Tuesday, 22 July 2014

Understanding Student Loan Repyament

Royal Roads students have a lot of responsibilities. Whether you’re taking a 6-month certificate, an intensive on-campus bachelor degree or a two year graduate program,  you’re likely  juggling a combination of course work, employment, family commitments,  and—if you can fit it in—a social life. Each aspect of your life is important and comes with a fair share of responsibility. It can be easy, therefore, to overlook an important responsibility of being a student: managing your student loan repayment.

This post will give you a general overview of how student loan repayment works. Keep in mind that repayment varies by province/territory. Check out your provincial/territorial loan provider’s website for specific information on your loan.

While you’re in school…

All student loans have a student loan study period. A study period must be at least 12 weeks long (or 6 weeks for part-time loans) and can’t be longer than 52 weeks.

During the study period your loan does not collect interest and you don’t have to make payments. If you’re still in school at the end of your study period you have two options.

1)      Apply for another full-time loan. Let’s say you’re going into the second year of the blended BA in Justice Studies program. If you received a full-time loan in your first year, and you apply for a new loan in year two through the same province, the previous loan will automatically stay interest/payment free.

2)      Submit a Confirmation of Enrolment request to your student loan lender. If you’re not applying for another full-time loan, or you are receiving part-time loans, you need to let the government know you’re still in school. This will keep your loan interest and payment free.

Check out the Interest Free section on the RRU website for more information.

After school…

When you finish school your loan will start collecting interest, but you don’t have to make payments for 6 months. This is called the repayment grace period. Your loan will enter repayment on the first day of the 7th month after school ends.

About 45 days before your loan enters repayment the government will mail you a consolidation agreement. (If you don’t receive anything, contact your loan provider for instructions before the end of your repayment grace period.)

This agreement outlines the repayment terms of your loan, including the total outstanding balance, monthly payment and when it is due, how long you have to repay, the interest rate charged on your loan and your bank account information.

It’s your responsibility to review this agreement, make changes where applicable, and send a signed copy back to your lender. Even if you don’t sign the agreement, your monthly payments will automatically be withdrawn from your bank account.

The StudentAid BC website has a good overview of how student loan repayment works.

Things to consider before your loan enters repayment…

Is my loan integrated? Integration means the federal and provincial portions of your loan are managed by the National Student Loan Service Centre. Integrated loans are easier to manage because you only have to make one monthly payment. Non-integrated loans require payments to two or more lenders including the NSLSC, provincial lender and in some cases the bank.

 You can find out what kind of loan you have on the CanLearn website.

When does my study period end? Log in to your provincial student loan account or check your Notice of Assessment (BC loans) to find out your study period end date. 

Be aware that reducing your course load, taking a leave, or withdrawing from studies can affect your study period end date. In these situations contact Financial Aid & Awards for more information. 

Is my contact information up to date? To ensure you don’t miss important correspondence from your loan provider(s), make sure your mailing address is up to date with the National Student Loan Service Center and your lending province and that they have a personal email address for you because RRU's email address will be deactivated shortly after convocation.

Things to consider after your loan enters repayment…

Repayment Assistance.  If you’re struggling to make your monthly loan payments there are resources available to help, particularly for grads earning less than $25,000 a year. Start by contacting the National Student Loan Service Centre about the Repayment Assistance Plan.

Changing repayment terms. You can update your bank account information, change your monthly payment date and request to change the amount of your monthly payment through the CanLearn website.

Returning to school. If you’re going back to school you may be able to place previous student loans into interest free status. Contact the Financial Aid office at your new school to check your eligibility.

A final piece of advice…

You don’t have to wait until your loan enters repayment to start paying it down. If you’re working and can afford it, start making payments towards your loan during your repayment grace period.

You can also increase your monthly payment amounts, or make lump sum payments through online banking.

The faster you pay down your loan, the less interest you pay overall. And that’s always a good thing!

(You’ll find more tips on how to pay off your loan faster on the CanLearn website.)

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