Repayment and Remission of Loans

Once you cease full time studies for 6 months or longer, you must contact your Revenue and Collections Officer to make arrangements for the repayment and/or remission of your student loan. Ceasing full time studies may include switching to part time, withdrawing from your program, being withdrawn or wanting to take a semester off.

Once you cease full time studies you will have a 6-month interest free period. For example, if you start a semester in September and you switch to part time studies in November, you should contact your Revenue and Collections Officer immediately as your 6-month interest free period will expire on June 1. You must contact your Revenue and Collections Officer sometime during that 6 months to make repayment and/or remission arrangements. This will ensure you receive all required documents within a reasonable amount of time and remain well informed of anything that may be required of you - such as official transcript(s), payments, etc. It is very important to let your Revenue and Collections Officer know about any changes that may occur during your academic year.

If you plan to attend full time studies without student financial assistance from the GNWT, you may be able to have your loan repayment put on hold, providing your account is up to date, while you continue as a full time student. Please contact your Revenue and Collections Officer to ensure that the proper documents are sent to you for your completion.

Interest Relief Program

New graduates who are temporarily unable to repay their student loan(s) due to low income can have their payments reduced or deferred. Under this new program, a student's monthly loan obligations could be reduced or deferred if their monthly payments exceed a given percentage of their gross family income. Depending on a student's income level and their monthly NWTSFA repayment obligations, interest relief could be granted for a period of up to 36 months.

Students could be eligible for interest relief if they:

• are living in the NWT and are available for work when applying for and/or while receiving interest relief.

• consolidated their loan(s) and have agreed to the terms of the loan repayment.

• are unable to make full payments on their loans(s) due to low income.

• have not been granted more than 36 months of interest relief.

• do not exceed the allowable level of monthly gross family income ($2,500.00).

Contact your Revenue and Collections Officer to apply for the Interest Relief Program.

Default

If you do not meet your obligations regarding your loans, you will go into what we call "default". This can have serious consequences to you. Your credit rating may be affected and you may not be able to receive further funding from us or banking institutions. Talk to your Revenue and Collections Officer to ensure that you are always up to date with your loan obligations. Discuss your personal circumstances with us. We may have options available if you are temporarily unable to meet your minimum monthly payments.

Bankruptcy

The Government of Canada has new rules for student loans and bankruptcy. If you claim bankruptcy within 10 years after the end of your studies, your student loan will not be automatically written off. The amount you owe, interest and principal, and the monthly payments you are required to make will remain the same until the loan is paid out.

A court can order the discharge from a student loan at any time after 10 years of ceasing full time studies if the student has acted in good faith and the person will continue to experience financial difficulty in paying the student loan.

Remission of your Loan

A Remissible Loan can be repaid in money or in time spent in the Northwest Territories. As with any other loan, you are required to make arrangements for repayment. The remission process is not automatic. In order to be eligible for remission, the following criteria must be met:

• you must provide official transcript(s) confirming successful completion of 60% of a 100% course load for your 1st to 4th semesters on SFA, and 75% of a 100% course load during the subsequent semesters to which the loans apply (for loans received as of the fall of 2000)

• you must re-establish your physical residency in the Northwest Territories with regard to eating, sleeping and carrying on your normal activities and

• you must provide confirmation of your NWT residency and any additional documents NWTSFA requires.

Once you have been out of school for a period of 6 months or longer and make arrangements for remission of your student loan, a document will be sent to you for completion. This document is to determine the exact date you returned to the Northwest Territories since ceasing full time studies. Remission will be retroactive from the date you fill in the document.

If you are eligible for remission, $1,000 will be deducted for every 3 months of residency. The SFA Program will monitor the remission program by sending a document every 3 months to prove your continued residency in the NWT and require you to complete this document until your loan is paid in full or you leave the Northwest Territories to reside elsewhere. Some of you may have already received remission credits at a rate of $750 for every 3 months of residency. This rate continued until June 30, 2000. Effective July 1, 2000, all loans will be remitted at a rate of $1,000 for every 3 months of residency.

How it Works

As an example of how a remissible loan is forgiven, let's say you received $32,000 in Remissible Loans from the SFA Program. If you wish to have your loan repaid through residency, you will have to reside in the Northwest Territories for 8 years to have this loan completely paid in full. If you decide to leave the Northwest Territories after 5 years, only $20,000 will have been forgiven by then, so you would have to repay the remaining $12,000 in money.

 

Remission Period	Annual Remission	Cumulative Remission
1 year	$4,000	$4,000
2 years	$4,000	$8,000
3 years	$4,000	$12,000
4 years	$4,000	$16,000
5 years	$4,000	$20,000
6 years	$4,000	$24,000
7 years	$4,000	$28,000
8 years	$4,000	$32,000
9 years	$4,000	$36,000
10 years	$4,000	$40,000
11 years	$4,000	$44,000
12 years	$4,000	$47,000

Going Away on Holidays?

Loan recipients on the remission program who leave the NWT on a holiday for a period no longer than 3 months may still earn remission. Please note that if you accept any employment (full time or part time) while vacationing, you will be required to make monthly payments and remission will not be earned. Individuals who leave the NWT for more than 3 months will be responsible for monthly loan payments of both interest and principal from the day they left the NWT.

