Budget Basics
Repaying Your Student Loans
If the thought of repaying your student debt is daunting, take a deep breath and know that there is help. The Canadian Government is committed to ensuring that there are resources and assistance available to those who owe money for their education. This document is designed to give you direction on where to go if you feel you are unable to pay for your student debts. Everyone’s situation is different so do not be afraid to call a counsellor today if you feel you can’t do it on your own. Consolidated Credit Counselling Services of Canada, Inc. is here to help. Call us at 1-800-656-3920.
What Happens If You Don’t Repay
If you are experiencing financial difficulty, the last thing you should do is ignore your creditors. Communication is the key to your financial success especially when things don’t look so good. In the event you do not pay your student loans when required, you could be subject to any or all of the following:
- • Additional interest charges
- • The loss of future financial assistance for education
- • You could be reported to a collection agency
- • You may suffer a bad credit rating
- • You could lose future income tax refunds
- • You could face legal action
None of these consequences are worth it, so utilize your resources and take responsibility.
Temporary Interest Relief
If you are unemployed or have low income, you may qualify for a 6 month deferment of payments and interest on your student loans. During this period, the government pays the interest on your loans. Interest relief is granted for 6 month periods up to a total of 54 months. If you are able to make payments during your period of interest relief, they are applied directly to your principal balance. There are eligibility rules for Interest Relief that consider your income, your residency, the status of your loan, and your loan agreement. You must meet all eligibility requirements in the month you apply. Click here to find out more information regarding Temporary Interest Relief.
Reducing Your Payments
Lowering the amount of your required monthly payment may also be an option for you. If you are unable to pay the payment amount that is listed in the terms and agreements of your original loan, you may be able to apply for a Revision of Terms that can lower your payment and extend the term of your repayment.
For Canada Student Loans or Integrated Student Loans, a revision of terms can extend the repayment period up to 15 years.
There are two ways to apply a revision of terms to your loan.
You can decrease your payments for a short period.
- • You can temporarily extend the term of your loan to lower your payment
- • During this period you will still be responsible for making payments at the adjusted amount and interest will still accrue
- • At the end of the designated period, your payments and interest will revert to the amount in your original agreement.
You can extend the full term of your loan to permanently lower your payments
- • This will lower your payments for the full term of your loan
- • Keep in mind that your loan will take longer to pay back
- • You will also pay significantly more interest
Most borrowers qualify for a revision of terms. Just contact the NSLSC or the Financial Institution that holds your loans.
