I'm a Student. How Will I Be Affected by the End of CSL Interest Relief and Debt Reduction?

AUGUST 1 HAS NOW ARRIVED. THE RAP PROGRAM IS NOW AVAILABLE FOR CANADA STUDENT LOANS.

 
More on RAP to come, starting with RAP 101 and RAP 201...
 
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The first -- kind of high-stress -- topic for this brand-new forum is what effects you could feel from losing the Interest Relief and Debt Reduction repayment aid programs for Canada Student Loans. They end after July 31, 2009.
 
These programs are not to be confused with the BC Student Loan aid programs that were recently cut without announcement. Some of those BC programs cut will directly affect particular groups of current or newly-graduated students.
 
To read more about the BC student aid programs that were recently cut -- another high-stress topic -- click here.
 
Canada loans, BC loans... Yes, student loans in Canada can be confusing. We've got many different types of student loans, with different rules and repayment programs.
 
So if you're wondering whether the end of these Canada Student Loan aid programs will affect you, we'll break it down here.
 
Students are the people most think of when they realize these student loan repayment programs are ending. But most of those who will be immediately and directly affected aren't students. They are former students. That's because the majority of students don't start repaying their loans until they are 6 months out of school.  
 
There are some current students who will be immediately affected. But most will not be, even though they may have Canada Student Loans.  
 
 
To all those still in school who have borrowed from Canada Student Loans:
 
These changes will affect all of you in the sense that when you graduate, the programs won't be there. But Canada Student Loans is replacing them with a different program.
 
The new federal program is the Repayment Assistance Plan (RAP). It starts on August 1, 2009. Debt 101 will soon cover RAP in detail.
 
To compare RAP with the two programs ending (Interest Relief and Debt Reduction) is an apples vs. oranges situation. RAP's aid is more gradual, but may help a larger number of students than the programs that are ending. RAP will have some interesting features.
 
The bottom line is that the current programs are being replaced. You are not going to be in limbo.
 
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Are you immediately affected? See which group you belong to below:
 
 
 
1. If you are a student with no Canada Student Loans:
 
You will not be affected. You wouldn't have benefitted from these programs anyway.
 
 
 
2. If you are a student with defaulted Canada Student Loans:
 
Sometimes students go back to school without borrowing new government loans because they have lost the ability to borrow due to earlier, defaulted student loans. Usually, these students must repay their student loans while studying, but they are repaying through a collection agency. Despite these repayments, defaulted student loans are not eligible for student loan aid programs such as Interest Relief or Debt Reduction.
 
So if you fit this category, you will not be affected -- unless you were in the process of getting out of default so you could apply for aid.
 
In that case, your only option now is to apply for the replacement program (RAP) when you are out of default.  
 
 
 
3. If you are a student repaying non-defaulted Canada Student Loans because you've been studying part-time OR you've passed the maximum full-time study time allowed before repayment:
 
Yes, you could be directly affected. But only by the loss of Interest Relief.
 
That's because Debt Reduction (DRR) on Canada Student Loans requires that you be out of school for at least 5 years.
 
You may qualify for Interest Relief even if you don't get it now. About half of the people who are eligible for Canada Student Loans Interest Relief do not even apply.
 
As a student, your income is probably low. That's a key requirement for Interest Relief. So check the eligibility rules on Debt 101.
 
If you do qualify, use this last chance to get Interest Relief. If you're accepted, you'd get a freeze on your payments until late December (six months after you begin).
 
This would only help you with your Canada Student Loans. But if you qualify for interest relief with these, you would likely qualify for continuing Interest Relief on your provincial loans, such as the Ontario portion of your OSAPs or your BC student loans.
 
More Info:
 
Find out if you are eligible now for federal Interest Relief. Click this page in 'The REAL Aid Rules' to see the official rules for Canada Student Loans Program's Interest Relief.
 
Debt 101 article: Don't Miss Out on Interest Relief! 
 
CanLearn ( the government website for Canada Student Loans) has a detailed page of information (with required income levels) on Interest Relief.
 
Lots of links, plus info on federal Interest Relief Application Forms in this posting from the General Discussions Forum.
 
Improve Your Chances When Applying:
 
There are great tips and links in this post from the  Payment Forum.
 
 
 
4. If you are a student currently receiving Interest Relief on your Canada Student Loans:
 
Your Interest Relief will not end on July 31, unless that is the scheduled end-date. Instead, you will be covered until your current 6-month coverage period is due to end. So you got in under the wire!
 
When your final Interest Relief period is about to end, you can apply for the new program (RAP).
 
Tip: Ask your lender how much RAP application lead-time to allow so you get a smooth transition and don't have to spend a month or two without help.
 
Interest Relief will not end now for all provincial student loans. This posting is just about your Canada loans.
 
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All students repaying non-defaulted Canada Student Loans can apply for the replacement program (RAP) starting August 1st (or when their federal Interest Relief period nears its end-date).
 
You'll see more on Debt 101 about the new Canada Student Loans aid program (RAP) in coming weeks!