Q & A for New Brunswick Student Loan Programs
Introducing a new series (Q & A)...
In this series, Student Finance 101 talks directly with people who can explain the rules of various student loan programs in Canada.
We'll start with New Brunswick.
In some ways, New Brunswick falls in the middle of the pack, student loan-wise. This standing isn’t helped by its high interest rates.
But New Brunswick (aka NB) has two good things going for it – IF you’re already finished with school.
First, NB offers RAP (Repayment Assistance Program) for provincial loans. Most provinces don’t yet do this, leaving RAP only available for the federal part of your student loan.
Second, NB is one of the few provinces providing a new tax rebate program that helps working grads pay off their debt faster.
Together, these programs make NB one of the better provinces to move to after graduation – assuming you can find work there. And of course, if you were educated in another province, you’d pay the interest rates of that province, so you wouldn’t be affected by NB’s high rates on its own loans.
- Jeannine Mitchell
The Q & A below was assembled by Student Finance 101 writer Rodney Noriega. As shown, he consulted two sources for each question.
NEW BRUNSWICK Q & A
by Rodney Noriega
Sources for this Q + A:
NSLSC refers to call-centre staff at the National Student Loans Service Centre. Gwen Walker is Senior Policy Analyst with the New Brunswick Student Loans Program. (Note: [ ] brackets show points that the speakers made that are not word-for-word. This is only done when required for clarity.)
STUDENT LOAN INTEREST RATES:
Student Finance 101: What interest rate is charged for the New Brunswick part of student loans?
Please tell us both of the available rates. The floating rate would suit people who would rather have their interest rate float up or down according to the cost of borrowing. The fixed rate would suit people who want to pay the same rate throughout their loan period.
National Student Loans Service Centre (NSCLC): It is 4.75% for the floating rate (the current 2.25% prime rate plus 2.5%) and 7.25% for floating (2.25% prime rate plus 5%)
Gwen Walker, Senior Policy Analyst with the New Brunswick Student Loans Program: The interest rate charged is the same as is charged by the federal government. Borrowers are required to pay either a floating rate of interest equal to the Prime Rate plus 2 % per year; or a fixed rate of interest equal to the Prime Rate plus 5 per cent.
REPAYMENT ASSISTANCE PLAN (RAP)
Student Finance 101: Does New Brunswick offer RAP for the provincial part of its integrated student loans?
NSLSC: Yes, RAP there is available for federal and provincial loans. Call 1-800-667-5626 to reach the NB provincial government.
Gwen Walker, NB: Yes, New Brunswick borrowers may apply for RAP with their Service Provider. If approved, the benefit is applied to both the federal and provincial portion of the borrower's integrated student loan.
Student Finance 101: Since New Brunswick has RAP for the provincial part, where can students see the rules? Or are they the same as the federal rules (which are listed to some extent on CanLearn’s website)?
NSLSC: [RAP is based on federal criteria, so New Brunswick follows the federal RAP rules. People from New Brunswick just use the RAP application form found on the CanLearn site.]
If you are from an Integrated Student Loan Province (Ontario, Saskatchewan, New Brunswick, Newfoundland and Labrador) [where RAP is not available for the provincial part of your student loan], this same RAP application will cover the following types of repayment assistance: Interest Relief [on the provincial part of your loan] and Debt Reduction in Repayment [on the provincial part of your loan].
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Gwen Walker, NB: [In New Brunswick], the RAP eligibility criteria used is the federal criteria. The borrower makes one application and RAP is assessed on the entire outstanding federal and provincial integrated student loan balance. There is only one set of rules.
INTEREST RELIEF AND DEBT REDUCTION
Student Finance 101: Since NB offers RAP on the provincial part of its integrated student loans, does that mean NB has closed the Interest Relief and/or Debt Reduction (DRR) programs, like the federal government did?
NSLSC: Yes. Interest Relief and Debt Reduction are no longer in effect.
Gwen Walker, NB: Correct - the Interest Relief and DRR programs have now finished. Those individuals on IR or DRR were transitioned to the RAP program effective August 1, 2009. On a go-forward basis, New Brunswick borrowers having difficulty in repayment can access the RAP program.
LOAN REPAYMENT PERIOD
Student Finance 101: Does NB still allow Revision of Terms (extending your loan repayment over a longer time to cut the monthly payment size)? Also, what is the maximum time to pay now? Is it the old “extended term” of 15 years (which after the 6-month grace period after school, works out to 14.5 years of payments, or 174 months?)
NSLSC: The maximum is still the same: 174 months (14.5 years).
Gwen Walker, NB: The RAP program is optional. Those that may prefer not to make use of RAP would not be required to (extend their term to the maximum.) They would make regular monthly payments according to their loan consolidation agreements. They would also continue to have access to revision of terms (RoT) in its current form.
INTEREST-ONLY PAYMENTS
Student Finance 101: Does New Brunswick also allow "Deferment of Principal" - also known as “Interest-Only Payments”? This is allowed in BC for a 6-month period once every year if you are too broke to make the standard payment. But some provinces only allow it once in the lifetime of the loan. How about NB?
NSLSC: No answer provided. Advised to check with New Brunswick at 1-800-667-5626.
Gwen Walker, NB: We define Interest-Only Payments as a temporary “Revision of Terms, and this is negotiated between the borrower and the lender, or service provider.
The number of times the borrower can [use Interest-Only Payments] is not dictated by New Brunswick. So this would depend on your own situation. If the [lender or service provider] thinks you may be having chronic problems making your regular payments (rather than facing a temporary challenge) they will probably not allow you any further [Interest-Only Payments].
DEBT REDUCTION FOR TIMELY COMPLETION
Student Finance 101: Does New Brunswick’s Timely Completion program (where your student loan debt is reduced if you graduate quickly) also apply for Master's or Doctoral degrees? Or is it only for undergrad degrees?
NSLSC: No answer provided. Advised to check with New Brunswick at 1-800-667-5626.
Gwen Walker, NB: No, the Timely Completion Benefit is for undergraduates. They must complete in the time frame assigned to the particular program. For example, a 4-year BA must be completed in 4 years.
OTHER NEW BRUNSWICK STUDENT LOAN PROGRAMS
Student Finance 101: Are there any other programs in NB to help people with repayment?
NSLSC: No answer provided. Advised to check with New Brunswick at 1-800-667-5626.
Gwen Walker, NB: Yes, the Department of Finance delivers the Tuition Rebate Program. Information can be found on the following site: http://www.gnb.ca/0024/index-e.asp
Student Finance 101 thanks Gwen Walker for her assistance here in explaining New Brunswick's student loan repayment programs.
