all of the terms really apply as well to the class of 2021,” said Facy. “We really hope that this sets a precedent for offering relief to new grads.”

“Everyone wants a freeze in the repayment,” said Facy. “We’re not saying we’re not going to pay, we’re just going to say we want to freeze in the interest and the loan so far.”

She added that although government supports like the Canada Summer Jobs Program and Canada Emergency Student Benefit might be helpful to students, the supports basically stop when they graduate.

“Implementing a loan freeze right now is the only way to give a little bit of economic relief to all new grads who are trying to transition from being a student to being a member of the Canadian workforce,” she said.

“I am worried that the class of 2021 will end up doing the same things that we had to do”

Ryerson politics and governance alumni Daniel Lis and Taylor Leppik also launched a petition on Feb. 24 demanding another student loan freeze, as well as the improvement of services at the NSLSC. As of March 11, the petition has garnered over 17,000 signatures. 

Lis said they launched the campaign because he saw how the economy and “the nonsensical amount of student loans” have taken a toll on students during the pandemic. 

Leppik said that after the freeze ended in October, her payments restarted in November 2020 with more money being withdrawn from her bank account than prior to the pandemic. When she inquired about taking out a loan for her credit card payments, the bank informed her that her credit score had fallen below 600 points.

“It was at that point that I had a breakdown. I didn’t know what to do, I felt completely hopeless,” said Leppik.

Living together in the west-end of Toronto, Leppik and Lis said they had no choice but to give up their lease in March due to their financial situation, and will be moving back in with Lis’ family in May.

Both Leppik and Lis work full-time jobs, with Leppik working an additional part-time job to keep her student loan payments up-to-date. However, Leppik said she still hasn’t been able to meet the minimum payment being auto-withdrawn.

“It was at that point that I had a breakdown. I didn’t know what to do, I felt completely hopeless”

Chris Glover, Spadina Fort-York member of provincial parliament and the New Democrat Party (NDP) critic for Colleges and Universities, said the Ontario government must continue to put a freeze on OSAP payments until the pandemic is over.

“[The NDP] has worked with the Canadian Federation of Students with support from the College Student Alliance and the Ontario Undergraduate Student Alliance to call on the government to freeze payments,” said Glover. “Students have reached out and said they have lost jobs or have a reduced income, and are being forced to choose between groceries and paying back their OSAP debt.” 

Glover noted that the government has also cut $670 million in OSAP funding as well as removed the interest-free grace period for new graduates. 

He added that OSAP cuts have resulted in students either leaving their studies or taking on more work to fund them.

Glover said that while the cost of tuition is growing at a rapid pace, it isn’t in line with the money families and students are making. When Glover went to university in the early 1980s, it was roughly $1,000 a year for his tuition. Now, a degree like engineering can cost upwards of $11,000 for domestic students at Ryerson

Challenges of the Repayment Assistance Plan 

Although graduates can apply for the Repayment Assistance Plan (RAP), Leppik and Facy said students face a lot of confusion and difficulties when trying to contact the NSLSC. 

According to their website, the NSLSC have received a higher than usual volume of applications for the RAP and are experiencing a delay in processing requests. 

Leppik spent a couple of weeks trying to get a hold of a representative at the NSLSC in order to apply for the RAP. She said the system didn’t let her file her application online. 

Eventually the application was denied and Leppik was left with no choice but to continue with the payments. A couple of weeks later in December 2020, she received an email from the NSLSC saying she may be eligible for the assistance plan and was recommended to reapply. On Feb. 22, she received another email letting her know they were experiencing “processing delays” so she would hear back within three weeks.

Facy said after getting her six-month grace period, she had to start repaying her loan in October. Without a loan freeze, her only option was to apply for the RAP.  

“It took months for them to even respond and [because it is] online, people can’t even reach their call centre,” said Facy. 

“I’m maybe lucky in the sense that I was able to get approved for the RAP, but it’s not really a support measure because it’s so difficult to work with and it’s been so stressful for people that have to rely on it.”

CORRECTION: A previous version of this article stated that Lis and Leppik moved back in with their parents in March. Lis and Leppik recently gave up their lease and will be moving back in with Lis’ parents in May. The Eyeopener regrets this error. This article has also been updated to reflect Leppik’s most recent correspondence regarding the Repayment Assistance Plan.

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