(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

Internet service in the West Kootenay is improving thanks to provincial government grants. File photo
COVID-19 support program brings faster internet to rural communities

The province has provided grants to local internet providers

A daycare in Kaslo says it has been overlooked by a provincial grant to add more child-care spaces in B.C. File photo
Kaslo daycare’s expansion plans fail to meet funder’s test

Periwinkle Children’s Centre had hoped to get a provincial grant

First responders at a crash scene near Rossland on Thursday, Oct. 22. Photo: Trail RCMP
First snow in West Kootenay causes vehicle collisions

The Trail and Greater District RCMP’s weekly brief contains details on collisions

The Regional District of Central Kootenay is no fan of the provincial STEP Code. File photo
RDCK board encouraged to ‘STEP’ forward with building code

RDCK directors have twice delayed adopting STEP Code standards

L-R, Kootenay mountain biking pioneer Mark Holt, Touchstones executive director Astrid Heyerdahl, and Deb MacKillop of the Nelson Cycling Club at the 2018 Touchstones exhibit. Photo: Louis Bockner
Touchstones Museum wins award for 2018 mountain bike exhibit

Exhibit responded to an unexplored yet vital part of Nelson’s identity

Provincial health officer Dr. Bonnie Henry arrives for briefing on the COVID-19 situation, B.C. legislature, Oct. 26, 2020 (B.C. government)
B.C. records 217 more COVID-19 cases, mask use urged

Infection spike continues, 21 senior facilities affected

Premier-elect John Horgan and cabinet ministers are sworn in for the first time at Government House in Victoria, July 18, 2017. (Arnold Lim/Black Press)
Pandemic payments have to wait for B.C. vote count, swearing-in

Small businesses advised to apply even if they don’t qualify

A raccoon paid a visit to a Toronto Tim Hortons on Oct. 22, 2020. (shecallsmedrew/Twitter)
Who are you calling a trash panda? Raccoon takes a shift at Toronto Tim Hortons

Tim Hortons said animal control was called as soon they saw the surprise visitor

Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

The duffel bags were found to contain 84 pounds of cocaine, valued at approximately $1.2 million and 198 pounds of methamphetamine, valued at approximately $960,000. Photo courtesy U.S. Customs and Border Protection.
2 men accused of fleeing border agents near U.S.-B.C. border with $2M in drugs

Cocaine and methamphetamine seized by U.S. law enforcement in remote Idaho area near Canadian border

Pixabay photo
‘Horrific’ abuse of volunteers, staff by parents must stop: Chilliwack soccer club

Parents have become abusive after being told COVID-19 rules, email says

FILE – The Queen of Alberni ferry leaves the Tsawwassen Ferry Terminal in Delta bound for Vancouver Island, Sunday, July 29, 2007. (CP PHOTO/Richard Lam) CANADA
Mechanical failure leaves nearly 200 passengers stranded on BC Ferries ship for hours

A tug arrived after dark to safely nudge the vessel into a berth so travellers could finally disembark

Ridge Meadows RCMP (Black Press)
Maple Ridge X-ray tech convicted of sexual assault dating back 30 years

Allen James Brooks is expected to be sentenced in January 2021

Most Read