Janice Lozano
Paying off student loans can be a challenging task, especially when you're just starting to build your career and work towards financial stability. Most students in Alberta graduate with two different loans: a provincial loan (managed through Alberta MyLoan) and a national loan (managed through the National Student Loans Service Centre or NSLSC). This means you'll need to handle two debts and two payment schedules. To effectively manage your student loan payments, it's essential to establish a clear goal and create a comprehensive list of your loans, including outstanding balances, interest rates, and loan terms. This will help you prioritize which loans to tackle first and make informed decisions about your repayment strategy. Additionally, staying organized by tracking repayment dates and managing your budget are also key components of successfully paying off your Alberta student loans.
| Characteristics | Values |
|---|---|
| Number of loans | 2 (Alberta loan and Canada loan) |
| Loan management | Alberta loan is managed through Alberta MyLoan and Canada loan through the National Student Loans Service Centre (NSLSC) |
| Repayment schedule | Depends on repayment term, monthly income, and life and financial situation |
| Interest rate | Floating interest rate |
| Tax credit | Eligible for a tax credit for interest paid on student loans |
| Repayment Assistance Plan (RAP) | Available for those who cannot afford to pay off their student loans |
| Enhanced RAP | Available for Alberta loans only under special circumstances |
| Loan forgiveness | Borrower with a disability may be eligible for loan forgiveness |
| Court-ordered discharge | Can be requested after 7 years (5 years in case of extreme financial hardship) |
| Interest-free grace period | Extended from 6 to 12 months |
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What You'll Learn
Managing two debts and two payment schedules
Most students in Alberta graduate with two loans: a provincial loan (Alberta MyLoan) and a national loan (National Student Loans Service Centre or NSLSC). Managing two debts and two payment schedules can be challenging, but here are some tips to help you stay on track:
Create Individual Accounts and Understand the Loan Details:
Create separate accounts for your Alberta MyLoan and NSLSC loans. Understand the specific details of each loan, including outstanding balances, interest rates, and loan terms. This knowledge will help you manage your repayments effectively.
Compile a Comprehensive List and Prioritize Repayment:
Make a detailed list of all your student loans, including both provincial and national loans. Note down their respective interest rates, repayment terms, and outstanding balances. This comprehensive list will help you prioritize which loans to focus on first and make informed decisions about your repayment strategy.
Adjust Repayment Details to Suit Your Financial Situation:
Both the Alberta MyLoan and NSLSC loans offer flexibility. You can adjust your repayment details, such as the repayment term and monthly payment amount, to align with your financial situation. Remember that your monthly payment is automatically calculated, and you can always reach out for assistance if needed.
Stay Organized and Utilize Customization Options:
Keep track of your repayment dates by writing them down in a money diary or using digital reminders. Consider customizing your repayment plans to match your schedule, such as changing to bi-weekly payments or adjusting the payment amounts. This can help you stay organized and ensure you don't miss any payments.
Explore Repayment Assistance Plans:
If you find yourself struggling to make payments, remember that assistance is available. Both the provincial and national loan programs offer Repayment Assistance Plans (RAP). You may qualify for an enhanced Repayment Assistance Plan for Alberta loans under special circumstances. Additionally, in extreme cases, a borrower with a disability may be eligible for loan forgiveness.
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Adjusting repayment details
If you are struggling to make your monthly payments, you can adjust your repayment details at any time to accommodate your financial situation. You can apply for the Repayment Assistance Plan (RAP) if you are unable to pay off your student loans. If you qualify for RAP, the Government of Canada will pay the interest on your federal loan, and will also begin to make payments on your principal after 60 months of RAP or 10 years after you finish school. The RAP is also available for Alberta student loans. You may also qualify for an enhanced Repayment Assistance Plan for Alberta loans only, or, in extreme circumstances, you may be eligible for loan forgiveness if you are a borrower with a disability.
You can also make adjustments to your repayment plan to better suit your schedule. For example, you can change your payment dates, increase or decrease your payment amounts, or change to bi-weekly payments.
If you miss a payment on your loan, Student Aid will contact you by phone and email to help you get back on track. If you are having trouble making payments, you can contact Student Aid to learn about your options.
It is important to establish a goal for paying off your student loans and calculate the monthly payment amount required to achieve that goal. This will help you stay focused and motivated on your journey toward financial freedom.
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Repayment Assistance Plan (RAP)
If you're struggling to repay your Alberta student loans, the Repayment Assistance Plan (RAP) may be able to help. RAP assists eligible borrowers who are facing difficulties with their repayments. To be eligible for RAP, you must apply, and if your application is approved, you will receive benefits for a period not exceeding six months. After this period, you must reapply to receive further benefits.
