Ch-ch-ch-changes
Government student loans are changing. Get schooled on how they affect you
New programs for borrowers having trouble paying back their loans
This new school year will also bring changes to programs designed for student loan borrowers who are having difficulty paying back their student loans after graduation. Before August 1, those who were experiencing financial difficulty could apply for a myriad of programs, including interest relief and debt reduction. Now, all that has been canned in favour of a consolidated plan called Repayment Assistance.
Under the new plan, borrowers will not required to make payments on their loans they can’t afford—payments will never exceed 20 per cent of their family income. Ability to pay will be calculated from the borrower’s family income and family size and the repayment period will never exceed 15 years.
If you qualify for Repayment Assistance, whatever payments you are judged to be able to afford will be applied directly to your principal while the federal government covers your interest. If after five years you are still experiencing financial difficulties, the government will cover your interest and start to make payments towards the principal amount of your loan, so that you will owe nothing at the end of 15 years.
Keep in mind that enrolment in this program is not automatic. To find out if you qualify and to apply, contact the National Student Loans Service Centre.
Laurie Campbell, executive director of Credit Canada, a non-profit credit counselling service, believes that the new program will help student loan borrowers who are in default. “The changes are great for students in financial difficulty making it easier to negotiate repayment of that debt even though they may be in default,” she said.
Borrowers who were approved for interest relief or debt reduction before August 1 2009, will continue to benefit from those programs for the remainder of the period for which they were approved.
To find out what your payments would be if you applied to the Repayment Assistance program, go to canlearn.ca’s Repayment Assistance Estimator.
Erin Millar and Ben Coli are writing an advice book about going to college and university in Canada. Have a question about anything to do with university? Email us at straightupguide@gmail.com
We received a question about whether scholarships affect your eligibility for grants. Here’s the answer: http://oncampus.macleans.ca/education/2009/09/17/do-scholarships-reduce-your-level-of-grant-funding/
Can someone please explain to me in more deails abou this new change to student loan because I am not understanding it one bit at all
Repayment Assistance program is not really assistance; instead, it is clamming the incomes of low income families and taking them under poverty line. Thanks for such innovation…! Interest Relief program is used to protect low income family, but I just noticed the program has been canceled. They try to compensate the banker mismanagements by taking the money from low income families. Shame on those who try to play with the lives of low income families!