Student loans 
can be both advantageous and detrimental for several different reasons. Most people who apply for student loans are youngsters, often under the age of 20, and have no “life experience”. Often they are leaving their parents’ Lethbridge home for the first time and have little or no idea of the impact of the amount of personal debt they will incur with a student loan. This is especially true for students entering a 4-year university program of study rather than a 2-year community college degree. Their debt load after graduation may be huge.
Repayment of a student loan can be difficult for a couple of reasons. There is no guarantee that a post-secondary education is going to allow you to land a good paying job. Many university graduates work at low-paying jobs for extended periods of time before getting a good-paying job in their chosen field.
Student loans are also not allowed to be included in a bankruptcy for at least 7 years after you cease being a student, so if you are going into a large student loan with the idea of declaring bankruptcy to avoid repayment, this is no longer an immediate option. The damage to your credit rating in these ensuing 7 years will be such that you will not be able to get a loan for a car, a mortgage or other things you may want to purchase on credit.
If you are unable to repay your student loan, you may be thinking of consolidating that debt with any other debt you may have. One advantage to consolidation with a bank or other lending institution is that you will no longer owe the money to the government. If you do not repay your student loan in a timely manner, the government can and will keep any income tax refund owed to you, as well as your GST rebate. A bank cannot do this if you consolidate with them.
An advantage to owing your student loan to the government is that you may qualify for the “interest relief” program. This allows you to defer your student loan payments until you are in a position to begin repaying them. If you’ve consolidated your student loan into one payment with a financial institution, there is no interest relief.
Other advantages to consolidation with a bank or other lender is that you may be able to negotiate better interest rates, and/or to have the loan spread over more time, which lowers your monthly payments. Also, if your credit is damaged by your inability to repay a student loan, consolidation and a healthy repayment to the lender can help to rebuild your credit. You should be aware, however, that if your credit is damaged when you apply for consolidation loans, you might not get a better interest rate with a bank or other lender.
On the flip side again, keeping your student loans with the government can give you a tax break every year. Your student loans are tax deductible. You will need to weight the pros and cons with your own personal debt and make a decision based on the amount of money you own in student loans and whether or not a tax break once a year would be more advantageous than a more manageable repayment schedule with an outside lender.
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