Student Loan Repayment
When does repayment begin?
You must begin to repay your Student Loan(s) when you graduate, leave school for more than 6 months or cease to be a full-time student.
You are allowed a six-month non-repayment period after you leave school before repayment begins where no payments are required; however, interest can accrue. You can either pay the non-repayment period interest off at the end of your six months or ask to have it added to your student loan balance. You are responsible for interest during the non-repayment period for the Canada Student loan, while no interest is charged during the non-repayment period for the Ontario provincial loan. Once you receive your consolidation documents from the service provider you must advise them on how you are going to pay the non-repayment period interest, if you do not notify them the interest will automatically be added to your loan balance at consolidation.
What is consolidation?
When you arrange to repay your Student loans, this is called consolidation.
During the six-month non-repayment period after you leave school, the service provider will mail you a Consolidated Student Loan Agreement for your Canada Student Loan(s), Provincial Student Loan or integrated student loan. This agreement provides information about:
- The amount of your loan
- Your interest rate
- Your repayment term (how long it will take to repay your loan)
- The amount of each loan payment
- Your first payment date
What am I responsible for?
You are responsible for:
- Repaying your loan and all accrued and/or capitalized interest according to the terms of your Consolidated Student Loan Agreement
- Notifying the service provider if you change your address, your name or your phone number
- Notifying the service provider if you leave or transfer to another school, change your courseload, or change your graduation date
How do I repay?
The acceptable payment methods are:
- Pre-authorized Payment Plan
- Telephone Banking
- Internet Banking
- Cheques – Monthly and Post-dated
- Money Orders
- Bank Drafts
You must ensure that your payments are received at the service provider before the scheduled payment date. If you send the payment on the payment date, it could be received by the service provider a few days after the due date, causing collection activity.
What is the interest rate on my Student Loan(s)?
When you enter into repayment, you can choose between a fixed or floating interest rate for the Canada portion.
- Fixed rate: interest rate is locked in at prime plus 5% for the duration of your repayment schedule and cannot go back to a floating rate
- Floating rate:pay prime plus 2.5% and you’ll have the option to change to a fixed rate at any time
- The Ontario interest rate will be set at a floating rate of prime plus 1%
Can I claim a tax credit for the interest I pay on my Student Loan?
Yes. A student loan tax credit allows you to deduct the interest that you pay on your student loans each year. This credit applies to interest payments you make on both your federal and provincial or territorial student loans, and the appropriate documents will be sent to you by mail for you to use when you file your taxes. It does not apply to interest payments you may make on any loans held with a private lender such as a student line of credit with a financial institution.
What if I have trouble repaying my loan?
If you have trouble finding employment or find it difficult to repay your Student Loan because of financial hardship, there is help. Programs such as Revision of Terms and the Repayment Assistance Plan are available to either defer or reduce your required monthly payment. The Repayment Assistance Plan will help you manage the Canada and Ontario Student Loan.
Can I make additional payments to reduce the amount of interest I pay?
In addition to your minimum monthly payments, you can make lump sum payments, or increase your monthly payment amount for your loan at any time during the life of your loans. These extra amounts will reduce your principal faster and therefore reduce the amount of interest you pay on your loan. You can also pay your loans in full at any time without penalty. Contact your service provider to obtain your current balance as it will change daily.
Can I get information on-line?
Yes, there are a number of resources you can take advantage of on the internet. A great resource is canlearn.ca the government of Canada’s website to help Canadians save, plan and pay for post-secondary education. It has a lot of information about how to manage your loan(s) as well as a link to the National Student Loans Service Centre (NSLSC) website. The NSLSC website allows you to sign up for an online account and:
- Check the status of your student loan
- Check the balance of your loan(s)
- Review details of new loans you’ve recently received
- Update your Mailing and Permanent Addresses and other contact information on-line
- Review your loan payment and transaction history
- Receive helpful information about your loan in your Personal Message Centre
- Customize your repayment amount ~ use your on-line account to increase or decrease your monthly payment amount
- Apply for Repayment Assistance Plan (RAP). If you qualify for RAP, you will have reduced or no monthly payments for up to six months at a time.
- Access your T4A on-line: Tax slip is used by the students to declare the amount of grant funding that was received as income on their taxes.