Paying off loans
As a borrower, you're responsible for paying off your loans when you finish your studies. Here are some useful tips.
- Keep yourself apprised of the latest changes made to the Loans and Bursaries Program, even after your studies. That way, you'll be sure to properly carry out your end of the contract without penalties.
Assistance is also available for exceptional or difficult circumstances.
“What's the rush to pay off my student loans?”
It might be tempting to pay off other loans before your student loans because of the lower and therefore more advantageous interest rate on the latter. There is no avoiding it and your financial institution has a duty to remind you of your responsibility.
- Your financial institution must follow certain rules and make sure that you honour your commitment just as you would with any other type of personal loan.
- Even if you take out new loans to buy a car or furniture, for example, you must be able to keep making your payments on your student loans.
“I don't have to pay a penny for 6 months”
Actually, interest starts accruing as soon as you're no longer a full-time student. 6 months later, you have to start paying back your debt, including both the principal and the interest.
If you're among the lucky few who have found employment right after finishing school, you may choose to start paying off your interest without waiting for the 6-month period to end. All you have to do is contact the Student Advisory Centre to let them know.
“What are the terms and conditions?”
You'll receive a letter from the Student Advisory Centre listing your repayment terms (amount to be paid each month and the repayment period). You therefore don't have to go anywhere or sign anything to get started.
“How long do I have to repay my loan?”
Your repayment period depends on the size of the loan.
“And if I choose to pay back my loan more rapidly to pay less interest?”
In order to lower their interest charges, some people opt for a shorter repayment period than the one recommended by the Student Advisory Centre. But before you commit to a quicker repayment plan, be sure to assess your financial situation and your ability to pay.
“I have to put my studies on hold for a while”
You can defer paying off your student debt if you temporarily stop studying full time for any of the following reasons:
- Becoming pregnant
- The birth or adoption of a child
- A temporary disability
- You have been elected an executive officer of a student association
The deferment period varies according to the reason for your request. In the case of pregnancy, for example, you could defer repaying your loan for 12 months.
How do I proceed?
- Fill out the AFE's Application to Postpone the Repayment of a Student Loan Debt During a Temporary Interruption of Studies in the Temporary Interruption of Studies section.
- Provide the necessary supporting documents.
“I don't have enough money, I don't have a job, I can't make the payments”
Need a break? If you haven't found a job after finishing school or you're in a precarious situation, you may qualify for the Deferred Payment Plan.
Eligibility is determined based on:
- your financial situation
- your income
If you're eligible, you'll be exempt from paying off your student loan for a 6-month period.
Over your lifetime, you're entitled to up to 60 months (10 periods of 6 months each) of deferred payments, meaning either a more manageable payment or no payment at all, according to your situation. This applies for the 10 years following the 6-month grace period after you finish your full-time studies.
“Do I qualify for Loan Remission?”
You may be entitled to a loan remission equivalent to 15% of your total student loan debt if:
- you completed your program within the normal time period
- and you received scholarships every year of your studies
“Am I entitled to a tax credit on my student loans?”
The provincial and federal governments grant you a non-refundable tax credit on the interest you pay on your student loans each year. You qualify for both tax credits until you have paid off your student loans.
“How do I qualify for the tax credit?”
The information regarding the interest paid on your student loan can be found on the account statements of your financial institution. Your December account statement displays the total amount of interest paid. Simply print out the statement and include it with your income tax return.
Questions?
In any event, if the proposed repayment terms don't work for you, or if you've neglected to inform the government that you're still a full-time student, contact the Desjardins Group Student Advisory Centre to let them know.