NEW! Q & A on RAP - Canada's Student Loan Repayment Assistance Plan
By Rodney Noriega
Source for this Q & A: Barry Beaulieu is a policy administrator with the Canada Student Loans Program (CSLP).
WHO TO CONTACT ABOUT RAP
Student Finance 101: Who do you contact to apply for RAP?
Barry Beaulieu, Canada Student Loans Program (CSLP): Borrowers who received a Canada Student Loan (CSL) on or after August 1, 2000 can call the NSLSC to obtain information on their loan. Borrowers who received a CSL before August 1, 2000 should call the financial institution that is holding their loan.
WHICH PROVINCES OFFER RAP ON PROVINCIAL LOANS?
Student Finance 101: Which provinces are offering RAP now for provincial student loans?
Barry Beaulieu, (CSLP): New Brunswick and Saskatchewan offer RAP on their provincial loans, while Nova Scotia offers a program called Enhanced Repayment Assistance. Please see the following link for information on this program:
YOU MAY PAY MORE THAN “20% OF YOUR INCOME”
Student Finance 101: Is the total payment for provincial and federal student loans always a combined maximum of 20% of gross monthly income - in every province and region?
If not, which provinces or regions don't follow this 20% guideline?
Barry Beaulieu, (CSLP): In provinces that offer RAP on their provincial loans (i.e., New Brunswick and Saskatchewan), the total payment for provincial and federal student loans should not exceed 20% of gross family income. Editor’s note: “Gross” is your full income before expenses. losses or deductions for taxes, EI or pension plans. .
In the remaining provinces, if a borrower is assessed an affordable payment under RAP, he/she would likely not be eligible for interest relief on their provincial loan and would therefore be required to make regular payments on their provincial loan. (Editor’s note: regular payment for provincial loans would be in addition to the 20% for federal loans).
This may result in total loan payments (federal and provincial) exceeding 20% of the borrower's gross family income.
ALL YOU REALLY NEED TO APPLY…
Student Finance 101: On the Canlearn site, it mentions the following requirements to apply for RAP:
"Things you may need:
1. Loan information from the National Student Loan Service Centre
2. Consolidation package
3. Monthly payment report for your student loans
4. Your spouse's loan information"
So that leads to application questions... For example, it says your loan information must be from the National Student Loan Service Centre but what if people don't have NSLSC loans? (Example: people with risk-shared and guaranteed loans from the 1990s)
Barry Beaulieu, (CSLP): Where did you see this information on Canlearn? (Editor’s Note: At writing, the above statement of requirements has been reworded. However, similar wording was found on this CanLearn page):
Barry Beaulieu, (CSLP) continues: All that is required in order to apply for RAP is a completed application form and any applicable supporting documents (e.g., statement of income).
Borrowers that only have guaranteed or risk-shared CSLs (i.e., loans issued before August 1, 2000) can ask for a RAP application from the financial institution holding their loan.
Here is [additional] text from Canlearn:
“If you have a Canada Student Loan or Integrated Student Loan through the National Student Loans Service Centre (NSLSC), send your application to the NSLSC. (If you also have a Canada Student Loan with a Financial Institution, your application will also apply to that loan.) The NSLSC will contact your financial institution to get information concerning your loan. If you're applying for Repayment Assistance for a Canada Student Loan negotiated before August 1, 2000 that is held by a financial institution (and you don't have a Canada Student Loan through the NSLSC), you must submit your application and supporting documentation to your financial institution directly. If you have a provincial or territorial student loan, ask your Provincial or Territorial Student Assistance Office about any programs they have for students having trouble repaying their loans. Under RAP you are approved for a six-month period. Therefore, you must reapply with a separate application when you are nearing the end of your approved RAP period.”
Student Finance 101: [Getting back to the original question] What do they mean by "consolidation package" [on the CanLearn website we quoted]?
Do they mean just the consolidation document we signed or is there now a full package? If there is now a full package, what should people do if they got their student loans in earlier years when there was only a consolidation document? Also, what if they have lost their consolidation document (or package) and don't have NSLSC loans?
Barry Beaulieu, (CSLP): The consolidation package refers to the package or letter that was sent out to a borrower after they completed or withdrew from studies.
Again, it is not an issue if a borrower has lost their consolidation package, as all that is required is a completed application form and any applicable supporting documents (e.g., statement of income).
Student Finance 101: What is the “monthly payment report" [mentioned on the CanLearn website]? Is there a special report form that people should fill out? If so, how do you get it if you don't have access to NSLSC? Can you download it directly from CanLearn? Or can you just write down the amounts of your monthly payments for each student loan?
Barry Beaulieu, (CSLP): I am not sure what a monthly repayment report is.
All that is requested is that the borrower provide their monthly payment amount in section 1 of the RAP application form.
If the borrower is unaware of this amount, the NSLSC or the financial institution carrying the loan would have it on file.
WHICH PROVINCIAL PROGRAMS CAN YOU APPLY FOR WITH YOUR RAP APPLICATION?
Student Finance 101: It says on the CanLearn website that "The Repayment Assistance application form is used to apply for the new Repayment Assistance Plan (RAP) and other debt management measures such as Interest Relief in Ontario."
So what are the "other" debt management measures covered by this RAP application form, besides the one example they give (Interest Relief in Ontario)?
Barry Beaulieu, (CSLP): The RAP application form applies to all integrated loans (i.e., where provincial and federal loans are combined - Newfoundland and Labrador, New Brunswick, Ontario, and Saskatchewan).
Because Newfoundland and Labrador and Ontario do not offer RAP on their provincial loans, the RAP application form also serves as an application for their provincial programs: Payment Deferral (Newfoundland and Labrador), and the Interest Relief and Debt Reduction programs (Ontario).
Please see the following links for information on these programs:
DO YOU LOSE ELIGIBILITY FOR THE FEDERAL RAP PROGRAM IF YOU DEFAULT ON A PROVINCIAL LOAN?
Student Finance 101: We discussed the point that borrowers pay more than RAP’s “affordable monthly payment” if their province does not offer RAP on provincial student loans.
Since most provinces don’t offer RAP yet, many people on RAP for their Canada student loans will still have heavy student loan payments when they add regular provincial payments to the 20% of gross income “affordable payment” for their Canada loans.
This leads to the following question:
If they can’t keep up with such large payments and end up defaulting on a provincial student loan, will they lose their eligibility for RAP on their Canada student loans?
Barry Beaulieu, (CSLP): If a borrower defaults on their integrated student loan, then he/she would not be eligible for RAP.
If a borrower does not have an integrated student loan, then defaulting on their provincial loan would not impact RAP eligibility on their CSL.
Student Finance 101 thanks Barry Beaulieu for his assistance here in explaining more about the Repayment Assistance Plan (RAP).