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Repaying Your Loan


The Repayment Process

You are responsible for repaying all the loans you borrow to fund your education as per the terms and conditions detailed on your Master Student Financial Assistance Agreement (MSFAA) or your loan certificate if you borrowed prior to the 2012-13 academic year.

For the first 6 months after your post-secondary studies, you do not have to start repaying your loans, although interest does accumulate on your Canada Student Loan during this period.

Six months after you have ended studies, regardless of whether you have graduated, withdrawn or are taking time off, you will have to start repaying your student loan. This is called student loan consolidation or repayment phase. For example, if you finish school on April 16, your student loans will consolidate on November 1 and your first loan payment will be due at the end of that month, on November 30.

Interest begins to accrue only on the Canada Student Loan portion of your student loan. No interest will accumulate on the Newfoundland and Labrador portion of your student loan. The interest rate on Canada Student Loan payments is prime plus 2.5% and you have the option of a one-time lock in at prime plus 5%.

The National Student Loan Service Centre

The NSLSC opens new window manages the repayment of your student loans on behalf of the Government of Canada and the Government of Newfoundland and Labrador.

You can expect to receive a loan consolidation package 4 to 5 weeks prior to your consolidation date. This package will be forwarded to the most recent address on file at the NSLSC. It is important that you advise the NSLSC of any changes to your address or other contact information. Read the information in your consolidation package carefully and respond to all requests from the NSLSC for information, signatures or other needs.

Note: Even in situations where, due to error, you do not receive the consolidation package or you do not respond to the information provided, repayment of your student loans will still begin, which means that monthly payments will be deducted from your bank account at the end of each month.

Borrowers Repaying Loans for Part-time Studies

You are not required to make payments on your loan while you are in-study, and interest does not begin to accrue until your studies are complete. Repayment starts 6 months after the completion of your part-time studies (i.e., at the end of the non-repayment period).

Defaulting On Your Loan

It is important to ask for help as soon as you feel you are having difficulty meeting your repayment obligations as you may qualify for repayment assistance.

As a borrower, you are required to fulfill your obligations and responsibilities so it is important that you fully understand the terms and conditions of your loan. Missing payments could damage your credit rating and your student loan could go into default. If you are having difficulty making your loan payments, contact the NSLSC opens new window. There are programs and services available to help you manage your payments and avoid defaulting on your loan.

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Reducing Student Loan Debt

Newfoundland and Labrador Debt Reduction Grants

This program allows for up to the full amount of the provincial portion of a student loan to be converted into a non-repayable grant. There is no application process. Students are automatically assessed after the Student Financial Services Division receives notification that the student has graduated.

Eligibility

You are eligible for a Debt Reduction Grant if:

  • you successfully complete at least 80% of a full course load each semester or academic year as determined by the school;
  • you apply and are deemed eligible for loan assistance for at least half of the required length of the program** and borrow in excess of $165 per week of study during a semester or academic year; and
  • within 10 years after the program start date, you graduate from a post-secondary program within the province that is at least 80 weeks in duration.

**If you are a work-term student, the program length will be based on your total number of academic terms plus any work-term semesters for which you were deemed eligible for student loans.

Grants are calculated on the basis of a semester or academic year; however, benefits are not paid until you graduate. Canada Millennium Bursaries or Transition Grants previously awarded are subtracted from the total Debt Reduction Grant for which you are eligible.

In an effort to reduce student debt and ensure timely completion of studies, this program promotes the participation of students who take and complete a full course load. The following example illustrates the advantage for such students.

Example: Emily received a total of $5,950 in financial assistance, $1020 ($60 per week) of which was in provincial loans during the fall 2011 semester. Because she successfully completed a full course load, her Debt Reduction Grant for that semester was equal to the full provincial loan of $1020. If Emily had enrolled in only 80% of a full course load, the maximum grant she could have received would have been only 50% of that amount (i.e., $510).

In certain situations, borrowers may qualify for a Debt Reduction Grant if they are taking less than 80% of a full course load. For example, this would include borrowers approved by the Student Financial Services Division for assistance for full-time studies while taking less than 80% of a full course load and students with permanent disabilities. However, to be eligible for the full Debt Reduction Grant, these students must be successful in all courses for which the reduced course load was approved.

