Possible chiropody student debt scenario -please read & comment.

Note: this is a scenario that can apply to a university student graduating with a student loan that was used to pay for a 4 year bachelor's degree at a Canadian university. Then the student does the 3 year chiropody program. Also to simplify the calculations, interest payable on the $25,000 (a very reasonable amount used to set up a private chiropody clinic) was not used in calculations to reduce the taxable income.

According to Department of Finance, 1998 Budget Background (Ottawa: Government of Canada, 1998) the average student debt for each year of attendance for an undergraduate degree is $25,000. Today's reality is that a student graduating with a 4 year BA/BSc can have $100,000 in debt. Now ask her/him to borrow another $20,000 x 3 years for the chiropody program and the total student debt on graduation from the chiropody program is $160,000!!!!! The new chiropody graduate has go to a bank to borrow $25,000 to set up a private chiropody clinic. If the loan is approved, then the student has $185,000 in loans to re-pay.


10 year payback period
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Reality hits hard when the interest rate is 6% and the re-payment period is set at 10 years... (a monthly mortgage calculator & an income tax rate of 31.15% was used and these are ball park figures) to be able to pay off the $185,000 the monthly rate is $2053.88 and so the after income tax bare annual minimum income to pay off this debt is $ 24,646.56. A successful chiropodist would need to make $35,679.83 before income tax for each year for 10 years in a row just to pay off this debt and for the successful chiropodist to live on $18,000/year in the GTA, the before income tax income is $26,143.79 for the year. Add these two (before income tax) incomes, then the bare income to survive the student debt and to pay it off in 10 years (assuming no inflation, decrease/increase in business or change in income tax) is $61,823.62. This means that the chiropodist needs to make $5151.97/month after overhead each month for the next 10 years just to pay off the student loan and to live in the GTA on $1,500/month. Assuming a gross monthly income of $7,000, then the gross is $1750/week. Is this realistic in the GTA????????


20 year payback period
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According to the Mortgage Calculator, $1325.40 payment is required each month to pay back the student debt of $185,000 at 6% during a 20 year period. This works out to $15,904.80 in after income tax money. Add $18,000 to live in the GTA and the total (in after income tax money) is $33,904.80 before income tax that's $49,244.44 (at an income tax rate of 31.15% combined Ontario and Ottawa tax rate was used) or monthly after overheard income is $4103.70. This means that the graduate with $185,000 in loans has to make $4,103.70 (after overhead) upon the first month after graduation and keep making that amount each and every month for 20 years or 240 months just to pay off the debt and to live in the GTA on $1,500/month. Assuming a gross monthly income of $6,000, then the weekly gross is $1500. Again, I have to ask is this realistic in the GTA????