Your Loan Responsibilities Understanding Loan Repayment Financial Difficulties Frequently Asked Questions Glossary

Transcription

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2 Table of Contents Your Loan Responsibilities... 2 Pay tuition and other required fees first... 2 Continue in full-time studies... 2 Maintain a satisfactory scholastic standing... 2 Withdrawing from school or failing to progress at school... 2 Report Changes in Circumstances... 3 How do I report changes?... 4 Understanding Loan Repayment... 5 When should I start repayment... 5 Lifecycle of a BC Student Loan in Repayment... 5 Grace Period (6 Months)... 5 Consolidation Agreement... 6 Repayment Day... 6 Monthly Payments... 6 Financial Difficulties... 7 What happens is I don t repay my student loan?... 7 Missed Payments... 7 Collections... 7 Where can I get help if I miss payments?... 7 Repayment Assistance Plan (RAP)... 8 Frequently Asked Questions... 9 What is a loan consolidation?... 9 When does interest start accumulating?... 9 What is a grace period? What is capitalized interest? What is amortizations? What interest rates will I pay? What will my monthly payments be? Glossary Contact Information for StudentAid BC Page 1 of 12

3 Your Loan Responsibilities Pay tuition and other required fees first The money provided by StudentAid BC is for your education. Your first responsibility is to pay the tuition fees and other required fees to your school. That has priority over all other costs for which you may have received funding. Continue in full-time studies To stay eligible for StudentAid BC loans or grants, you must attend school full-time for the entire study period for which you have received funding. If you drop below the required course load during your first semester/term but plan to attend full-time in the second semester/term, you must submit a new application for student assistance. Your new application will be assessed once the withdrawal process at your school is complete. If you stop attending classes, drop below your required course load, or fail to maintain the minimum number of weekly instructional hours for non-academic programs for your entire study period, but you do not formally withdraw from school, you may still be considered withdrawn for student assistance purposes. If you miss 10 consecutive days of classes, or 20% of your study program, you will be considered withdrawn. If you withdraw from school two times while receiving B.C. student financial assistance, you will be denied further funding by StudentAid BC. Maintain a satisfactory scholastic standing To continue receiving financial aid, the Canada Student Financial Assistance Act and StudentAid BC policy require you to maintain a satisfactory scholastic standing. Withdrawing from school or failing to progress at school Page 2 of 12

4 You will not be able to receive more student assistance, and you will be disqualified for interest-free status on any previous student loans if: You withdraw from a full-time course load on two separate occasions while receiving student assistance or interest-free loan status. You fail to achieve satisfactory marks in 68 weeks or more of fulltime study while receiving student assistance or interest-free status. If you withdraw from full-time studies: Your school will automatically notify us that you no longer meet requirements for assistance. Your funding will be re-calculated based on the number of weeks you actually attended school. We will explain to you in writing how your withdrawal decision affects your student loan or grant. Any tuition refund you are eligible for will be applied to your outstanding loan balance if your school received tuition from your student loans. Re-qualifying for student assistance depends on several conditions, including successfully completing full-time studies for two semesters or one academic year without StudentAid BC assistance. Report Changes in Circumstances What changes should I report? You should report any changes that affect the accuracy of the financial need and eligibility information in your student assistance application. Changes include but are not limited to: Your income, assets or investments, including any new sources of income not listed in your application. Financial estimates, assets or investments of your spouse/commonlaw partner or parents/step-parents/sponsor/legal guardian. Your program of study or study period dates. Your marital status before the first day of classes. Page 3 of 12

5 Your living situation before the first day of classes (such as whether you are living in a home owned or rented by your parents, or living away from your parents' home). Purchase/sale/lease of a motor vehicle The birth or adoption of a child How do I report changes? Instructions Complete the appropriate form. (There are different forms for fulltime and part-time studies). Appendix 7: Request for Reassessment Form for full-time students. Submit the form to StudentAid BC. All information is subject to audit and verification. Keep all receipts and supporting documentation related to your changed circumstances, as these may be needed if you are audited. If you fail to report changes to your application information, you may become ineligible for funding through StudentAid BC. Understanding Loan Repayment When should I start repayment? Starting your repayment early will reduce your debt load after graduation because payments are applied directly to the outstanding principal balance. Contact the lender(s) holding your student loans to arrange repayment if you: Have finished your program Have transferred to part-time studies Are taking time off Withdrew from school completely Want to make payments while still in school Page 4 of 12

