Can I get student loan relief?

Here’s what to do if you’re in default

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From the February/March 2016 issue of the magazine.

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Q: Five years ago, I wasn’t able to graduate from my post-secondary studies and defaulted on my student loan. Now, I owe $13,000. I heard the new Liberal government could provide student loan relief. Is that true?

—Bianca King, Calgary

A: You are responsible for repaying your loans, regardless of whether you graduate. But if you have difficulty you can apply to the Repayment Assistance Plan (RAP), according to Julia Sullivan of Employment and Social Development Canada. “Approved borrowers only pay back what they can reasonably afford based on their family size and income.” You can also apply for a Revision of Terms, which lowers your monthly payments even further. If you default on the loan, the Canadian Revenue Agency takes over its collection but there’s still a rehabilitation option, says Sullivan. Make two months of payments, plus pay all outstanding interest and the loan moves into good standing. “Then you’re eligible to apply for additional post-secondary loans and grants, or repayment assistance if you need help.” As for changes by the Liberals, the RAP may be revised to ensure that borrowers make at least $25,000 before being required to make repayments.

Bruce Sellery is a frequent guest on financial television shows and author of Moolala. Do you have your own personal finance question? Write to us at ask@moneysense.ca

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