Student Loans
National Student Loans Service Centre
If your student loan is up-to-date, then it should be with the National Student Loans Service Centre (NSLSC)*. In this case, it is best to speak with them first if you are struggling with your payments. They can let you know what options are available to help you with this debt.As long as your loan(s) are in good standing with the NSLSC, you can apply for a Repayment Assistance Plan (RAP), which would reduce your monthly payments for a period of six months at a time (you would need to re-apply every six months).
You are also able to apply for aids such as interest relief, bursaries and grants to reduce your overall debt load. If you are currently on a Repayment Assistance Plan or interest only payments, then you are still considered to be in good standing with the NSLSC.
The National Student Loans Service Centre can be reached at 1-888-815-4514. Even if you are behind in payments, your student loan account may not have yet defaulted and been transferred from the NSLSC. Therefore, it is important to confirm whether or not NSLSC still has your student loan(s) before seeking other options. It is important to note that you will need to be in good standing with the NSLSC if you choose to go back to school in the future and need to apply for more student loans.
What happens if my student loan defaults from the NSLSC?
Depending on which province you live in, your student loan may have been divided into a federal portion (called your Canada Student Loan) and a provincial portion. The options you have for handling each type will differ slightly once you have defaulted from the NSLSC, which can happen if you miss too many payments.
When your Canada Student Loan (federal student loan) defaults from the National Student Loans Service Centre, it will be sent to Employment and Social Development of Canada (ESDC). If you start receiving letters from ESDC, this is a good indication that your federal student loan has defaulted.
For the provincial portion of your student loan, it will likely be sent to a collection agency within your province that has been designated to handle this type of debt. However, each province has its own procedure for transferring defaulted accounts. For example, in British Columbia the loan is sent to the Revenue Services of British Columbia for collection. In Ontario, the loan is sent to the Minister of Finance who will then reassign the account to one of four different collection agencies it uses. The National Student Loans Service Centre will be able to tell you where they sent your loan after it defaulted.
Once your provincial or federal student loan has defaulted, you may still be eligible to have the NSLSC take back your account, but first you would need to complete a rehabilitation program. This is not as complicated as it sounds, and it does not require any meetings. It simply means that that you would need to bring the interest amount overdue on your student loan account up-to-date.
How the rehabilitation program works
If you are interested in doing the rehabilitation program to get your student loan back in good standing with the NSLSC, you would need to contact the appropriate party to make the necessary payment arrangements.
For your Canada Student Loan, you would contact the Canada Revenue Agency (CRA) at 1-866-864-5823. They will advise you of how much you are required to pay to bring your overdue interest up-to-date. This amount can be paid in monthly instalments; however, the minimum monthly payment amount will be determined by the CRA.
For your provincial student loan, you would need to contact the collection agency holding your account to find out how much you owe in interest. The minimum monthly payments required will also be determined by the collection agency. If you are not sure which collection agency is holding your account, you can contact the National Student Loans Service Centre (1-888-815-4514) for more details.
Once you have paid all of the interest owed, you can then contact NSLSC and tell them that you have completed the rehabilitation program. They will then take back the account, and you will be considered eligible for repayment relief options again.
There are limitations to how many times you can attempt to rehabilitate a student loan before you are no longer eligible for the program, therefore it is important to only sign up for it once you are sure that you can follow through with the payments required to successfully complete it.
Other student loan debt relief options
If you have been out of school for at least seven years and are still struggling with your provincial or federal student loan debt, there are two additional options that you may want to consider; consumer proposal and bankruptcy. Both options will provide you with a means of actually getting rid of your student loan debt rather than just keeping up with the payments.
A consumer proposal will allow you to pay back only a portion of your debts, based on monthly payments you can afford. With a bankruptcy, your debts are eliminated so that you are no longer responsible to pay them. A Licensed Insolvency Trustee will be able to assess your situation to let you know if one of these solutions is right for you. However, you must have been completely out of school for the past seven years before your student loan(s) are eligible for either of these options. Even taking one course could reset the clock on this completely.
If you have not been out of school for at least seven years, or are not eligible to file for a consumer proposal or bankruptcy (or simply don’t want to), you may be able to place your defaulted student loan(s) on a Debt Management Program (DMP). Student loans are usually accepted on these programs on a case-by-case basis, therefore it is only worth considering if your account is no longer with NSLSC, and you are unable to afford the monthly payments required to complete the rehabilitation program.
For a provincial student loan that has been sent to a collection agency, the interest rate will usually be reduced to 0% on a Debt Management Program. However, for a federal student loan there will be no interest relief on a DMP, it will only provide a structured monthly repayment plan.
While receiving help from an external program with your student loan(s), such as a Debt Management Program, consumer proposal or bankruptcy, you will not be in good standing with the NSLSC and will lose access to their internal benefits such as repayment relief options and eligibility for new student loans.
National Student Loans Service Centre (NSLSC)
Phone number:1 (888) 815-4514 (within North America)
Mailing address:
P.O. Box 4030
Mississauga ON
L5A 4M4