Understanding Student Loans

Many students who attend Academy Canada (and all colleges/universities) get a student loan to help finance their education. For most people, this is their first loan and can be an intimidating process. The College Support Staff is here to help guide you through the process to make sure that you understand how it works, your responsibilities and how you can use the financing program responsibly.

It is important to understand that a student loan – whether offered through government or a bank – is a LOAN and must be repaid in the future to protect your credit rating. Fortunately, some programs (especially those offered by government) recognize that you are using the money to finance your education and require extra supports during repayment. To help, they offer good terms – including reasonable interest rates, no repayment while you are in school, and a wide range of RAP (Repayment Assistance Program) initiatives that are described below.

In some provinces like NL governments have non-repayable grants available for those who qualify. This is a significant help.

The list below summarizes some of the key things you need to understand at various stages in the life of a student loan.

When You Are Trying to Understand the Student Loan Program, It Is Important to Know that…

• The student loan program is a tool to be used responsibly and with care.
• A student loan helps you make an investment in your education. To make it worthwhile, you need to make the investment pay off by taking care of your money, studying hard and getting a good job that will allow you to repay any money owed.
• It is your responsibility to repay your student loans. Protect yourself and your credit rating by paying it in full and on time every month.
• If you received a student loan in order to go to school, the provincial government covers 40% of your assessed financial need to a maximum of $140 per week of study. The federal government provides the remaining 60% to a maximum of $210 in loans per week of study. Additional funding may be available in the form of non-repayable Canada Student Grants.
• For repayment purposes, student loans from both lenders will be consolidated (combined) and administered as one loan.
• Your consolidated student loans will be serviced through the National Student Loans Service Center (NSLSC).
• You have six months from the last day of your program or your last day of class before you have to start repaying your loan. These six months are called a grace period.
• The grace period allows for borrowers to find employment before they have to begin repaying their student loans. You may, however, make payments on your student loans during your six-month grace period, as interest begins to accumulate on Canada Student Loans during this time.
• As of August 1, 2009 no further interest will accumulate on Provincial Student Loans.
• You are responsible for ensuring that your loans are in good standing. Campus representatives and your campus Business Office can provide helpful information and reminders, but the responsibility of paying your loans in full and on time belongs solely to you.
• Your student loans do not and will never go away. They are real loans and lenders will expect that they be repaid just as any loan be repaid.
• There are many repayment assistance options available to student loan borrowers. If you are experiencing financial difficulty before or during the repayment of your student loans, contact the NSLSC at 1-888-815-4514 to apply for repayment assistance. You may be eligible to defer your payments or decrease your monthly payment.
  • This Student Loan Repayment Guide will answer many of the questions and concerns you might have. There’s also a checklist of important items for you to know and a list of phone numbers and websites that can assist you further.
  • To obtain a copy of the Student Loan Repayment Guide please see your campus Business Office.
  • If you have any questions about Student Loans, please feel free to contact us at 1-800-561-8000.

When You Are Ready to Apply for Your Loan, It Is Important to…

• Ensure that you understand all of your financial options and the obligations of the student loan program.
• Apply to your college program and get accepted.
• After getting accepted into your program, visit the Student Financial Services online application and complete all sections.
• If you need support please contact NL Student Financial Services (729-5849 or toll free 1-888-657-0800) or speak with your Admissions Officer. They can offer valuable advice and guidance through the application process.
• Ensure that your family is aware of your intentions.

If You Left Your Program before Graduating, It Is Important to Know…

• You are still required to repay student loan money borrowed if you withdraw or are dismissed.
• Academy Canada notifies your lenders that you have ended your program early. Therefore, you will have six months from your last day of class to start repaying your loan.
• If you are entitled to a tuition refund, it will be sent to the NSLSC to be applied to your outstanding student loan balance.
• You may still have an outstanding balance with Academy Canada depending on when you withdrew from studies. See your campus Business Office to determine if this is the case.
• There are several repayment assistance programs for which you may be eligible. Contact the NSLSC at 1-888-815-4514 to determine if you can receive assistance in repaying your student loans.

When You Are about to Graduate, You Need to…

• Contact the NSLSC at 1-888-815-4514 to discuss your consolidation agreement and verify your program end date, address and telephone number.
• In consolidating your student loans, you are simply allowing the NSLSC to combine all of your student loans into one larger loan. This makes repayment much more manageable. You will receive, sign and return a consolidation agreement sent by the NSLSC which will inform you of your repayment terms and repayment schedule.
• If the NSLSC has the wrong end date on file it will cause you to enter into repayment of your loans before the end of your 6-month grace period.
• If your lenders have the wrong end date on file for you, contact your campus Business Office to get a Schedule II or Continuation of Enrollment form to complete and submit to the NSLSC. It is important that you do this before your program end date—the NSLSC will not accept this form after you finish your program.

