Time to pay the piper, but I'm still paying a DIFFERENT piper.
November 25, 2009 1:58 PM   Subscribe

I'm a graduate student who has been in school continuously in Canada for 10 years now. Now the student loan people want to make me pay. What can I do?

I'm a graduate student who began university in 1999 in British Columbia. In my first year of undergrad, I applied for, and received, a government student loan amounting to a colossal $260. After that, I did not apply for any further funding until I began my graduate education in an MA program, also in BC. I received student loans for three years as a result of this. I finished my MA, and went on to do PhD work in another province.

I have diligently sent in my forms indicating that I am still a university student and have never had a problem. Yesterday, though, I came home after being out of town for the weekend to find a letter saying I am to begin re-payment as I have used up my 520 months of grace period, even though I am still enrolled in a Canadian (non-BC) university as a PhD student.

This threw me for a loop as I had, a month previous, received a letter confirming that they had received my proof of enrollment and I was still okay to not pay anything just yet, being covered until the end of the semester after my proof of enrollment indicated (I have to do the proof of enrollment each semester). They want me to begin payment on the entirety of my student loans, not just the $260 I borrowed ten years ago.

I spoke with the student loan people on the phone today and they said that all I can do is apply for interest relief, principal deferment, or extended amortization (all of which are described here) and that there are absolutely no appeals available.

I'm totally at a loss as to what to do. I offered to just pay off the $260 from 10 years ago but that won't do anything, apparently. I really can't afford to start paying my student loans back right now being, still, a poor graduate student. I don't know what my options are beyond those three things above. Can anyone offer any advice (and I fully recognize that you are not my lawyer, accountant, banker, financial advisor, or anything similar).
posted by anonymous to Work & Money (6 answers total) 2 users marked this as a favorite
Keep copies of everything. Put together a binder with a timeline. Make notes on all calls. Get the names of all reps you talk to. Consider recording calls (which is likely legal where you live, since it's Canada, but IANAL). I say this because the student loans people tried to make me pay interest on a loan after they lost all my paperwork -- they admitted that they lose stuff all the time.

Talk to the financial aid office at your university. Talk to the student union. They can connect you with people who can guide you through the process.
posted by acoutu at 2:02 PM on November 25, 2009

It's been a while since I looked at loans, but perhaps the interest relief and principal deferment would work for you. It's possible that your student status and income would qualify you to forgo paying anything for now. You can defer for up to 234 months.

I would hesitate to suggest that you get a job. Those who urge that route may be unfamiliar with how the Canadian student loans system works.
posted by acoutu at 2:50 PM on November 25, 2009

They want me to begin payment on the entirety of my student loans, not just the $260 I borrowed ten years ago.

This is the issue. Your understanding was that you had 10 years of potential interest-free status. They think that the 10-year clock, once it has been triggered, applies to all your loans. You did not expect this.

Do you have copies of your agreements for the 10-year old debt and the current one? Find then and review them for any information on how the interest-free status clock runs.

There doesn't appear to be an appeal process, and probably the person you spoke to doesn't know what to do when there isn't one. Escalate. Ask to speak to a manager, or someone higher up (be nice but firm, etc.). If you get to someone, you might treat it as information gathering -- has a case like yours come up before? Is it common? Where does it explain this in documents you were given when you got the loan? Is there information on how the interest-free clock runs somewhere on the website?

Follow acoutu's advice -- gather your materials, and talk to the financial aid office at your university, and perhaps at the BC school where you incurred the original loan.

Other advocates who can help include MLAs -- Dawn Black is the opposition critic for the Ministry that administers the student loan system in B.C. Contact her office and explain this one issue: you are prepared to payback the loan made 10 years ago, but the interest-free status on your current loans should not be affected. MLA staff people are trained to deal with individual issues (at least their counterparts in Ontario are). They can be really helpful. And remind them you probably not the only one to be in this position -- it's not strange for PhD'ers to be in school for 10 years or more.

And since that is the case, maybe one of the B.C. graduate students' unions have heard of this before? Ask 'em.

While there may not be an official appeal mechanism, your student loan is a contract and your obligations under that contract have to be interpreted by someone. StudentAid BC has their interpretation, and you might have to fight it, but keep in mind that their interpretation may not be the final word on the subject. People fight about contracts all the time.

In the meantime, you might try the interest relief and principal deferral, but make sure you paper everything -- write letters to accompany anything you send in saying that you don't believe your newer loans are yet due, and you are believe your M.A. loans should still be in interest-free status, but that since you cannot afford to pay these loans, need relief and deferral until the issue is resolved.
posted by girlpublisher at 3:01 PM on November 25, 2009

Yeah, unfortunately, you're feeling the fallout of a lot of kids who defaulted on their student loans in the late 80s and early 90s. The provincial and federal governments have been getting progressively more stringent about student loans as the years go by.

I got a Canada Student Loan, and I got the six-month interest deferral you mention above. It's something, but not much. If I were in your shoes, I'd talk to your bank and investigate what can be done about consolidating the debt, and explain to them your situation, including how long you still have before you complete the PhD. But unfortunately, you may simply have to start budgeting for the additional expense of repaying the student debt.
posted by LN at 3:02 PM on November 25, 2009

Oh and make sure you do not acknowledge that you owe the debt, if you do not think you owe the debt. I seem to recall that if they trick you into saying you owe something, then they can use this to say you do. Tell them outright that you do not acknowledge that you are due to start paying, based on your interpretation of your contracts. Repeat as necessary.

Student Loans can be a nightmare. I took out a tiny loan for the very last semester of school. I got a job right after the term started and was making a lot of money. I repaid the entire amount at once, before it was even the end of the term. Student Loans lost all the paperwork saying that I was even a student (why would I have taken out a loan for the term if I was not?!) and then demanded that I repay the interest, even though I repaid the loan a month after I got it and I was in school and therefore not even eligible to be paying interest on the loan. So you have to watch them like a hawk. In the end, I won my case. But do be careful with them. I thought all the talk about them was made up till I went through it on my own.
posted by acoutu at 3:24 PM on November 25, 2009

I don't know whether this is a good solution for you (for that I'd speak to your financial aid office), but I've had to use interest relief in the past and it was utterly painless. You send them a budget showing that your income is below a certain level and you pretty much automatically get a six-month renewable grace period. You may find that if you're still going to school and not making much money that you can renew your interest relief indefinitely and be in exactly the same situation you were before you entered the repayment phase.
posted by hayvac at 6:37 AM on November 26, 2009

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