Borrowers may also be eligible for the Debt Reduction Grant if they demonstrate that extenuating circumstances beyond their control have caused them to be unsuccessful in completing 80% of a full course load. In such cases, approval for the grant will be determined upon review of a written appeal.

Attending Schools Outside the Province

Borrowers who attend a designated school outside the province may also be eligible for the Debt Reduction Grant if they went out of province for at least one of the following reasons:

  • the program was not offered in Newfoundland and Labrador or was substantially different from any program in the province;
  • the program was at the graduate level;
  • the student was not admitted to the program in the province due to limited enrolment;
  • the student did not meet the entrance requirements of the school in the province, but did for the same program in another jurisdiction;
  • the student received transfer credits toward, or advanced standing into the program, which significantly reduced the program length; or
  • the student’s spouse went out of province to attend a program of study that is eligible for the Debt Reduction Grant.

Note: Borrowers are required to provide the Student Financial Services Division with appropriate documentation to support their case.

Programs Less Than 80 Weeks in Duration

Borrowers may be eligible to receive Debt Reduction Grants for programs that are less than 80 weeks in duration if the program(s):

  • is completed after the student graduated from a previous program that was at least 80 weeks in duration and qualified for the Debt Reduction Grant; and
  • is deemed to advance the student in their particular field of study or significantly enhance the student’s employability.

Required Documentation

A separate application is not required; however the Student Financial Services Division requires the following information to determine a student’s eligibility:

  • transcript of marks;
  • percentage of a full course load the student completed per semester;
  • confirmation of graduation (this can be a copy of the relevant degree, certificate or diploma); and
  • confirmation of the graduation date and the number of weeks of the program.

Note: This information can be submitted by the school using the Debt Reduction Program Monitoring Form that is sent to them. If the school does not provide this information to the Student Financial Services Division, the borrower is encouraged to submit the information directly.

Under the Debt Reduction Grant Program, borrowers must respond to all requests for required documentation from the Student Financial Services Division within 2 years of graduation.

Note: Borrowers who do not apply for financial assistance during the final period prior to graduation should contact the Student Financial Services Division so that their eligibility for a Debt Reduction Grant can be determined.

Borrowers may appeal decisions made by the Student Financial Services Division pertaining to Debt Reduction Grants. However, appeals will not be considered prior to the release of a debt reduction notice.

Deadline: You must submit your appeal within one year from the date you were notified of the original decision.

All Debt Reduction Grants are subject to audit, which could result in overpayments. In such cases, the amount overpaid will be added to the balance of the provincial student loan.

Note: In cases where the provincial portion of the loan has been paid in full, the student will receive the remaining debt-reduction funds in the form of a cheque.

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Early Childhood Education Grants

No application is required. The Student Financial Services Division will notify you if you meet the eligibility requirements. If you qualify, the outstanding balance of the provincial loan borrowed while you were studying Early Childhood Education will be forgiven by converting into a non-repayable grant upon confirmation that you have met all requirements.

You qualify if:

  • you graduate from an approved Early Childhood Education program within the province;
  • you have applied and been deemed eligible for assistance for at least half of the required length of the program;
  • you borrow more than $165 per week of study during a given semester;
  • you completed the program within the normal length of the program plus a grace period of up to one academic year (two semesters); and
  • you obtain full-time employment (at least 30 hours per week) in a licensed family home or child-care centre within the province for a period of at least 24 months.

Note: In cases where the provincial portion of the loan has been paid in full, the student will receive the balance of the grant in the form of a cheque.

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Programs to Help if You Have Difficulty Repaying Your Loan

If you’re having difficulty repaying your loan, contact the NSLSC before you miss a payment. Repayment assistance is available to help you manage your payments and avoid defaulting on your loan.

Repayment Assistance Plan (RAP)

You are responsible for repaying all the money you borrow to fund your education. However, if you’re having difficulty making your student loan payments, the Repayment Assistance Plan (RAP) can help.

The RAP makes it easier to manage your debt by requiring you to pay back only what you can reasonably afford based on your family income and family size. Monthly payments are limited to less than 20% of a borrower’s family income, and no borrower will have a repayment period of more than 15 years (10 years for borrowers with permanent disabilities). In cases where borrowers earn very little income, they may not have to make any loan payments until their income increases.

The NSLSC administers the RAP on behalf of the governments of Canada and Newfoundland and Labrador. If you face financial difficulty after completing your studies, call the NSLSC (1-888-815-4514) before you begin missing payments. Help is available.

