(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

There has been COVID-19 exposures at two elementary schools in District 42. (Image courtesy CDC)
Interior Health reports 24 additional COVID-19 cases

This includes three school exposures in Kelowna

The village is looking to install another 91 metres of breakwater at the marina. Photo: JD Mah
Village staff applying for $2.1 million in grants to complete three infrastructure projects

Projects include new biomass system at arena, breakwater and stormwater repairs

Enrolment is up overall in the district. Photo: Nakusp Elementary School
Enrolment at SD 10 schools skyrocket

Enrolment numbers have increased by 10 percent between Sept. 2019 and Sept. 2020

Katrine Conroy has won for the fifth time in the Kootenay West riding. Photo: Submitted
Katrine Conroy ready to tackle challenges after election

Conroy won the Kootenay West riding for the fifth time

A view of the Burton Flats area. Photo: Submitted
Work progresses on man-made wetland near Burton

The project is already seeing modest results

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

Seven-year-old Aaliyah Rosa was found dead in an apartment in Langley in July. (Langley Advance Times files)
Child’s body cold, no pulse: Off-duty cop testifies in Langley mother’s murder trial

The seven-year-old girl’s mother faces a first-degree murder charge

People march during a climate strike in Montreal, Friday, Sept. 27, 2019. THE CANADIAN PRESS/Graham Hughes
Judge rejects 15 youths’ climate change lawsuit against Canadian government

Justice Michael Manson has granted the government’s motion to strike the plaintiffs’ claim

A woman walks through check in at WestJet at Pearson International airport during the COVID-19 pandemic in Toronto on Wednesday, Oct. 14, 2020. THE CANADIAN PRESS/Nathan Denette
Strong support for pre-flight COVID testing ahead of upcoming WestJet trial: YVR

Airport is partnering with UBC, which is helping choose the method of pre-flight testing

Prime Minister Justin Trudeau provides an update on the COVID pandemic during a press conference in Ottawa on Tuesday, Oct. 27, 2020. THE CANADIAN PRESS/Sean Kilpatrick
Trudeau says pandemic ‘really sucks,’ and that Christmas gatherings are up in the air

The prime minister encouraged residents to continue to follow the advice of local health authorities

The Williams Lake Indian Band is stipulating no-go zones for mushroom picking in areas burned by last summer’s wildfires. 100 Mile Free Press photo
Who controls mushroom harvesting on Indigenous lands?

‘We don’t necessarily know where the mushrooms grow, how old the stands need to be, those types of things.’

Canadian and American flags fly near the Ambassador Bridge at the Canada/USA border crossing in Windsor, Ont. on Saturday, March 21, 2020. THE CANADIAN PRESS/Rob Gurdebeke
U.S. election results one factor that could impact immigration to Canada next year

The survey polled 1,523 Canadians between Oct. 23 and Oct. 25

The voting station mimicked a real voting station in Nicole Choi’s classroom at Chilliwack middle school on Oct. 22, 2020, where students had to show their ID (student cards), be checked off a list, and mark a secret ballot behind a screen. (Jessica Peters/ Chilliwack Progress)
B.C. students choose NDP majority in mock election

More than 90,000 youth took part in school-based election process

Most Read