The topics in the Dial-A-Law series provide general information on legal issues within the Province of Alberta. The purpose of this topic is to inform you of your legal rights and responsibilities. This is not legal advice. If you require legal advice, you should contact a lawyer.
This topic provides a brief summary of student loans. The information contained in this topic is not intended to be nor should it be used as a complete explanation of or the laws surrounding student loans.
Student loans are the same as a bank loan. It is a personal debt and must be paid back according to the terms of the loan agreement. Read the terms and conditions of the loan agreement before you sign the contract. Student loans are supplemental resources for while you are in school, so they may not cover all your costs.
The difference between “regular” loans and “student” loans is that you do not have to make payments or pay interest on the loan, as long as you are enrolled in a recognized university, college, or similar educational institution. You must always keep the Alberta Student Aid Service Centre (ASASC) and the National Student Loans Service Centre (NSLSC) informed of your enrolment status. You may reach ASASC by calling toll-free 1-855-606-2096, and NSLSC by visiting www.csnpe-nslsc.canada.ca/en/home or by calling toll-free 1-888-815-4514.
Payment on the student loan begins once you complete your education or you withdraw from classes. You have a 6-month grace period. After which you must begin paying back the debt and interest on your student loan. If you cannot make the required payments on your loan, take all necessary steps to avoid defaulting on your loan or incurring further interest costs. Contact the ASASC and NSLSC immediately to discuss payment terms. Ask them for interest relief during the period you cannot make the payments or create a payment schedule that works best for you.
Depending on your income, the government may be able to make payments due on your loan, through the Repayment Assistance Plan (RAP). Ask ASASC whether you qualify for a part, or all the loan to be paid by the government. If you qualify for the RAP, you will need to re-apply every 6-months.
In the 6 months after the date you complete your studies or withdraw from classes, all repayment schedules should be made with the lender. If you do not make the necessary arrangements for repayment, the lender may demand full payment of the student loan immediately. The lender may also demand full payment if you default on your repayment schedule. If you are having financial difficulties contact the lender and tell them of your financial difficulties and try to arrange for new terms of payment that you can make. There is no penalty if you want to make a lump sum towards the debt.
If you cannot make your loan payments, the bank will recover the loan amount from the government. The government will then collect the debt directly from you. The government can take you to Court and get a Court Order to collect. Collection may be a garnishment of any income or savings you have, or they may seize your property. The Court Order will continue until you have paid your debt. Usually the government hires a collection agency for collection. The collection agency will contact you to demand payment.
Try to make some repayment schedule with the collection agency to pay your debt. If you find the collection agency is uncooperative and you believe you can pay off your debts, contact the Credit Counselling Services of Canada in Calgary at 403-263-9905 or toll-free at 1-888-716-0774.Debt counsellors will assist you in exploring your options to deal with your debt. If you declare bankruptcy, you must wait 7 years has passed since you left post-secondary, or 5 years if you prove financial hardship, to be discharged. However, you will still be expected to make payments on your student loans after.
Dial-A-Law is a Calgary Legal Guidance public service project funded in part by the Alberta Law Foundation.