6 Lifecycle of a British Columbia Student Loan in Repayment: Grace Period (6 Months) The grace period begins on the first day of the following month after a student has graduated from their College program. Example: Student s last day of attendance is April 12; the Grace Period begins on May 1 and ends October 31. Students must start the repayment of their student loans on the last day of the seventh month. Example: November 30. Interest on students loans start to accrue after the student has left school, during the grace period. A pre-consolidation letter is sent by StudentAid BC to a student 2.5 months before the student reaches their repayment date outlining: o Anticipated monthly payment; o Interest rate; o Payment due date; and o Loan balance A Consolidation Agreement is sent to the student 1.5 months before the student s repayment date outlining: o Loan amount; o Interest rate (fixed or floating); o Repayment terms (general 174 months); o Account information; o Payment due date; and o Monthly payment amount. Consolidation Agreement Within six months of ceasing to be a full time student, a borrower who has received loans through StudentAid BC must enter into a consolidation agreement with the bank or service provider managing the loan documents. This agreement establishes the monthly payments, which will be required to repay the debt in full. Page 5 of 12

7 Repayment Day Repayment day is on the first day of the seventh month following the student s last day of studies. Monthly Payments Will be automatically debited from the students account on the last day of each month Extra payments can be made anytime by: o Online payments; o One time debit; o Telephone banking; or o Cheque or money order. Financial Difficulties What happens if I don't repay my student loan? If your Canada-B.C. integrated student loan is 270 days overdue (150 days overdue for B.C. loans at the BC Student Loan Service Bureau), your loan will be considered in default and collection activities will proceed. Defaulting on your loan can disqualify you from: Receiving future student financial assistance. Applying for repayment assistance under the Repayment Assistance Plan. B.C. debt management measures. Missed Payments 1 missed payment = delinquent; 2 missed payments = not further funding; or 5 missed payments = (default) sent to Revenue Services of B.C, for collection. Page 6 of 12

8 Collections Students can expect from the Revenue Services of B.C. collection department: Added interest charges Loss of eligibility for future StudentAid BC funding Having to deal with a collection agency A bad credit rating and inability to get credit Not being accepted for contracts for cellular phones, etc. Loss of future income tax refunds and GST rebates Legal action Garnishment of your wages Liens against your property Where can I get help if I miss payments? If you are having trouble making monthly payments on your student loans, talk to the: National Student Loan Service Centre, B.C. Student Loan Service Bureau Or please contact the administration office at Q College if are having any repayment difficulties, we would be happy to assist you in applying for any other the assistance options available to most students, including; Repayment Assistance Plan (RAP) You are eligible if you: Are a resident of Canada; Have signed your consolidated student loan agreement; and Are unable to afford the required monthly payment Under this program, no payments will be required of borrowers whose affordable payment falls below a minimum threshold, based on accepted debt-to-income ratios. Eligibility is assessed on a six-month basis; borrowers must re-apply every six months if they wish to remain on RAP. Page 7 of 12

9 Stage I: This stage applies to the first five years. For five years student loan borrowers who qualify will make affordable payments (or no payment) toward their loan principal. Paying the student loan principal first reduces the total debt. The Gov t of Canada will cover the interest amount owing that the borrower s affordable payment does not cover. Borrowers will not make payments exceeding 20% of their income towards student loans covered by the Repayment Assistance Plan. Borrowers could be enrolled in this stage for up to 5 years during a 10-year period. Stage II: This stage is available for borrowers who continue to experience financial difficulty. It starts once the borrower completes Stage I, or has been in repayment for 10 years after they leave school or complete their studies. The Gov t of Canada will continue to cover the interest and begin to cover a portion of the student loan principal amount (i.e. the difference between the affordable payment and the required payment). The balance of the loan should be gradually paid off so that no student loan debt remains after 15 years of leaving school. Throughout this period, the same eligibility criteria, application process and affordable payments as in Stage 1 will apply. Frequently asked questions What is loan consolidation? Consolidation means your lender has given you a "repayment date". It starts on the first day of the seventh month after you stopped attending full-time studies or withdrew from classes. The National Student Loans Service Centre (NSLSC) will automatically send you a consolidation agreement, approximately 45 days before you enter repayment. Page 8 of 12

