Debt Relief Canada Repay Student Loans

Canada provides debt relief options for repayment of student loans. Options for debt relief may entail forgiving a portion of the debt’s principal, lowering the interest rate, or consolidating several debts into a single lower-interest loan.

However, if you are struggling to pay your student loans, especially in times of pandemic, you can avail of the two solutions the government has given. 

What are student loans programs in Canada?

The federal government has two programs that can help you fund your education. You can apply for school loans from the Canada Student Loan Program (CSLP) or grants from the Canada Student Grants Program (CSGP).

Canada Student Loan Program offers up to 60 percent of the cost of your tuition in federal loans. However, you have to pay the loan amount plus interest once you graduate.

Canada Student Grants Program is available to full-time students in financial need. You are automatically assessed when applying for student aid with your province or territory. Unlike student loans, you do not have to repay upon graduation.

Debt Relief Canada: Repay Student Loans

Get a Repayment Assistance Plan

If you are having trouble making payments, you can apply to the Government of Canada to help you pay your loans through the following plans:

  • the Repayment Assistance Plan (RAP)
  • the Repayment Assistance Plan for Borrowers with a Permanent Disability (RAP-PD)

According to the government, β€œDepending on your income, you may not be required to make payments that exceed your income by 20%, or any payment at all. You can apply for RAP anytime during repayment.”

You can already apply for RAP as soon you start repaying your student loans. Once you get accepted, the Government of Canada will pay the interest owing to that your revised payment does not cover. After 60 months of 10 years after you graduate (whichever comes first), the government would repay both the principal and interest that exceeds your reduced monthly payments.

As long as you remain qualified for RAP, your loan balance is gradually paid off, and repayment requirements will not exceed 15 years (or 10 years for persons with permanent disabilities) after graduation.

For this debt relief Canada student loans repayment program, re-enrolment is not automatic, and you must re-apply every six months.

Update payment options

Under Canada debt relief for student loans, you may increase or decrease your monthly payment. As well, you could customize your payment online. Increasing your payment means the time it takes to pay back your loan and get a lower interest rate. 

If you lower your monthly payment, your repayment period would be extended up to 174 months. So your payment would be lower, but you will get more interest. 

Log in to your secure National Student Loans Service Centre (NSLSC) account to customize monthly payment terms. 

Contact NSLSC if you want to reduce your payments below the minimum amount.

What happens when I miss a student loan payment?

When you fail to pay for nine months,  your federal student loan will be forwarded to the Canada Revenue Agency (CRA) for collection. Once it reaches collection, you can no longer apply for a debt relief program in Canada Government for student loans. You need to make your loan up to date to qualify for student aid again. 

What if I apply for bankruptcy?

Unfortunately, your Canada Student Loan won’t be cancelled even if you apply for bankruptcy within seven years of finishing your studies. Therefore, you will need to continue paying back your Canada Student Loan.

The debt relief program provided by the Government of Canada would only be effective if you do your part to pay off your student loans. However, if you are still having difficulty resolving your debt, you can reach a certified credit specialist to help you resolve your financial situation. 

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