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Repaying Your Student Loan

Student loans are a privilege. With every privilege, there is a responsibility. Your responsibility is to repay what has been loaned to you in good faith. A student loan, like any other loan, must be repaid. One of the differences between a student loan and a consumer loan is that there is more flexibility and more programs in place to help you repay your loan(s).

More information on repaying your student loan is available on the OSAP website.

For Canada Student Loans negotiated after August 1, 2000, and Canada-Ontario Integrated Student Loans negotiated after July 31, 2001, the lender is:

National Student Loans Service Centre
PO Box 4030
Mississauga, ON L5A 4M4
1-888-815-4514 (within North America)
800-2225-2501 plus appropriate country code (outside North America)

National Student Loans Service Centre Online
Through the NSLSC Centre website you can:

• Check the status and details of student loans you've already received
• Check the balance of your loan(s)
• Update your Mailing and Permanent Addresses and other contact information with the NSLSC
• Review your loan payment and transaction history
• Receive helpful information about your loan in your Personal Message Centre

NSLSC Login

For Information on Student Loans Issued Before Aug 1, 2000: Call Your Lender
Royal Bank www.royalbank.com	1-888-359-4770 (West) 1-800-363-3822 (East)
Bank of Nova Scotia www.scotiabank.ca	1-888-284-3044
Canadian Imperial Bank of Commerce www.cibc.com	1-800-563-2422
National Bank of Canada www.nbc.ca	1-888-483-5628

Full-Time Students

You are responsible for beginning to repay your loan six months after you have completed your studies or have stopped being a full-time student. The interest on your loan accrues from the time you stop being a full-time student. The actual rates and conditions for repayment are set at the time you begin repaying.

Unless you have a previous loan which you negotiated prior to August 1, 2000, you will most likely be dealing with the National Student Loans Service Centre (NSLSC) to make repayment arrangements.

Part-Time Students

You are responsible for making interest payments on your Part-Time Canada Student Loan while you are in school. Six months after you have completed your studies and/or stopped being a part-time student, you are responsible for beginning to repay the principal and interest on your Part-Time Canada Student Loan. The actual rates and conditions for repayment are set at the time you begin repaying. You must contact the NSLSC to make repayment arrangements.

Monthly Payment Amount

The maximum amount of time you have to repay your loans can be 114 months (approx. 9.5 years). Your monthly payment amount is determined by:

• the amount of money you owe
• the interest rate
• the duration of your repayment (i.e. 5 years, 7 years, 10 years).

Visit Canlearn or OSAP to estimate your monthly payment.

Lump Sum Payments

You can make a lump sum payment at any time, even after you consolidate your loans. When you make this type of payment, you must specify that it is a lump sum payment. The advantage is that it reduces the principal amount of the outstanding loan and that can save you money on the interest over the term of the loan. The sooner you repay your student loan, the quicker you can use that money to achieve some of your other goals (like buying a car or a house). Use every opportunity you get. For example, every time you get an income tax refund, use it to reduce your student loan debt. If you do that every time you get a refund, your loan balance will be quickly reduced.

Making Arrangements to Repay

You are required to start making loan payments on the first day of the seventh month following the month your full time studies ended. This is called your "consolidation date". As of your consolidation date, the amount of interest which accrued in this six-month period is calculated and you can either pay the interest or capitalize (add) it to your loan principal. If you choose to capitalize the interest, NSLSC will adjust your monthly payment amount accordingly.

During the six-month period after your studies end, contact the National Student Loans Service Centre (NSLSC) to make sure your personal information is current and to check on your loan balance. While you do not have to make any loan payments during this six month period, the interest will begin to accrue on your outstanding loans during this period.

Consolidation Agreement

Close to the date on which you will start your first payment, you will receive a consolidation agreement in the mail. The completion of your consolidation agreement is the first step in the repayment process and the most important as it will ensure that your loans remain in good standing, and in addition, is one of the triggers for the Ontario Student Opportunity Grant (OSOG).

Once you receive it, complete it and send it back immediately. Depending on the timing of the payment of the OSOG, you may have to sign for a larger amount. You will also be expected to make the monthly payments based on this principal (the amount of money you borrowed) until such time as the OSOG is paid on your behalf.

If you have any problems understanding the form, you can contact the National Student Loans Service Centre. Or alternatively, you can contact us for assistance.

Remember in order to receive your OSOG, you must complete and return the Consolidation Agreement.

Interest Relief and Other Programs to Help You Repay Your Loans

With all the assistance available from different programs, there is no valid reason as to why a student should default on his/her student loan. If you are unable to meet your repayment obligations, you may be eligible for some type of assistance. The OSAP website is an excellent place to find information on the programs that are available if you are experiencing difficulty repaying your loan. Please remember that in order to be eligible for any type of assistance it is imperative that you keep your loans in good standing. Contact the NSLSC to discuss your situation, sooner rather than later. Keep reading to learn about the different programs available to help you keep your loans in good standing.

1. Revision of Terms Program

If you find the amount of your monthly student loan payments to be onerous, you may ask to revise the repayment terms of your loan by extending your loan repayment period from 9 1/2 years to up to 15 years. Revising your loan repayment terms may help lower your monthly payments to a more affordable amount.

There are three types of Revision of Terms available:

1. Payment Break - Request to decrease payments for a short-term period.

• Provides a short-term fix, and breathing room to get back on track.

Example: If regular payments of $46.84/ month were revised using a payment break:

• 6 months lower payments: $ 26.00/month
• 90 months (rest of term) $ 49.00/month

1. Extend Term - you can extend your given term, to obtain a permanent decrease in your monthly payment.

• This revision allows for a longer period of decreased payments.
• Consequences?

