Transcript National Student Loans Service Centre (NSLSC) CanLearn.ca Repayment Seminar Repaying your loan: Six things you need to know Welcome!  This session will offer you.

National Student Loans Service Centre (NSLSC)
CanLearn.ca
Repayment Seminar
Repaying your loan:
Six things you need to know
Welcome!
 This session will offer you six “must-knows”:
1. What are the benefits of Government Sponsored Student
Loans?
2. What is grace period?
3. Understanding your Consolidation Agreement.
4. How can you save money?
5. Avoiding repayment difficulties.
6. Maintaining your student loan.
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Must-know # 1: The benefits of your government sponsored
student loan
 With one application to the Provincial Government, you are
assessed for both Provincial and Federal funding.
 With that application you are assessed for Loans and Grants.
 The loan is interest free while you are in full-time studies.
 You do not have to repay the grants*.
 You do not have to make payments for six months after you end
full-time studies.
 You can make payments at any time without penalty.
 There are programs designed to assist you if you have difficulty
repaying your loan.
* Provided you maintain eligibility
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Must-know # 2: What is Grace Period?
 Grace period is the six month period after you end full-time studies
and before repayment begins.
 No payments are required, however, interest can accumulate
during this period.
 During this period you can make voluntary payments towards your
student loan.
 No interest is charged if you return to full-time studies and notify the
Service Provider during Grace Period.
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Must-know #3: Understanding Your Consolidation Agreement
Consolidation is the term used to
describe when your loan
repayment begins.
Your loan Consolidates on the
first day of the 7th month after
you end full time studies.
A month before your loan
consolidates you will receive a
Consolidation Agreement
which outlines the details of
your student loan.
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Must-know #3 :Understanding Your Consolidation Agreement
Your Consolidation Agreement presents you with a number of decisions:
how you wish to submit monthly payments
whether to pay off the interest that accumulated during your grace
period, or add it to your loan
the type of interest rate to apply to your loan and
how long you will take to repay your loan
After you have made your choices, it is important to return a signed copy
of the Consolidation Agreement.
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Must-know # 3: Understanding Your Consolidation Agreement
Payment Options
Your first payment is due on the last day of the month of Consolidation.
Your Consolidation Agreement allows you to set-up, confirm, change
or cancel your pre-authorized payments.
If you do not wish to have preauthorized payments deducted from your
account you can make your payments by:
• Telephone banking
• Online banking
• Cheque or Money Order
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Must-know # 3: Understanding your Consolidation Agreement
Dealing with grace-period interest
Option 1: Capitalize the interest (add it to your loan)
 Advantage: You will not have to pay off the interest if you do not
have the money available.
 Disadvantage: This will increase the total amount of your loan, so
you will pay more interest over time.
Option 2: Pay it off
 Advantage: Grace-period interest won’t be added to the amount of
your loan so your payments will be lower.
 Advantage: You will be able to claim the interest you pay on your
income tax return.
 Disadvantage: You will have to make a lump sum payment before
repayment begins.
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Must-know # 3: Understanding Your Consolidation Agreement
Interest Rate Options
On the Ontario portion of your student loan your interest rate will be
set at a floating rate of prime plus 1%.
On the Canada portion of your student loan you can choose to have
a floating or a fixed interest rate.
Choosing a Floating interest rate
means:
Choosing a Fixed interest rate
means:


Your interest rate will be set at
prime plus 2.5%.
+ You will pay a lower interest rate
initially.
- Your rate will fluctuate with prime.
Your interest rate will be set at
prime plus 5%.
+ The rate will not change during
your repayment period.
- If prime rate remains low, you will
pay more in interest.
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Must-know # 3: Understanding your Consolidation Agreement
Setting Repayment Terms
You can choose any length of time to repay your student loan, up to a
maximum of 14.5 years. (Most borrowers take 9.5 years.)
Shorter Repayment Term
Longer Repayment Term
 Choosing a shorter repayment
term means:
+ You will pay less interest
overall.
– Your monthly payments will
be larger.
 Choosing a longer repayment
term means:
+ Your monthly payments will
be smaller.
– You will pay more interest
overall.
You can adjust your terms any time during your repayment.
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Must-know # 3:Understanding Your Consolidation Agreement
On-line Tools
 The Canlearn.ca website has tools,
such as, the Loan Repayment
Estimator that you can use to assist
you in your decision making.
