(The Canadian Press)

(The Canadian Press)

Here’s what to do as Canada Student Loan payments resume, starting today

Graduates like Cytko have a range of options, from requesting to postpone payments to tackling them on a budget

Before graduating with a double master’s in information and museum studies from the University of Toronto in June, Elizabeth Cytko was gearing up to apply to jobs at libraries and institutions across the country.

The plan was to launch her career and start working down her debts.

“My wild daydream was to have them paid off in three years,” Cytko said.

“I assumed I would have had full-time work by now, but that hasn’t quite happened with COVID-19.”

The graduate is living at home in Edmonton and taking a free online course as she wrestles with how to handle her federal student loans.

“I’m just living in limbo at the moment.”

She’s not alone. Thousands of recent graduates are facing the end of the six-month freeze Ottawa imposed on repayments and interest for Canada Student Loans in response to the coronavirus outbreak. Oct. 1 is the first day monthly payments resume.

Graduates like Cytko have a range of options, from requesting to postpone payments to tackling them on a budget.

Those with an income below $25,000 per year are eligible for continued deferrals until they hit that threshold. They can apply through the Repayment Assistance Plan (RAP), which also allows borrowers to apply for a reduced payment.

“Depending on your income, you may not be required to make payments that exceed your income by 20 per cent, or any payment at all,” the program website states.

However, just because you’re able to kick the debt can down the road doesn’t mean you should.

“Attack that debt as best you can,” said Keith Emery, co-CEO of Credit Canada, a not-for-profit credit counselling service.

“If you’re getting a debt deferral, as with the RAP, that’s not a debt writeoff, that’s just putting it on pause to a later date… sort of like a giant don’t-pay-a-cent event.”

Graduates should steer away from the vicious cycle of using borrowed money — especially if it’s higher interest — to pay down other loans, while sticking to their payment due dates, Emery said.

“It is important to maintain those payments because you don’t want it to impact your credit score and credit report, which are important to build as you’re getting your financial start,” Emery noted.

Payment delinquency, including with the National Student Loans Service Centre, will eventually come across the desks of all three major credit bureaus, he added.

Young people have been among the hardest hit financially by the pandemic. Employment of Canadians aged 15 to 24 was 15.3 per cent below pre-pandemic levels, by far the largest gap among age groups, according to Statistics Canada.

More than one in three postsecondary students had a work placement cancelled or delayed as a result of the outbreak, according to an Statistics Canada survey of more than 100,000 in April.

The time-tested method of living on a budget can make for quicker debt repayment.

“If you don’t have a car, if you’re living at home… I would say kudos to you. Don’t let anybody tell you what you should be doing at this stage in life financially. All that matters is what works for you,” Emery said.

“Maybe you’re not going out to eat as much… Anything that allows you to weather this storm without taking on debt and while maintaining your student loan payments is a positive.”

The federal government tends to be more flexible with repayment plans than most private lenders, said Doug Hoyes of Hoyes Michalos, an Ontario-based debt-relief firm.

A solid sense of your own financial situation provides the key to charting a path out of student debt, he said.

“You want to take stock of where you’re at. You’re supposed to be paying $400 a month, say. Can you actually afford that?”

Hoyes recommends taking the initiative and giving the government a call.

“You’re allowed to pick up the phone and call the lender and make a plan: ‘I can’t afford to give you $400, but I can afford to give you $100 a month for the next six months.’

“You’re the boss. You want to take charge. You don’t want to hide from it,” he said. “If it’s a federal student loan, they know where you are. So hiding is not a good strategy.”

Christopher Reynolds, The Canadian Press

Like us on Facebook and follow us on Twitter.

Want to support local journalism? Make a donation here.

CoronavirusEducationFederal Politics

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

(PQB News file photo)
Qualicum Beach voters head back to the polls on May 15

Byelection will be held to replace former councillor (now MLA) Adam Walker

The Town of Qualicum Beach East Village Revitalization project has received a grant from the B.C. government. (Town of Qualicum Beach illustration )
Parksville Qualicum Beach projects receive more than $1M in provincial funds

Chamber of Commerce plans to establish micro-fullfilment centre to aid area businesses

(PQB News file photo)
Qualicum Beach offers to establish temporary cold-weather shelter

Move would provide aid to a maximum of 15 individuals

FILE – A COVID-19 vaccine being prepared. (Olivia Sullivan/Sound Publishing)
B.C. seniors 80 years and older to get COVID vaccine details over next 2 weeks: Henry

Province is expanding vaccine workforce as officials ramp up age-based rollout

Dr. Bonnie Henry talk about the next steps in B.C.'s COVID-19 Immunization Plan during a press conference at Legislature in Victoria, B.C., on Friday, January 22, 2021. THE CANADIAN PRESS/Chad Hipolito
456 new COVID-19 cases in B.C., 2 deaths

Since January 2020, 78,278 have tested positive for the novel coronavirus in B.C.

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a UHN COVID-19 vaccine clinic in Toronto on Thursday, January 7, 2021. (THE CANADIAN PRESS/Nathan Denette)
Vaccinating essential workers before seniors in B.C. could save lives: experts

A new study says the switch could also save up to $230 million in provincial health-care costs

The late Michael Gregory, 57, is accused of sexually exploiting six junior high students between 1999 and 2005. (Pixabay)
Former Alberta teacher accused of sexually assaulting students found dead in B.C.

Mounties say Michael Gregory’s death has been deemed ‘non-suspicious’

According to a new poll, a majority of Canadians want to see illicit drugs decriminalized. (THE ASSOCIATED PRESS)
Majority of Canadians think it’s high time to decriminalize illicit drugs: poll

More than two-times the B.C. residents know someone who died from an overdose compared to rest of Canada

Photograph By @KAYLAXANDERSON
VIDEO: Lynx grabs lunch in Kamloops

A lynx surprises a group of ducks and picks one off for lunch

(Black Press Media file photo)
B.C. residents can reserve provincial camp sites starting March 8

B.C. residents get priority access to camping reservations in province

Two women were arrested in Nanaimo for refusing to wear masks and causing disturbance on a BC Ferries vessel. (File photo)
B.C. ferry passengers arrested and fined for disturbance, refusing to wear masks

Police said woman threatened their pensions in Feb. 21 incident aboard Nanaimo-bound boat

When his owner had knee surgery, Kevin, 2, was able to continue to go for walks thanks to volunteers from Elder Dog Canada. (Contributed photo)
B.C. woman has nothing but praise for Elder Dog Canada

National organization has a fleet of volunteer walkers ready, but needs more clients to serve

Most Read