Repaying your Loan
Canada Student Loans, like any other loans, have to be repaid. Payments begin six months after you cease being a full-time student.
Defaulting
Rules and Responsibilities
The Interest Relief Plan
Fast Facts: Making Your Payments
Other options: (Extended Interest relief & Debt reduction)
Early payments on Direct Loans
Important Note
Stay in touch with your lender. By communicating changes in your situation you ensure that your credit rating is protected, and that you remain eligible for future student loans.
Tax Relief Effective in 1998
While you are repaying your student loan, you will be allowed to claim a 17 percent tax credit on the interest portion of the amount paid on your student loan each year.
Defaulting
If you default on your loan, your lender and the Government of Canada will take steps to recover the debt, which may include reporting you to a credit agency, using a private collection company, or taking legal action. Under legislation introduced in 1998, you can not avoid repaying your Canada Student Loan or provincial student loans through bankruptcy for a period of ten years after the end of your studies.
Understanding the Rules and Responsibilities
Once you have received a full-time Canada Student Loan, it is your responsibility to:
Understand and respect the terms and conditions spelled out in detail in your loan agreement;
Tell your lender and the student financial assistance officer at your school or provincial student assistance office of any changes in your situation such as a change in name or marital status, a change in your status as a full- or part-time student, or a change of address;
Provide your lender with proof of enrollment for each study period that you are enrolled, even if you are not applying for a new loan;
Keep track of the amounts you borrow each year as soon as possible after the end of your period of study, complete a Consolidated Student Loan Agreement within six months of ceasing to be a student; and repay your student loan. If you are a full-time student, you will be required to start repayment of your student loan on the last day of the seventh month after ceasing to be a student; however, you can start repayment earlier if you are in a position to do so. If you are a part-time student, you are required to make interest payments even while enrolled, and start full repayment on the last day of the seventh month after ceasing to be a student.
Interest Relief/Debt Reduction in Repayment
The Interest Relief Plan
Having trouble repaying your loan? The Interest Relief Plan may help you. The Government of Canada may pay the interest on your loan. Discuss your situation with your lender if you have a pre-August 2000 student loan. Your lender may agree to revise the repayment terms. If you have a post-August 2000 student loan, contact Canada Student Loans client services.
In addition, the Government of Canada offers an Interest Relief Plan and debt reduction to help borrowers facing financial hardship. If you have difficulty making your loan payments because of low income, the Interest Relief Plan may be available to you.
What is Interest Relief?
While you are on Interest Relief, the Government of Canada pays the interest on your loan. Interest Relief is normally approved for three-month periods up to a maximum of 30 months throughout the lifetime of the loan.
Where Can I Apply?
If you have a pre-August 2000 student loan, information and application forms are available from the lender holding your student loans. If you have a post-August 2000 loan, contact your Canada Student Loans client services representative. You may also contact your provincial/territorial student assistance office.
Who is Eligible?
To be eligible for Interest Relief, your total family income must be below a level determined by the size of your family and the size of your monthly loan payment. Special circumstances may also qualify you for Interest Relief. For example, if you have had to pay for unexpected emergency health-related expenses or emergency home repairs, you may be eligible.
Provided you meet the income conditions, you are eligible to apply if:
you are currently living in Canada or on a government-sponsored international internship;
you have signed a Consolidated Student Loan Agreement;
you have not already received Interest Relief for the maximum period allowed (30 months); and
you have not defaulted on any Canada Student Loans for which the government has already reimbursed your lender.
Fast Facts: Making Your Payments
Full-time students must start repaying their loans six months after they leave school.
Part-time students make interest-only payments one month after obtaining a loan, and start payment of both principal and interest six months after completing studies.
If you have difficulty making payments, discuss your situation with the lender.
defaulting on your loan has serious consequences.
If you face financial difficulty, a number of options are available, including revising the terms of your loan, applying for interest relief and a temporary suspension of payments, and in certain circumstances, reduction of the principal by the government on your behalf.
If you continue to have difficulty making your loan payments after 30 months of Interest Relief, discuss your situation with your lending institution or your Canada Student Loans client services representative.
Other options available to help you:
Extended Interest Relief
After you have exhausted the 30 months of interest relief, you can extend the loan repayment period to 15 years. This would lower your monthly payments by nearly 25 percent at current interest rates.
If, after extending the repayment period to 15 years, you remain in financial hardship, interest relief may be extended during the five years after leaving school.
Debt Reduction
In the event that you remain in financial difficulty, the government will reduce your loan principal if your annual payments exceed a given percentage of your income. The maximum amount of debt reduction will be $10,000 or 50 percent of the principal of your loan, whichever is less. To qualify, five years must have passed since you completed your studies and you must have exhausted interest relief.
Early payments on Direct Loans
If a student calls in with inquiries on where to send payments on Direct Loans (Loans issued and cashed after August1, 2000), please advise them that payments should be made payable to the Receiver General at:
Receiver General for Canada
P.O. Box 2090, Station "D"
Ottawa, Ontario
K1P 6C6
**Also on the cheque it should be indicated that it is a payment to be applied towards their Direct Loan. Once the payment is received and applied, a letter will be sent to the borrower acknowledging receipt of the payment.
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