10 Your consolidation agreement shows: The details of your current outstanding Canada-B.C. integrated student loans balance. Your monthly payment and when it is due. How long you have to repay. The interest rate charged on your loan. The bank account from which payments will be withdrawn. Your credit rating stays in good standing when you meet the terms of the consolidation agreement and repayment schedule by making your monthly payments on time. The consolidation agreement lets you: Review your loan information. Change the bank account that payments are withdrawn from. Increase the amount of your monthly payment. Change the interest rate. Pay your grace period interest. Change the day your monthly payment comes out of your account. If you do not arrange a different schedule, your payment will automatically come out on the last day of the month. Please sign and return the consolidation agreement to the NSLSC. If you do not, payments will automatically be withdrawn directly from the bank account that you provided when you negotiated your master student financial assistance agreement. When does interest start accumulating? Interest begins accumulating on your loan as soon as your study period ends. You are not required to begin making payments until the first day of the seventh month; however, you can make payments anytime during your study period and your six-month non-repayment (grace) period. It is your responsibility to make repayment arrangements with the NSLSC and/or your lending institution within six months of finishing your studies. Page 9 of 12

11 What is a grace period? You have six months starting from your last day of full-time studies or date of withdrawal before you have to make payments on your Canada- B.C. integrated student loans. However, you are responsible for the interest that accumulates during those six months. At the end of this grace period, your loans are consolidated and you must start to repay them. You can pay off the accumulated interest immediately or have it added (capitalized) to the principal amount owing. If you do not pay off the grace period interest, it will automatically be capitalized onto the principal of your loan. What is capitalized interest? Adding the accumulated interest to the principal of the loan is called capitalization. You are responsible for the interest that accumulates during the six-month grace period. You can either pay the accumulated interest immediately, or it will be capitalized and added to the principal of your loan. What is amortization? Amortization or the repayment period is the length of time you arrange with your lender to fully repay a loan. The normal amortization period to repay a Canada-B.C. integrated student loan is 114 months or 9.5 years. What interest rates will I pay? The interest rate for student loans is either a floating interest rate (the prime rate plus 2.5 percent) or a fixed rate (the prime rate plus 5 percent). Your loan will automatically be charged the floating interest rate unless you choose to change to the fixed rate. Page 10 of 12

12 What will my monthly payments be? Your monthly student loan payment is based on: The total amount you owe on your loan, The interest rate at the time of consolidation, and The number of months in your repayment period. Your consolidation agreement is sent by the NSLSC and shows your monthly payment on your student loan. Glossary Prime rate The prime rate is used as a base to calculate the interest applied to a Canada Student Loan. It is then added to the fixed or floating interest rate. The prime rate is calculated using the average interest rates declared by the Bank of Nova Scotia, TD Canada Trust and the Bank of Montreal. Fixed rate Fixed rate is a stable rate of interest. If you negotiate a fixed rate, you will be charged the same interest rate throughout your repayment period. The Loan Repayment Estimator uses a fixed rate of 5%. It is then added to the prime rate. Floating rate Floating rate is a rate of interest that varies over time with the prime rate. If you negotiate a floating rate, the interest you are charged during repayment of your loan will increase and decrease along with the prime rate. Page 11 of 12

13 The Loan Repayment Estimator uses a floating rate of 2.5%. It is then added to the prime rate. Your total interest payable may fluctuate with the changes in the prime rate. Number of monthly payments If you take advantage of the 6-month grace period, 114 monthly payments represent a total repayment period of 9.5 years (10 years x 12 monthly payments less your 6-month grace period). If you do not take advantage of the 6-month grace period, 120 monthly payments represent a total repayment period of 10 years (10 years x 12 monthly payments). You can select a shorter repayment period by entering a lower number of monthly payments. Contact Information for StudentAid BC Website Address: If you would like to talk to a person, staff are available Monday to Friday 8:00 a.m. to 4:30 p.m. Pacific Time (excluding statutory holidays). Toll Free in Canada: Outside North America: Page 12 of 12