By: Emily Olsen
As tuition prices evolve, student loans have become a major part of the post-secondary experience for many students.
The process of application, budgeting and paying off these loans is a large undertaking for many students. However, after speaking to several general bankers they explain that understanding the process is important and focusing on repayment even during the initial application will help throughout the process of obtaining a loan.
During the application period when calling or visiting a bank to apply for a loan, students should have a number in mind of how much they will require for their monthly expenses as well as their current income and proof of enrollment.
It is important to note that enrolment at a post secondary institution is essential to apply at all. And many banks will not be able to provide information without an estimate of what will be required.
Some students who do not have a credit history of approximately two years may require a guarantor, which is someone who will cosign for the loan without personally benefiting from it.
The loan will be received by the post secondary establishment within 7-10 days of approval and once approved, the remainder of the loan will go to the student directly.
The loan received goes to the National Student Loans Service Centre (NSLSC) where the loan is consolidated between the federal and provincial government so only one payment per month is required.
The average loan is set to be repaid in nine and a half years and the monthly minimum payments will be set based on that schedule.
Many students are unaware that all interest paid on loans is tax deductible. Keeping track of these payments will make the separate tax forms easier to complete during tax season. Regular payment can also help to avoid extra charges and penalties on loan repayment.
The Repayment Assistance Plan is provided by the provincial and federal governments and it provides help for temporary repayment difficulties, as well as long-term help with ongoing repayment struggles. If a student is eligible for the plan, the government will cover the interest and what each individual can afford to pay will remain. In long term plans, the government will cover both principal and interest fees until the loan holder can afford full payments.
However, if a student in repayment does not qualify they have to start paying back into the loans six months after graduation or after they have discontinued classes.
The most important takeaway for loan applicants is to research which terms will best suit their needs and what bursaries and grants are available to them.
Having a set budget that is comfortable and sustainable for each individual lifestyle is important. And loan holders should always set a deadline for repayment.
Never miss a payment because the repercussions could range from challenging to irreparable for the long term.
Most important to remember is that many adults are carrying student loans debt and any questions students may have are not new to loan professionals. Speak with banking providers, student aid government numbers, parents or family throughout repayment to gain clarification on what is required as a loan holder and especially if financial responsibility becomes a burden.
Photo Source: Unsplash