NSLSC Online Services enable you to review your student loan accounts and to view and change your contact information. Visit CanLearn.ca opens in new window to sign up for an online account.

How Does the RAP Work?

Depending on your financial circumstances, the RAP has 2 stages to help you fully repay your student loan within 15 years.

Stage I

This stage applies to the first 5 years of the plan.

  • Borrowers who qualify will make affordable payments (or no payment) toward the principal of the student loans; paying the principal first reduces the total debt.
  • Borrowers will not make payments exceeding 20% of their income toward loans covered by RAP. In cases where the borrower has very low income, no payments are required.
  • The Government of Canada will cover the amount of interest owing that the borrower’s payments do not cover. (Newfoundland and Labrador does not charge interest on provincial student loans post August 1, 2009).

Stage II

This stage starts once the borrower completes Stage I or after the borrower has been repaying the loan for 10 years.

  • The Government of Canada will continue to cover interest and both the governments of Canada and Newfoundland and Labrador will begin to cover the portion of the principal of the loan not met by the borrower’s affordable payment.
  • The balance of the loan should be gradually paid off so that no student loan debt remains after 15 years (or 10 years for persons with permanent disabilities).
  • Throughout this period, borrowers will need to meet the same eligibility criteria and will continue to make affordable payments.

Am I eligible?

To be eligible for the Repayment Assistance Plan you must:

  • be a resident of Canada; and
  • meet the financial eligibility criteria.

How do I apply?

You need to apply for the RAP; enrolment is not automatic.

  • Call the NSLSC at 1-888-815-4514 to request an application form or to get more information about the plan.
  • Complete the application form and submit it, along with all required supporting documentation, to the NSLSC.
  • RAP is approved in 6 month intervals; you must reapply after each 6 month approved period.
  • Applications are also available through your NSLSC Online Services account on CanLearn.ca. opens in new window

Repayment Assistance Plan for Borrowers with a Permanent Disability

The Repayment Assistance Plan for Borrowers with a Permanent Disability (RAP-PD) helps borrowers with permanent disabilities who are having difficulty repaying their student loans. The RAP-PD makes is easier for borrowers to manage their debt by allowing them to pay back what they can reasonably afford.

Under this plan:

  • No borrower with a permanent disability should have a repayment period longer than 10 years.
  • Loan payments are based on family income, ability to pay and disability accommodation costs (e.g. uninsured medical expenses, special care and other expenses).
  • Borrowers will not make payments exceeding 20% of their income toward loans covered by RAP-PD.
  • In certain cases, borrowers may not have to make any loan payments until their income increases.

How do I apply?

You need to apply for the RAP-PD; enrolment is not automatic.

  • Call the NSLSC at 1-888-815-4514 to request an application form or to get more information about the plan.
  • Complete the application form and submit it, along with all required supporting documentation, to the NSLSC.
  • Applications are also available in your NSLSC Online Services account at CanLearn.ca opens in new window.

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Revision of Terms (ROT)

You may be able to make arrangements to pay only the interest portion of your loan payments or to extend the repayment period for up to a maximum of 15 years. Contact the National Student Loan Service Centre for details.

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Don't Avoid Your Repayment Obligations!

As a borrower, you are required to fulfill your obligations and responsibilities so it is important that you fully understand the terms and conditions of your loan. Missing payments could damage your credit rating and your student loan could go into default. If you are having difficulty making your loan payments, contact the NSLSC. There are programs and services available to help you manage your payments and avoid defaulting on your loan.

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Bankruptcy

Are you a student-loan borrower who:

  • has filed for bankruptcy?
  • has filed a consumer proposal?
  • is participating in a provincial arrangement for the orderly repayment of debts?

If so, and if you have not yet begun repaying your loan at the time of filing, you may be eligible for a student loan for full-time study covering up to 3 additional years to complete your current program of study.

As of July 7, 2008, the waiting period to have a Canada Student Loan debt discharged under a bankruptcy was reduced from 10 to 7 years.

If you can provide proof of exceptional financial hardship, the waiting period will be reduced to 5 years. To qualify for this reduction, you must demonstrate to the court that you have acted in good faith and that you will continue to experience financial difficulties. To find out more, you should contact your bankruptcy trustee.

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