Paying Student Loans
You've got the education. Now it's time to start paying for it , which is easier said than done. But the following information may make paying your student loans just a little bit easier. And while it may seem as though it's been a very long and drawn-out session of on-the-job training, what feels like the end of one part of your life is actually the beginning of a much larger one. Welcome to the job market.
Punching in the Time Clock
At some point around the time that you're planning your graduation party, it's a good idea to get in touch with each of the financial institutions holding your outstanding student loans and/or the National Student Loans Service Centre (NSLSC). You need to make payment arrangements with them, and they'll provide you with a repayment schedule detailing when each of the expected monthly payments are due, and the total length of your repayment period. The terms and conditions of repayment will include the outstanding principal of your student loans, the interest rate(s) and your monthly payment amount. The process is called consolidation.
Hurray for Grace Periods
Because most university students don't get jobs immediately after graduation, student-loan recipients are granted a grace period after they stop attending school during which they are not required to start repaying their student loans. In most cases, that's six months after they cease to be full-time students. (If you decide to return to full-time studies, and don't receive a new student loan, you have to notify the bank.) But take note: Depending on the provincial source of your loan, your interest might start to add up from the first day following the month your studies ended.
How long you have to finish paying the loan depends, again, on what province you're in. In Ontario, for example, you have up to nine-and-a-half years to repay your student loan in full.
What if it's too much to handle?
If you cannot afford to make payments on your student loans, you've got to let your creditor know. They might be able to revise the repayment terms to make them more favourable. In some cases, you might qualify for interest relief, debt reduction or even debt forgiveness. The best rule is to keep in touch with the bank if you are having difficulty with repayment.
There are many different ways you can arrange your payment schedule, depending on what you can afford. The standard payment plan, if you can afford it, will offer you the lowest total loan cost.
The monthly payment students owe to the bank or service provider to repay their student loan is based on the outstanding balance of the loan and the length of time they negotiate to repay their loan (the amortization period).
As an unemployed recent university graduate, you may have much more time than you have money. Six months after you finish your post-secondary education, and are no longer a full-time student, you are responsible for repaying your loan. Some universities have instituted Loan Forgiveness Programs, to help students reduce their debt. In addition, some provinces have instituted Loan Forgiveness programs. Research these options online or with student assistance programmes at your university.
It may be tempting to forget about your loans. After all, school is over, so why do you need to think about paying for it? But if you do not make your payments, you will be considered in default. Your debt will be turned over to a collection agency and your default will be reported to a credit bureau. That will look nasty on your credit record, and may disqualify you for further student loan funding in the future. What's more, a discharge from bankruptcy will not include your student loan, so there's no salvation there.