Students are required to consolidate their student loans with their lending institution within six months of the end date of the study period that is on record with their lender.  If you are not returning to school you must contact your lending institution and advise them of any change to your address and confirm when your loan consolidation papers are signed.

If you are not in a financial position to begin repayment by the due date, you may be eligible to apply for Interest Relief, which is available for both Canada and Ontario Student Loans.  Applications for Interest Relief are available from your lender (s).

Do not delay in approaching your lender(s) for information.  If you run into financial difficulty once you begin repaying your student loans, speak with your lending institutions to see if alternative arrangements can be made.

Consequences of Student Loan Default

There are severe penalties for student loan defaults.  Some of the possible consequences include:

It is in your interest to make every effort to avoid defaulting.

Returning to full-time post-secondary studies

If you return to full-time post-secondary studies, you must provide to your lender(s) proof of enrolment as soon as you are registered whether you apply for a new student loan or not. 

Proof of enrolment can be provided with either new student loan documents of CIFS Form (Continuation of Interest Free Status/Confirmation of Enrollment) This will ensure that your lender(s) has a record of the new end date for your study period and that your loans are maintained in interest-free status. 

You can pick this form up at the Office of Financial Aid Services, download it here, or print it directly from the OSAP website.  Upon receipt of the form, the Financial Aid office will attach a Letter of Enrollment, sign and forward the documents to the NSLSC.

Timeline

1. Close to your end of studies:
   If your province has a debt relief or remission program, the assessment may occur around this time.
   
   Check with your province for special Payment Programs that might be available to you.


2. The day after your full time studies ends:
   Interest begins to accrue (add) onto your principal, or the amount that you borrowed.


3. At about 5 months after your end of full time study date:
Lenders will try to contact you to make arrangements for repayment. If you do not hear from your lenders, you are responsible for contacting your lenders. For Alberta - If loans were issued after August 1, 2000, your loans are held by two lenders:

National Student Loans Service Centre
1-888-815-4514 (toll free)
Fax: 1-888-815-4657

Edulinx
1-866-827-0310 (toll free)
Fax: 1-866-827-0311


4. Before 6 months after your end of full time study date:
You will need to sign the consolidation agreements and send them back to the respective lenders. These consolidation agreements will give you the total amount you borrowed, the terms of repayment, your monthly payment due and also ask for how you would like to make the payment.

Please be aware that you enter passive agreement if the signed loan consolidation forms are NOT returned to the lenders. This consolidation is different than if you were to do a consolidation loan with the banks. More information is below.

If you would like to shorten or lengthen your term of repayment or make changes, do so when you return the consolidation agreement.


5. From 6 months after full time studies end until your loans are paid off:
Make your monthly payments on time. The payments are usually taken automatically from your bank account, so make sure there's enough money in there!

Keep your lenders updated on any contact information or banking information changes.

If you decide to return to school, you can have your loans reinstated to full time status.

Ask for help if you are having difficulty making your payments.

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General Tips & Pointers

Interest is calculated daily so, if you are able to increase the frequency or amount, you will save over the long run in interest charged

There is no prepayment penalty on student loans, so if you can make a payment before the 6 months starts, you will also minimize the interest that you pay.

If you are having difficulty making your payments, there are programs to help you. See below for more information.

Don't ignore your lenders, no matter what you do!

Make sure your banking and contact information are up to date. This tends to cause a lot of problems for students, especially after they graduate and move away.

I'm having difficulty making payments. Help!

There are several government options to help you if you are finding it difficult to make your payments.

Revision of Terms

You can request to have your terms revised so that the total repayment period is extended, and so your monthly payments decrease. The downside of this is that the total interest you end up repaying increases.

Interest Relief

This program is designed for short term relief if you are having short term financial difficulties. Contact the lenders for more information and to request interest relief.

Interest relief is available for 6 months at a time, up to a total of 30 months.

While on interest relief, you will not have to make any payments, and interest stops adding onto your principal.

Interest relief must be negotiated with each lender separately.

Extended Interest Relief

If you are still having difficulties after using 30 months of interest relief, you can request the extended interest relief to be applied. You must have revised your term of repayment to 15 years, and still meet the requirements in order to qualify for extended interest relief.

If you qualify, you can ask for more interest relief in 6 month blocks up to another 24 months.

Federal Debt Reduction in Repayment

If, after extended interest relief, you are still experiencing significant financial hardship, you may qualify for a reduction in your Canada Student Loan.

Loan Forgiveness

Students with permanent disabilities that will prevent them from finding meaningful work can apply to have all their loans forgiven.

What if I don't pay? Defaulting on student loans

Defaulting on a loan means that a payment is more than 270 days overdue. Your loans will be in collections, and you will be reported to the credit bureaus.

It is the student's responsibility to notify his/her lender if he/she cannot meet repayment requirements. If the student fails to make loan payments their loan will go into default

Students who continue to be in default will be reported and their loan may be sold to a collections agency. Further loan funding will be denied. Any government monies (like income tax refunds and GST/HST credits) owing the student may be withheld.

When you are in default, you are no longer eligible for debt reduction tools like interest relief or additional loan funding until your loan default has been cleared or you rehabilitate your account.

The process of rehabilitating your account is different for each loan and is also dependent on how long your loan has been in default.
It may require:
Making a lump sum payment

Paying off all outstanding interest, as well as consecutive payments for a number of months as determined by the lender.

Paying off the entire loan amount outstanding.

What if I need to claim bankruptcy?

NOTE: Students who declare bankruptcy in the middle of the school year lose eligibility for any further funding. Any loans or grants that have not yet been disbursed will be canceled. The student cannot apply again until 3 years after the discharge date and must also go through the proper loan rehabilitation procedures.

A student cannot claim bankruptcy on his/her student loan after finishing studies until 10 years after the End of Study date.

Some government programs may still be available, depending on your situation.

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