1. Can I start making payments early or before my loan goes into repayment?
Yes, this is a wise way of paying down the principal debt and reducing the interest charged during your six-month grace period. You must contact your lender(s) to arrange early payments and get them to send you a consolidation agreement.
2. What is a consolidation agreement? What happens if I don’t sign it?
A consolidation agreement is your lender’s legal document outlining the terms of repayment. It should include your total loan balance, the expected monthly payments, the start date of repayment, the interest rate, and the amortization period. Your lender(s) will send you this form when you are reaching the end of your study period.
If you do not sign and return the consolidation agreement, your loans will still go into repayment. However, you will not be eligible for any repayment assistance programs until you have signed it.
3. Should I consolidate all of my student loans into a single loan with a bank?
There are both advantage and disadvantage to consolidating your student loans into one bank loan. The advantages of consolidation are:
- You only have to deal with one lender
- You only have one monthly payment instead of two or three
- You’ll have a fixed, possibly lower, interest rate
The disadvantages of consolidation are:
- You are no longer eligible for government debt management programs (Repayment Assistance Plan or BC Interest Relief).
- You will not be eligible for tax credits for interest payment when filing your tax returns.
- You will not be eligible for interest-free status if you return for more post-secondary studies.
- You will be unable to claim student loan payments on future student loan applications.
4. Should I double up my monthly payments
Yes, when you can. This is recommended as it will decrease the overall amount of interest that you will pay on your student loans. Even if you can’t double up but you can only make an extra payment of $25 or $50 each month, it will make a big difference in the long run.
5. What happens if I can’t repay my student loan(s)?
Find out more about your repayment options or contact your lender(s). You can also meet with a Student Services advisor to work out a financial plan for paying back your student loans after graduation.
6. What happens if I default on my student loan(s) repayment?
Contact your lender(s) to find out about your options to keep your loan in good standing. Defaulting on your student loans can result in the loans being sent to collections, a poor credit rating, loss of future income tax refunds and/or GST credits, wage garnishment or property liens, and potential legal action.
7. How long is the repayment period? What is the interest rate? What is prime?
To answer your questions about repayment periods, interest rates, and primes, visit CanLearn.
8. If my question isn’t answered here, where else can I find answers?
Check out CanLearn for more information.