What happens to my student loan?

How Can I Deal With My Student Loans?

Unfortunately in Canada over the past few years the cost of post secondary education has increased dramatically. As a result, and increasing number of Canadian students require student loans to finance their education.

What happens if you don’t get a great job when you leave school, and you can’t make the payments on your student loan?

You have three options.

• First, we recommend that you contact the lender and negotiate a repayment schedule. Even payments as low as $50 per month may be enough to “buy time” until your income increases and you can make larger payments.

• Second, if your student loans have been placed with a collection agency, or if you have been unsuccessful in negotiating payment arrangements on your own, a consumer proposal is another option. The rules regarding student loans in a proposal are complicated, so the assistance of a licensed trustee is essential.

• Finally, bankruptcy may be an option. However, under current rules, a government guaranteed student loan is only automatically discharged in a bankruptcy if the loan is more than 10 years old. Again, the rules are complicated, particularly with respect to how the 10 year period is calculated, so the assistance of a licensed trustee is required.

I heard the student loan rules are changing?

Yes, it is likely that the 10 year rule will be reduced to 5 years, although it is unclear when that rule will change.
In November, 2003 the Senate Committee on Banking, Trade and Commerce released a report called Debtors and Creditors: Sharing the Burden: A Review of the Bankruptcy and Insolvency Act. You can download a copy of the complete report here. The Senate Committee recommended that the 10 year period be reduced to 5 years.However, for this change to become law, the legislation must be amended by the House of Commons. As we all know, a new minority government is now in place, and it is doubtful that reforming this law will be a high priority of a government concerned about it’s survival.Bookmark this page and check back often; when changes are announced, this page will be updated immediately.
In the meantime, to discuss strategies for dealing with your student loans, click here to find a local trustee.