Understanding Your Lifetime Limits in Canada Student Loans

Since 1964, the Canada Student Loans Program has helped students pursue post-secondary education through financial assistance made available by different financial institutions. The financial institutions are the ones that handled the loan process, while the Government of Canada stood as the guarantor of the issued Canada Student Loan.

In effect, the Government reimburses the unpaid amount of loans. In 1995, however, there were several changes made, and this included the risk-shared agreement.

The financial institutions had taken responsibility for the defaulted loans, since they were also handling the loan process themselves. The Government assured a fixed payment as part of the agreement.

In 2000, the agreement between the Government of Canada and financial institutions had ended. Now, the Government is the one financing the loans. Canada Student Loans Program is placed under the administration of the National Student Loans Service Centre (NSLSC).

Canada Student Loans lifetime limits

For Canada Student Loans, different lifetime limits apply on the cost of financial assistance you receive, which includes the loan and the interest-free period. After reaching the lifetime limits, the interest rates will kick in. Borrowers have to start paying back their loans six months after graduation or they left school.

Those who are granted loans for full-time students that are received on or after August 1, 1995 can avail of financial aid for 340 weeks, while those who are permanently disabled have a maximum of 520 weeks to receive financial assistance. Finally, those who are taking up doctoral studies can get financial assistance for a maximum of 400 weeks.

Repayment Assistance Plan

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. This is by 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.

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 10 years.

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