 The Loan Repayment Estimator will
show you how your decisions
regarding grace period interest, the
repayment term, and the interest rate
affect your loan.
Note: Interest rate and grace period interest are calculated at the
Federal rates (Floating, prime + 2.5% and Fixed: prime + 5%) and
should be used for budgeting purposes only. Your Consolidation
Agreement will outline your repayment details.
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Must-know #3: Understanding Your Consolidation Agreement
Three examples of the effects of the decisions you can make on your loan.
Based on a $25, 000 student loan and a prime rate of 3%.
1: Capitalize Grace Period Interest, Fixed Interest Rate and 9.5 year term.
Monthly Payment: $326.33
Total Interest: $11,202.12
2: Pay Grace Period Interest, Floating Interest Rate and 9.5 year term.
Monthly Payment: $282.05
Total Interest: $ 7153.41
3: Capitalize Grace Period Interest, Floating interest and 14.5 year term.
Monthly Payment: $214.56
Total Interest: $11,645.03
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Must-know # 4: Saving Money
 To save money in interest charges, borrowers can repay their loan
before the end of their repayment term without penalty by:
• Making payments while in school.
• Making payments during grace period.
• Paying an amount larger than the minimum monthly payment
calculated for their term.
• Making weekly or bi-weekly payments.
• Making lump sum payments.
.
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Must-know # 4: Saving Money
Based on a $25,000 loan, a prime rate of 3% and you have
chosen the floating interest rate. The chart below demonstrates
potential savings utilizing common repayment strategies.
Do Nothing
Number of months you will need
to repay your loan
Payment Amount
Total interest payable over the
life of your loan
Total interest savings
Increasing
Minimum
Payments by
20.00/month
Making
$250.00 lump
sum payments
once a year
Making
biweekly
payments
114
106
105
102
$289.80
monthly
$309.80
monthly
$289.90
monthly
$144.90
every two
weeks
$7,350.13
$6,506.74
$6,410.00
$6,195.32
$0.00
$843.39
$940.13
$1154.81
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Must-know # 5: Repayment Assistance
Missing payments on your loan can have serious and long-lasting
consequences.
Avoiding the consequences of missing payments
 Before you miss a payment, the best thing you can do is contact the
Service Provider, who can provide you with options such as:
• Repayment Assistance Plan
• Revision of Terms
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Must-know # 5: Repayment Assistance
Repayment Assistance Plan
 The Repayment Assistance Plan applies to both the Canada and
Ontario portions of your student loan.
 If you qualify for the Repayment Assistance Plan, you will not be
required to make a student loan payment above an affordable level.
 An Affordable Payment is calculated based on your income and
family size. As a result the payment could be lowered or put on hold
until you can afford them.
 You must apply for the Repayment Assistance Plan through the
Service Provider every six months—enrolment is not automatic.
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Must-know # 5: Repayment Assistance
Using the Repayment Assistance Estimator on the Canlearn.ca
website you can approximate your Affordable Payment based on your
loan, income and family size.
Example: A single borrower with no dependents who has a $25000 student loan
and a gross income of $2000/month.
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Must-know # 5: Repayment Assistance
Revision of Terms
 Allows borrowers to adjust their monthly payment temporarily or for
the remaining term of the loan.
 Options:
• Lower payment by making interest-only payments (6-month terms).
• Lower payments by adjusting the term up to the maximum 174 months
(14.5 years).
 How Revision of Terms differs from the Repayment Assistance
Plan
• All borrowers are eligible for Revision of Terms regardless of debt and
income level.
• Payments are required each month.
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Must-know # 5: Repayment Assistance
Ontario Student Opportunity Grant
 When you apply for the Ontario Student Assistance Program
(OSAP) you are automatically assessed for the Ontario Student
Opportunity Grant.
 The grant assists you by limiting your repayable loan.
 After the completion of the loan year the Ontario Ministry of Training,
Colleges and Universities determines your eligibility and will send
payments directly to the National Student Loans Service Centre.
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Must-know # 6: Maintaining your student loan
To keep your loans in good status make sure that you:
1. Let the Service Provider know if you return to school full-time to
return your loan to interest free status.
2. Sign and return your Consolidation Agreement.
3. Keep your contact information current with the Service Provider.
4. Let the Service Provider know if you are having difficulty making
your loan payments.
5. Check your loan balances regularly.
6. Keep all the documents that you receive by mail.
.
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Thank you for your time
and attention.
Stay in touch!
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