Borrowers with both Canada and Alberta student loans only need to submit one Repayment Assistance Plan application to the National Student Loans Service Centre to be considered for both programs. If you qualify for an affordable payment option under both programs, the affordable payment will be split between your Canada and Alberta loans. It's important to note that the financial eligibility criteria differ for each program, and borrowers who qualify for both may have distinct RAP eligibility periods for each loan.
When a borrower with an Alberta Student Loan held by a financial institution applies for RAP, their loan will be transferred to the Alberta Student Aid Service Centre, which will administer any RAP benefits. If you have not met the financial eligibility criteria for RAP, you can submit a written request to Alberta Student Aid to review your eligibility. Similarly, if you have been approved for RAP, you may request a review of your reduced affordable payments under certain circumstances.
RAP is designed to offer relief to borrowers with temporary repayment difficulties (Stage 1) and those facing long-term or ongoing difficulties (Stage 2). The government will pay any interest that the borrower's affordable payment does not cover.
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Declaring bankruptcy
If you are struggling to repay your Alberta student loan, you may be considering declaring bankruptcy. However, there are a few things to keep in mind. Firstly, it's important to understand that declaring bankruptcy will not address your student loans directly. While bankruptcy could free up room in your budget and make your overall finances more manageable, your student loans will survive your insolvency.
If you are considering declaring bankruptcy to eliminate your student loan debt, you must satisfy certain waiting periods under federal law. In most cases, you must be out of school for at least seven years for your government student loans to be eligible for discharge in bankruptcy. This seven-year period is calculated from the date you ceased to be a full or part-time student. If you declare bankruptcy before the seven-year period has elapsed, your student loan debt will not be discharged, and you will still be legally obligated to repay it.
However, there is a provision that allows for student loans to be released within five years if you are experiencing significant financial difficulties. To qualify for this reduced waiting period, you may need to have completed a bankruptcy or consumer proposal and have no other debts. You must also demonstrate that it is impossible for you to manage your loan payments. Additionally, the court can reduce the seven-year period to five years if repaying the loan would result in undue hardship.
If you are struggling to make your Alberta student loan payments, there are other options available to you. You may be eligible for the Repayment Assistance Plan (RAP), which can help make your monthly payments more affordable. Additionally, low-income individuals and those with permanent disabilities may qualify for financial support from the federal government to help repay their student loans.
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Creating a budget
Understand your loans
Firstly, it's crucial to know what you owe. Make a comprehensive list of your student loans, including any private or federal loans, monthly payments, due dates, current and principal balances, interest rates, and servicers. Check your credit report if you're unsure about certain details. Understanding the specifics of your loans will help you create a more effective budget.
Conduct a personal finance audit
Take a close look at your finances by creating a list or spreadsheet that outlines your income, expenses, and other debts. Include all your loans, such as car loans or credit card debts, along with their outstanding balances and minimum monthly payments. This will give you a clear picture of your total monthly payments and overall debt.
Prioritize loan repayment
When creating your budget, make loan repayment a priority. Allocate your funds accordingly, ensuring that you at least make the minimum payments on all your debts to avoid late fees and penalties. Any extra funds you can allocate towards your smallest debt will help reduce the total amount you pay in interest over time.
Explore debt reduction strategies
Look for ways to reduce your debt. Consider cutting back on discretionary expenses or boosting your income through side gigs or extra hours at work. Every dollar counts, and by directing extra funds towards your smallest debt, you can create a snowball effect, gradually increasing the amount available for larger debts.
Stick to your budget and track your progress
Maintaining discipline and perseverance is essential. Stay motivated by setting goals and rewarding yourself for milestones achieved. Track your transactions manually or use a budgeting app to stay on top of your spending. This will help you identify areas where you can cut back and ensure that you're sticking to your budget.
Seek support
Remember that you're not alone in this journey. Surround yourself with a supportive network of friends, family, or online communities dedicated to debt repayment. Reach out to your loan servicer if you need assistance or explore options like the Repayment Assistance Plan (RAP) offered by Alberta Student Aid if you're facing financial difficulties.
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Frequently asked questions
You must create an individual account through the Alberta MyLoan website and handle your repayments there. You can adjust your repayment details at any time to accommodate your life and financial situation.
It is common for students in Alberta to graduate with two different loans. Your Alberta loan is managed through Alberta MyLoan and your Canada loan is managed through the National Student Loans Service Centre (NSLSC). You must handle your repayments separately.
Your monthly payment is automatically calculated. Your repayment schedule depends on your repayment term, i.e., the number of months it will take you to pay off your loans. You can calculate the monthly payment amount required to achieve your financial goals.
The Repayment Assistance Plan (RAP) was set up by the Government of Canada to help those who cannot afford to pay off their student loans. If you qualify for RAP based on your income, the government will pay the interest on your federal loan. You may also qualify for an enhanced Repayment Assistance Plan for Alberta loans only.
Yes, the interest-free grace period for Alberta student loans has been extended from 6 to 12 months to give students more time before having to make loan payments.
