In this section you will find information in regards to the repayment of your government student loans:
• When do you have to start repaying your loans?
• What will your payments be?
• How do you go about repaying your loans?
• Are there tax credits you can receive for your government student loan payments?
When do you have to start repaying your loans?
For BC Student Loans (loans received August 1, 2000 or later) interest begins accumulating on both the Canada Student Loan portion and the British Columbia Student Loan portion on the first day of the month following your last day of studies (May 1, 2012). Thus, during the six-month ”grace period” interest accumulates but not payments are required on outstanding loans.
At the end of the grace period, when the student must begin repaying their loan, the interest that accumulated over the 6 months can either be paid off by the student or capitalized into principal. If a student chooses to have the interest capitalized into principal, the lump sum total of the interest is added to the student’s outstanding loan balance. The student’s repayment terms and monthly payment amount are then based on the new, higher outstanding loan balance.
Repayment – both principal and interest – is scheduled to begin on the first day of the seventh month after graduation (November 2012).
What will your payments be?
The amount of your monthly student loan payments will depend upon:
a) The amortization (the length of time) that the repayment of your student loans is based.
The amortization period will be automatically determined by the BC and National Student Loan Service Centres based on the amount of your outstanding government student loans. Typically repayment of Canada Student Loans will be based on a 114-month amortization period, although you can request a 174-month repayment schedule. Repayment of BC Student Loans is usually based on a 174-month period, although an amortization period of up to 234 months can be requested.
b) The rate of interest charged.
For BC Student Loans issued prior to August 1, 1995, the interest rate is a floating rate of prime +1%. For Canada Student Loans issued prior to August 1, 1995, the federal government sets maximum interest rates.
For Canada and BC Student Loans issued August 1, 1995, or later, there are two interest rate options available:
1) A maximum fixed rate equivalent to the prime rate at the time of consolidation +5%;
2) A maximum floating interest rate of prime + 2.5%.
To obtain an estimate of your expected monthly payments given the amount of your BC and Canada Student Loans and the repayment terms (amortization and interest rate) that you have negotiated or expect to negotiate visit the CanLearn Repayment Assistance Estimator.
Lump sum payments can be made towards your loan at any time. Making lump sum payments, in addition to scheduled monthly payments, not only helps you pay your loan off faster, but also saves you money. Paying the principal faster will reduce the amount of interest that accrues on your loan over your repayment term.
How do you go about repaying your loans?
Students should receive loan consolidation agreements for all their outstanding government student loans approximately a month before their loans go into repayment. The loan consolidation agreements will detail the amounts outstanding, interest rates choices, amortization period and the amount of their monthly payments.
It is the student’s responsibility to ensure that contact is made with all institutions with which they hold student loans. If a student does not receive loan consolidation agreements from all holders of their government student loans, it is their responsibility to contact these organizations.
For loans received prior to August 1, 2000, students must contact the banks that hold their government student loans to complete a Consolidation Agreement.
For Canada and BC Student Loans received August 1, 2000, or later, students have to contact the National Student Loans Service Centre for Canada Student Loans and the BC Student Loans Service Bureau for BC Student Loans to set the terms of their repayment schedules. These loans cannot be consolidated with loans negotiated prior to August 1, 2000, so separate payments will have to be made at each institution.
If you have provincial loans from provinces other than BC, please view the Out of Province spreadsheet to make arrangements for the repayment of these loans.
Are there tax credits you can receive for your government student loan payments?
A provincial and federal tax credit is provided for the interest paid on government student loans each year. Income tax receipts are sent each year along with Annual Loan statements, listing the amount of interest that has been paid during the taxation year. Payments applied to loan principal and payments made by the government on your behalf (e.g. Interest Relief) do not qualify for the income tax credit.
You will be able to print off your T2202A from the Student Service Centre.
If you have any questions or concerns regarding your income tax receipt, please contact the National Student Loans Service Centre.
NOTE: You will no longer receive a tax credit if you add any other personal loans to your government student loans when you are negotiating your consolidation agreement with a financial institution or if you refinance your government student loan into any other type of bank loan product.