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Printer friendlyDealing with student loan debt
A few years ago the most expensive purchase a Canadian considered was that of a home and an automobile. Now it is necessary to add the cost of a higher education to this list. Today tuition for a 3-year undergraduate degree at a Canadian university could cost in the vicinity of $14,000 to $24,000. This amount can jump significantly at a professional school. These amounts do not include a student's living expenses while attending school. Today student loan debt is a major burden for thousands of Canadians.
For many Canadians attending a post-secondary institution is one of the most important investments they will make. Studies of Canadian's incomes show that, on average, the more education an individual has the greater their income. However, many Canadians have discovered that higher education is no guarantee of a better paying job.
Today, for some individuals, the student loan system in Canada has been a frustration to deal with!
Because:
- of changes to student loan programs in 1995 and 2000 individuals may find they are dealing with up to six different loans managed by different organizations
- of service levels which have received negative media coverage at organizations responsible for administering federal student loans
- thousands of important forms sent to organizations administering Canada Student Loans have been lost which could adversely affect some students
- of difficulties obtaining details on an outstanding student loan
Overview of student loans
Student loans are available from both the federal government through the Canada Student Loans Program (CSLP) as well as loans available from the province where a student resides. Canada Student Loans are made to full-time students, interest free while they are attending school full time. Repayment on a Canada student loan, both principle and interest, begins six months after a student completes their studies. As a general rule, Canada student loans must be repaid within ten years after leaving school.
Canada student loans before August 1, 2000
The Canada Student Loan Program began in 1964. Several important changes were made to the program in 1995 and 2000 and some corresponding changes were made to provincial loan programs. As a result of these changes a person may have up to six different student loans to deal with administered by different organizations (pre-1995 federal and provincial, 1995-2000 federal and provincial, and post-2000 federal and provincial).
Canada Student loans that were taken out before August 1, 2000 were administered by individual banks and credit unions. Payments on these loans were made to the institution that granted the loan. If a student defaulted on these loans the lender could recover its monies from the federal government, which guaranteed the loan. The federal government would then assign the delinquent Canada student loan to a collection agency.
Canada student loans after August 1, 2000
In 2000 Canada's financial institutions got out of the federal student loan business citing lending losses. Consequently, in 2000 the federal government assumed responsibility for administering Canada Student loans. The National Student Loans Service Centre (NSLSC) administers all Canada student loans issued after August 1, 2000. Today outstanding provincial and federal loans are placed for collection with collection agencies.
Canadian bankruptcy laws and student loans
Under Canadian bankruptcy law unsecured debts are typically eliminated when a person is discharged from personal bankruptcy. However, unpaid student loans survive bankruptcy except where the bankrupt ceased attending school several years ago. At the present time a student loan debt survives bankruptcy unless the bankrupt ceased attending school ten years prior to filing for personal bankruptcy. In December of 2007 federal legislation was passed reducing this 10-year period to 7 years and to 5 years in the case of hardship. However, this change has yet to become the law in Canada although it is expected to become law sometime in 2008.
Need help navigating through your student loan debt?
You've left school. Don't let your student loan debt keep you in a financial hole and rob you of your peace of mind. If your student loan is a problem, Mark Silverthorn may be able to help you. Call today!