Upon returning to the NWT, all individuals must complete a separate form to confirm the dates they left and returned to the NWT. They must remain in the NWT for at least 3 consecutive months in order to be reinstated to the remission program.

If you do not return the form as required you may lose your remission privileges. As well, your account may be transferred to Financial Reporting and Collections, Financial Management Board Secretariat. Your name may also be reported to the Credit Bureau.

Here During the Summer?

Keep in mind that if you return to the Northwest Territories during your summer break, remission cannot be earned for this time period. You must be out of school for at least 6 months and have made arrangements for the repayment/remission of your loan.

Repayment of your Loan

After you cease full time studies, your loan will have to be consolidated. This means that you have to make arrangements to repay on a monthly basis all the loans you took while you were in school. You will have to repay the principal of your loan and interest, just like you would with a bank loan. There are several methods of payment, automatic withdraw, cheque, money order, Visa, debit card and cash. You will have to discuss your monthly payments with your Revenue and Collections Officer.

Interest Rates

Interest is applied on loans and the rate is set annually by the Department of Finance, Government of the Northwest Territories. It is always 1% below prime rate on January 1 of the year you consolidate your loans.

Length of Time

The table below shows the maximum amount of time you will have to repay your loan. If, for example, you have an outstanding student loan between $20,000 and $25,000, you will have a maximum of 7 years to repay it.

Monthly Student Loan Payment

Your monthly student loan payments can vary considerably, depending on the prevailing interest rate during the year in which you consolidate your loan. For example, your loan payment can vary by as much as $100 a month or more on a 12-year loan, depending on the interest rate at which you consolidate your loan.

The following repayment schedule shows the period of time you have to repay your loan based on the amount of money you borrowed.

 

Repayment Period	Amount Borrowed
1 year	$0- $1,500
2 years	$1,501- $3,000
3 years	$3,001-$5,000
4 years	$5,001- $10,000
5 years	$10,001- $15,000
6 years	$15,001- $20,000
7 years	$20,001- $25,000
8 years	$25,001- $30,000
9 years	$30,001- $35,000
10 years	$35,001- $40,000
11 years	$40,001- $45,000
12 years	$45,001- $47,000

Repaying a $47,000 loan at 7% would cost you $69,000 over a 12-year period. If the interest rate increased to 10%, it would cost you $81,000 for that same loan, $12,000 more just because of the change in interest rate.

Here is an example of a loan amount with a repayment term and different interest rates. You can see how different your monthly payments can be depending on how high or low the interest rate is.

You may decide to repay all or part of any consolidated loan before the end of the repayment term and you may do so without penalty. Please keep in mind that interest on loans is calculated according to the number of days that lapse between receipts of payments on the principal balance outstanding. The larger the payments or the more often payments are submitted, the less interest you will pay during the term of your loan.

Going Back to School?

If you become a full time student again while repaying your loan, you may have your payments interrupted as long as the loan is in good standing and you provide documentation confirming your full time student status. The interruption of your repayment obligations will be honoured if you meet SFA Program eligibility, but you do not have to receive SFA benefits. This is based on the semester that you have received assistance from NWTSFA (see Section 5 for further details on eligibility). For example, if you are in your 4th semester, you must be enrolled in at least 60% of a 100% full course load. However, once you enter your 5th semester, you must be enrolled in at least 75% of a 100% full course load to be considered for loan payment interruption.

If you received additional SFA benefits during this period, your loans (from previous consolidation and new advances) will be renegotiated at the current interest rate applied to the new portion of the loan once you cease full time studies. The prevailing rate during the year in which you consolidate your loan will be used throughout the term of repayment unless you previously consolidated a student loan. Here is an example of what this means.

Let's say you go to school starting in 2000 and you end in 2003, you took loans in the amount of $20,000 during that time. When you cease full time studies, you have to consolidate those loans. The interest rate that will be set is the rate prevailing during the year you consolidated your loans. Let's say that in 2003 it will be 4%. That rate is set at 1% below the prime rate on January 1 of that year. You make payments over the next few months of $5,000 towards the principal of your loans, but you decide to return to school. You then have an outstanding balance of $15,000 and you take more loans in the amount of $8,000. You will have to consolidate that $8,000 with the previous $15,000 outstanding amount after you cease full time studies again. These loans will be consolidated at another prevailing rate than your previous one. Let's say it is now 11% for that year. Your new interest rate will now be 6.375% based on our approved rates schedule which rounds to the nearest eighth.

Here is the table the SFA Program will be using to determine your new interest rate.

Penalties

Students who do not make arrangements to repay their loans within 6 months of finishing full time studies will have the entire amount of the loan and interest that should have been paid become due and payable on the first day of the 7th month after the date the student ceased studies. An interest penalty will be charged even if arrangements are not made prior to the expiry of the 6-month interest free period.

Students failing to make payments for more than 3 months may have their account transferred to a collection agency, which may result in the garnisheeing of wages, a poor credit rating and legal action.

Difficulty Repaying - Let's Talk

In order to ensure a good credit rating now so that you may be able to borrow money in the future, it is essential that you make your minimum monthly student loan payments on time. By doing this, you demonstrate good money management and financial responsibility, essentials for future borrowing.

If you think you might have difficulty meeting payments on time, talk to us! We can help you in a variety of ways, including preauthorized debit plans and possibly, more flexible repayment arrangements. Remember, we're here to help!