If You Are about to Enter Repayment…

• Contact the NSLSC at 1-888-815-4514 to consolidate your student loans immediately after finishing your program or leaving school.
• If you do not contact your lenders to consolidate your loans, they will do it for you. However, whether you sign a consolidation agreement or not, you will still be responsible for repaying you student loans. Your monthly loan payments will be taken from the bank account into which they were initially deposited. If there is no money in that account, your loans will be considered delinquent and will already be heading toward default.
• Apply for repayment assistance. You may be eligible to defer or significantly decrease your monthly payments. Call the NSLSC at 1-888-815-4514 to inquire and apply.
• Borrowers have 3 options to consider when deciding how to deal with the repayment of their student loans. The 3 options are explained below:

Option 1: Start Repaying Your Student Loan.

• The NSLSC will send a consolidation agreement 4-5 weeks prior to your repayment start date for your review. This form has to be signed and returned.
• Consolidation occurs when the NSLSC combines all of the student loans you’ve had each semester into one loan. This makes repayment easier to track and understand.
• When you receive the consolidation agreement, it will state the interest rate of your loan, the full amount owing on your loan, when your first payment is due, and the amount of each monthly payment.
• It is important to know that even if you do not return the consolidation agreement, you will still be responsible for repaying the loan and the payments will still be deducted from your bank account each month.
• The first payment on your student loans will be required on the last day of the seventh month following your end date. For example, if your program ends in August your first payment is due on March 31 of the following year.

Option 2: Review Repayment Assistance Programs (RAP) if You Are Experiencing Financial Difficulties.

• If you are experiencing financial hardship before or during your repayment period and anticipate that you may not be able to make the required monthly payments on your student loan, there are programs available to assist you.
• You must apply for these programs before you miss any payments. Contact the NSLSC at 1-888-815-4514 directly after graduating or leaving school to ask about repayment assistance options. These options include the Repayment Assistance Plan, a Revision of Terms, and Debt Reduction Grants. These options are explained in greater detail below.

Option 3: Ignore Your Loans and Go into Default.

• If you choose to ignore your student loans, you will go into default. Doing so will cause lenders to quickly take action to recover the money you owe them.
• You will be reported to a credit bureau, where your credit history will be negatively reported.
• Lenders such as banks, credit card companies and car dealerships review your credit history when you apply for a loan, for items such as a house, car or credit card. Landlords also check the credit ratings of potential tenants before renting a house or apartment.
• If such institutions or individuals see that your credit rating has been negatively affected by your irresponsibility with student loan repayment, you may not be eligible to borrow money for a house or car, and may not qualify to own a credit card or rent a property.
• Your information will be shared with the CRA and/or a private collection agency for further collection of your student loan payments.
  • When your file is transferred to the Canada Revenue Agency, any income tax refunds or tax rebates for which you are eligible may be intercepted before you receive them so that they may be applied to your outstanding student loan balance.
  • If you do not repay your student loans on time, lenders may take legal action against you. This may involve the garnishing of your wages, among other legal consequences.
  • By law, you cannot avoid repaying your student loans through declaring bankruptcy.

If You Are Struggling with Loan Repayment, You Need to Know…

No one wants students to default on their loans. To help make repayment easier, government has created a Repayment Assistance Program (RAP) that has several supports available to students, including:

Repayment Assistance Options

1. Repayment Assistance Plan
2. Repayment Assistance Plan for Borrowers with a Permanent Disability
3. Revision of Terms
4. Debt Reduction Grant
5. Severe Permanent Disability Benefit

1. Repayment Assistance Plan

• The Repayment Assistance Plan is designed to help borrowers who are experiencing difficulty in repaying the Canada Student Loan (CSL) portion of their student loans.
• The program allows borrowers to make affordable monthly payments on their loans. Loan payments are calculated based on income, debt amount, and family size.
• No borrower will make payments that exceed 20% of their income and the repayment period will not extend beyond 15 years.
• If a borrower earns a very low income, he/she may not be required to repay until his/her income increases.
• Application is not automatic — borrowers must apply for the Repayment Assistance Plan. Call the National Student Loans Service Center at 1 888 815 4514 to inquire and apply

2. Repayment Assistance Plan for Borrowers with a Permanent Disability

• The Repayment Assistance Plan for Borrowers with a Permanent Disability (RAP-PD) is available to borrowers with a permanent disability who are having difficulty repaying their student loan debt.
• Loan payments are based on family income, family size, and disability-related expenses (allowable uninsured medical expenses, special care and other expenses directly related to the disability).
• No borrower with a permanent disability will have a repayment period longer than 10 years under the plan.
• You must apply for RAP-PD. Enrolment is not automatic. Call the NSLSC at 1-888-815-4514 to inquire and apply.

3. Revision of Terms

• The Revision of Terms option extends the repayment period of your student loan.
• Student loans are normally repaid within 9 years. However, a Revision of Terms may allow your repayment period to increase up to a maximum of 15 years.
• By extending the number of months taken to repay the loan, the monthly payment amounts will decrease.
• You must apply for a Revision of Terms. Contact the NSLSC at 1-888-815-4514 to determine whether a Revision of Terms is an appropriate option for you.

4. Debt Reduction Grants

Debt Reduction Grants are offered by the Provincial Government to help reduce the student loan debt of successful students. This program converts the provincial portion of your student loan into a non-repayable grant, pending you meet the eligibility requirements.

