Understanding the Repayment Assistance Plan of Canada & Student Loans

The Repayment Assistance Plan, which began on August 1, 2009, was implemented with the goal of helping those who have difficulty managing their student loans–ensuring that their loan payments are within their means.

This Plan replaces the Interest Relief and Debt Reduction Repayment schemes. Borrowers who are under the Interest Relief and Debt Reduction Repayment schemes can either remain on these programs or apply for the Repayment Assistance Plan. This plan is not automatically given to those with student loans. Borrowers must apply for it.

What you need to know about the Plan

Under the Repayment Assistance Plan, payments for student loans are based on the borrower’s family size and income. Payments for loans under the Plan will not exceed 20 percent of the family’s income. For those with very low income, payment is not required and will only commence once their income increases. Lastly, repayment period will not exceed 15 years.

For borrowers with permanent disabilities, the maximum duration of repayment shall not be more than ten years.

2 Stages

The Plan is divided into two stages. The first stage pertains to the first five years. During this time, payments will be applied to the loan principal in order to reduce the total debt. The government will cover shoulder the interest amount.

Payments will not exceed 20 percent of the borrower’s income. Stage two is for those who continue to experience financial difficulty despite being under the Plan’s generous terms. This stage starts once the borrower completes stage one. In this stage, the government will cover a portion of the principal amount of the student loan on top of the interest it has been shouldering.

The principal amount to be covered by the government is determined by getting the difference between the required loan payment and the computed affordable payment. Within this stage, the loan should be paid off such that no student loan remains unpaid after 15 years of graduating from school.

Eligibility

To be eligible for the Repayment Assistance Plan, one should be a resident of Canada, have a signed Consolidated Student Loan Agreement, and satisfies the criteria of not being able to afford the required monthly payments as calculated by the Canada Student Loans Program.

To apply, one can request for an application form from the National Student Loans Service Centre by phone or through their web site. Information on eligibility can also be obtained through the aforementioned channels.

The application form should be complete and with the required supporting documents when submitted to the NSLSC.

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