Surviving School: My Incredible Shrinking Student Loan

“Shouldn't there be an extra zero at the end of that?”

With that question, journalist Christopher Sun kicks off the first off his short-term 'my-life-in-school' bllog on the Debt 101/Student Finance 101 website. Chris documents his first weeks of returning to school for a new diploma. Since Christopher is good at cutting the costs of school, we call his blog 'Surviving School' - in recognition of the huge financial pressures facing students these days.

With that introduction, here is his first "Surviving School" blog:

“Shouldn't there be an extra zero at the end of that?”

That was my reaction to the student loan assessment letter I got last month. It said I was approved for a paltry $960.

Yeah, $960. Why even bother lending such a small amount?

Shocked, confused and a little worried, I called StudentAid BC to find out what went wrong with my student loan application.

“Really? You gave me less because I own a boat or RV?” I asked. “Can you please tell me where it is, because I didn't know I owned one.”

Turns out I had just entered the value of my car twice.

“It's a common mistake,” the StudentAid BC clerk told me. "Perhaps there's some kind of glitch in the online application.”

And the solution?

“Just fill out an Appendix 7 and change your other asset to zero,” said the clerk. “It can take up to six weeks to process your revised notice of assessment.”

It turns out that I had made my mistake in Part 6, the assets section of the online application. The first question in that section asks about the value of your RRSPs, then your non-registered investments and, finally, the value of your assets. Well, that's where I entered the value of my car.

My car is an asset, right? Doesn’t that make sense? But no, apparently it doesn't. Question 6 is where you’re asked if you own a car and from there, you’re asked to enter the year, make, model, purchase price and current value of your beloved gas guzzler.

Thankfully, it only took two weeks to get that revised notice of assessment. Two weeks of worrying about returning to school without even knowing what my loan was going to be.

Now I know for next time.

And here are a couple of other interesting things I picked up from that conversation with the StudentAid BC rep:

First, if you own a car, make sure it's worth under $15,000. Otherwise, the student loan folks will expect you to sell it (all of which becomes apparent when you look in horror at how much you qualified for versus what they actually offer in your notice of assessment).

This sucks if you received a decent car as a gift. How will your family feel if you turn around and sell that car they proudly gave you? Or what if you worked hard to buy the car of your dreams -- or you simply need a decent car to handle driving through snow or long commutes? I used to live in Fort St. John, BC, which has a college. Transit was not an option up there for 90% of the students and if your car couldn't run in minus 40 Celsius – well, have fun hitchhiking...

Second, RRSPs can also affect your student loan assessments. For each year after the age of 18, you’re allowed to have $2,000 in your Registered Retirement Savings Plan (RRSP). Anything more and student loan officials will deduct from your student loan the amount they expect you to liquidate from your RRSP

“A student loan is for students who have no other way to fund their education,” explained the student loan clerk when I asked why there is a limit on car values and RRSPs.

And what happens if, say, I do own a boat or recreational vehicle, but I live in it?

“As long as it's your principal residence, you don't need to sell it,” said another student loan rep, “If you live in your car and it's your principal residence, that's fine too.”

Well, isn't that generous.

Who would have thought that having my car depreciate 75% since I bought it - and not being able to make full RRSP contributions for the past 5 years - would actually work in my favour…

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