You are finished with your studies after many years of toil but you still haven’t found a job even though you have been looking for months. You also have to think about those pesky student loans that you have accumulated.
Here are a few things you should know about student loans and how repayment works.
When do student loans become due?
There are four situations that trigger the repayment of your student loan:
- If you have left school;
- If you have graduated from your program;
- If you are taking time off school for longer than six months; and
- If you have transferred to part-time studies.
It’s also important to know that for the first six months after you have left school, you actually don’t have to make payments on your federal or provincial student loan.
Don’t think that grace period comes at no cost though. The government will still charge you interest during that period. You have the following options:
- Start paying the interest payments immediately;
- You can also arrange to pay the six months’ worth of interest as a lump sum;
- You can request to have the interest added to your loan total after the six month grace period.
Where do I have to make my payments?
That depends on the province in which you applied for your student loan.
If the loans were issued by British Columbia, Ontario, New Brunswick, Newfoundland and Labrador, or Saskatchewan, then you have to repay your loan through the National Student Loan Services Centre (NSLSC).
If your loans were issued by Alberta, Manitoba, Nova Scotia or Prince Edward Island then you have to make two payments: one to the NSLSC and one to the student office of your province.
If your loans were issued by Quebec, Nunavut or Northwest Territories then you have to repay your loan through the student assistance office of your province or territory.
If your loans were issued by Yukon, then you would pay through the NSLSC.
What can I do if I cannot repay my loans at this time?
The government offers something called a Repayment Assistance Plan. Under this program, your monthly student loan payments could be reduced, or you may not have to make any payments. How much your monthly payment is reduced, or whether you pay at all is informed by how much you earn or whether you are employed at all. You must reapply for this plan every six months.
What can I do if I’m in default of my student loans?
If you keep defaulting on your student loans, your file could be sent to Canada Revenue Agency to retrieve the outstanding balance. Generally, you must have been in default for 270 days before your file is considered to be in default.
However, the government gives you the chance to have the file returned from CRA to NSLSC through the Canada Student Loan rehabilitation program. However, you have to contact the NSLSC to find out whether you are eligible for the program.
If you are eligible, then you have to contact the NSLSC to speak to them about:
- Repaying all interest which you owe on your student loan;
- Arrange a repayment schedule with Canada Revenue Agency;
- Make an equivalent of two monthly payments on the loan;
- Once payments are completed, then you can contact the NSLSC and speak with an officer and tell them you want to rehabilitate your loan.
If you are having issues with your student loan, want to speak to them about repayment or you need information, you should contact the National Student Loans Services Centre or your Provincial/Territorial Student Financial Office.
Student Loans and Grants Government of Canada
Canada Student Loans Program