1. Pay loan 5 years longer
2. Pay more interest in the long run

Example: A term of 96 months, with payments of $234.25/month now becomes 174 months with payments of $166.62/month.

1. Lump Sum Payment - Revise your monthly payment after a lump sum payment has been made.

• This revision re-amortizes the reduced principal balance over the term remaining on your loan after you have made a lump sum payment

Example: A loan of $15,000 is reduced to $8,000 after a lump sum payment of $7,000 was made (ie. the student is awarded a signing bonus at the beginning of their first job out of university). As a result, the student's loan payments are reduced from $233.66/month to $124.62/month over a 90-month term.

2. Debt Management Programs

Should you be unable to repay your loans because of low income, there are two programs available for which you might qualify. There are two programs available:

2. a) Interest Relief

If you are temporarily unable to repay your Canada-Ontario Integrated Student Loan or Part-Time Canada Student Loan because of low income, you may be eligible for interest relief. During periods of interest relief you are not required to make payments on either the outstanding principal or the interest. The Government of Ontario and/or the Government of Canada will pay the interest on your behalf.

Interest relief is granted for periods of six months, up to a maximum of 30 months. You may be eligible for extended interest relief, of up to an additional 24 months. You must apply for each 6 month period of Interest Relief.

The OSAP website has a list of eligibility requirements. The first requirement is that you must have consolidated your loan(s) and signed a Consolidation Agreement. You cannot apply for interest relief until you have done so. If you have not signed a Consolidation Agreement, contact the NSLSC at 1-888-815-4514.

This program is administered by the NSLSC. You must contact the NSLSC for an application and you will receive a pre-filled and personalized "Application for Special Interest Free Period (Interest Relief)". NSLSC will then submit it to the federal and provincial government for approval. You will be advised of the result (approval or denial and the number of months of interest relief granted).

If you need assistance beyond the first 6-month period of interest relief you must re-apply for another period of interest relief.

Depending on the types of loans you have, you may have to submit two applications. Visit the OSAP website for more information.

2. b) Debt Reduction in Repayment (DRR)

This type of program helps borrowers who are facing long-term financial difficulty by reducing their outstanding student loan principal, thereby lowering their monthly loan payments. The circumstances must be considered exceptional in order to be approved. DRR is available to assist students who have been out of school for at least five years and have exhausted all available periods of interest relief. A DRR assistance is applied against your outstanding student loan debt and the payments are sent to the financial institution. Both the Government of Ontario and the Government of Canada offer DRR programs.

3. Medical Loan Forgiveness and Permanent Disability Benefit Programs

If you have a permanent disability or an illness that significantly affects your earning capacity and you are having financial difficulty making your student loan payments, you may be eligible to have either the federal or provincial government pay off the portion of their loan. Check the OSAP website for more information.

4. Financial Counselling

Before you start, and through your academic career, you should be tracking your student loan indebtedness. The more money you borrow, the more you have to repay when you finish school. Upon entering the workforce, your monthly student loan payment is likely to be a major expense. You will have to think about how your salary will enable you to meet this financial obligation and others, such as rent, food, transportation and entertainment. It's important for you to be aware of your spending habits and to manage your money so that you are living within your means. If you ever have any difficulty meeting your monthly obligations, be proactive about it. Don't let it slide or think it will all resolve itself. Safe guard your credit rating; seek help. Many educational as well as financial institutions, offer courses in budgeting and credit. Credit Canada, a non-profit agency, helps individuals get control of their debt.

Avoiding the Penalties of Default

Failure to repay your Canada or Ontario Student Loan (missing three consecutive payments) will be considered a default and make you ineligible for future assistance with OSAP. The penalties can include one or more of the following measures:

1. Your debt will be turned over to a collection agency;
2. Your debt will be reported to the Credit Bureau and may prevent you from obtaining future credit;
3. Any income tax refund or tax credit will be withheld and applied against the amount of loan owing.

Withholding Your Income Tax Refund

If you have defaulted on your Canada-Ontario Integrated Student Loan, and loan collection is unsuccessful, the Government of Canada and/or the Government of Ontario may direct Canada Revenue Agency (CRA) to withhold your income tax refund and apply the proceeds against the amount owing on your student loan. You will be advised that your income tax refund may be withheld, and you will have the opportunity to contact OSAP to make arrangements to repay the outstanding debt instead of having your income tax refund withheld.

Tips on Keeping Your Loans in Good Standing

Here are a few tips to help you maintain a good credit rating and keep your loans in good standing.

• Set up a file at home where you keep all the documents and correspondence relating to your loans.
• Talk to your FAO if you run into difficulties while attending school. We can give you valuable advice to help you communicate with either the NSLSC or government.
• Make sure you tell the university and the NSLSC when you move, get a new telephone number or change your name.
• Contact the NSLSC as soon as you have graduated or stopped attending full time classes. Make arrangements to repay your loan(s). Remember you must consolidate (make arrangement to repay) your loans before the beginning of the 7th month after you stopping attending full time studies.
• Communicate with the NSLSC at all times and if you have any questions, ask, ask, ask until you get the answer you need.
• Advantages of a Student Loan

Below are a few of the many advantages of student loans:

• No interest while you are attending school on a full time basis. The government pays the interest for you during this period.
• The interest rate is usually lower than consumer loan rates.
• The length of time to repay - up to 9.5 years - allows you to select and agree on an amount that suits your budget.
• Interest Relief programs help you when you can't make your regular monthly payments (i.e. you become unemployed).
• You can make lump sum payments on the principal (the amount you borrowed, not the interest that has accrued) at any time with no penalty. This saves you money in the long run.
• When you start repayment, the interest you pay on your government student loan qualifies for a tax credit. See Students & Income Tax.

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