• To qualify you must have:
  • Graduated from a program at least 80 weeks in duration.
  • Borrowed more than $165 per week during a semester.
  • Been successful in at least 80% of a full course load in a semester, except where it is determined that you have extenuating circumstances.

5. Severe Permanent Disability Benefit

The Severe Permanent Disability Benefit is available to borrowers with a severe permanent disability. If you have a severe permanent disability, you may be eligible to have your loans immediately forgiven.

• The Canada Student Loans Program defines a severe permanent disability as preventing you from working and from participating in post-secondary education.
• You must apply for the Severe Permanent Disability Benefit. Enrollment is not automatic. Call the NSLSC at 1-888-815-4514 to inquire and apply.

If You Need some Student Loan Tips or Information…

• Contact the NSLSC at 1-888-815-4514 to determine your repayment start date and confirm consolidation—the combination of all your loans into one loan for repayment purposes.
• Protect yourself by documenting and safely storing or filing all conversations and correspondence relating to your student loans. More particularly, keep track of dates, names and discussions. For example, keep notes like the one below:
  • January 15, 2015. Spoke with Kelly at NSLSC. Wrong program end date on file. Need to get Schedule II form from Business Office.
• The NSLSC manages and administers the loans of millions of students. This means that letters or phone calls that you should receive may not reach you on time or may not reach you at all.
• Protect yourself by calling throughout your study period (i.e. once each semester) to determine your total loan amount, your repayment start date, your monthly repayment amount, repayment assistance options available, or to ask any questions regarding your loans.
• Call the NSLSC immediately before and after you finish your program to ensure that you apply for available repayment assistance options and that you are prepared to make your monthly loan payments in full and on time.
• If you have applied for, or have been approved for repayment assistance, contact the NSLSC to ensure that the repayment assistance you receive is applied accurately to your loans.
• If you have trouble understanding the person you reach at the NSLSC due to a language barrier, or feel that you are being misinformed, politely hang up and call again. You will likely reach someone else.
• Be responsible for your loans and ensure that you are a responsible borrower – it is important! Keep your student loans in good standing and ensure that you do not go into default due to making late payments or missing payments altogether.

If You Are Trying to Understand Student Loan Responsibilities…

It is important for everyone involved in the student loan program to understand their obligations, including:

Students

Your responsibilities as a student include, but are not limited to:

• Reporting changes in your address, telephone number, name, marital status, financial status, or student status (withdrawal, transfer to part-time studies, or change of school or program) to the NSLSC. Call the NSLSC at 1 888 815 4514 to make such changes.
• Providing proof of enrollment to the NSLSC in the form of a Continuation of Enrollment form, available at your campus Business Office.
• Contacting the NSLSC to set up your repayment schedule immediately after you finish your program of study or leave your program without graduating – you must repay your student loans whether you graduate or not.
• Educate yourself on your student loans and the repayment of your student loans.
• Maintain contact with the NSLSC during and after your study period.
• Protect yourself by documenting and safely storing all correspondence and conversations regarding student loans.
• Protect yourself and your credit rating by making your student loan payments on time and in full every month.

Federal Government

The federal government provides access to post-secondary education through federally funded loans. The National Student Loans Service Center (NSLSC) is managed by the federal government to administer and maintain all student loans belonging to all Canadian student loan borrowers.

The responsibilities of the NSLSC include those listed below, among many others.

• Processing your student Loan documents (the documents you sign to accept your loan once your application has been assessed by the provincial Student Aid office).
• Arranging for student loans to be released to students and deposited into bank accounts.
• Managing student loans during and after a student’s study periods.
• Working with students to establish and manage a repayment schedule.
• Administering repayment assistance programs for student loan borrowers.

Provincial Government

Student Financial Services is a division of the Government of Newfoundland and Labrador’s Department of Education. Student Financial Services has various responsibilities, some of which include:

• Creating and updating application forms, program guides and informational tools available to students and educational institutions.
• Communicating information about all relevant programs and services to student loan borrowers and educational institutions.
• Working with student loan borrowers and educational institutions in many capacities to ensure students properly receive and repay their loans.
• Assessing the financial need of each student loan applicant.
• Authorizing the amount of funding to be provided to qualifying students through federal and provincial loan and grant programs.
• Carrying out credit checks, when necessary.
• Reviewing student loan assessments on request.
• Assessing students for any grants they may be entitled to.

Educational Institution

Post-secondary educational institutions have various responsibilities in supporting their student loan borrowers. Educational institutions play a fundamental role in helping students obtain, manage and repay student loans.

The responsibilities of educational institutions include, but are not limited to:

• Educating and counseling students on the responsibilities of borrowing student loans, as well as educating borrowers on all available student financial assistance programs as well as all repayment assistance programs available.
• Confirming student enrolment in school by signing a Confirmation of Enrolment form. The form is forwarded to the NSLSC as proof of full or part time studies.
• Making all information and documents concerning student financial assistance and loan repayment available to students.
• Keeping students up to date on all student loan issues, changes, or repayment assistance options.
• Communicating with students, Student Aid and the NSLSC to resolve all issues that may arise regarding student loans.