What's the easiest way to repay US Stafford student loans having moved to Canada permanently?

November 7, 2007 9:19 AM

I'm an American living in BC with about $20K in consolidated Stafford loans. I moved up here two years ago for graduate school at UBC. I've since graduated, secured gainful employment and have applied for permanent residency. My student loan repayment begins soon and I'm trying to figure out the easiest way to do the actual paying. I heard that the Dept of Ed will give you an interest rate reduction if you setup direct withdrawal from a bank account. Is this possible with a Canadian bank? If not, is there another way to setup automatic payments? Any other hidden gremlins of loan repayment from abroad, both physically and financially?

My scenario is basically the mirror of this. The rising loonie is great for me, as my student loan debt keeps getting smaller and smaller. I'm looking to pay off my loans in about 24 months. I'm mainly just looking for information about the logistics of repayment, but if there are any subtle factors to student loan repayment that I haven't considered, feel free to mention them (and yes, I've also budgeted savings for emergencies, RRSP, etc.).

posted by Nelsormensch to Work & Money (11 answers total)

Response by poster: Doh, I wasn't paying attention and my main question area is way larger it should have been. Most of that should have been in the extra info. Apologies!
posted by Nelsormensch at 9:20 AM on November 7, 2007

Best answer: I live in the UK and pay my US student loans through direct debit as well, here's how i do it:

I have a UK account that my salary is paid into
I have a US account linked to the Student Loans for auto-payments
I PayPal the money across once a month before the payment (I use the Subscription feature of PayPal for this to happen automatically)

Instead of PayPal for the last step you could probably set up a direct bank transfer, but I found the fees smaller with them.
posted by ukdanae at 9:29 AM on November 7, 2007

Just to make it explicit: You can't have the payment drawn from a Canadian bank account
posted by winston at 10:04 AM on November 7, 2007

Best answer: When I lived in Canada, I opened a secondary Royal Bank American account, something like this. It's definitely for snowbirds, but if I recall correctly it was easy to transfer money between the two and it provided a US account that could used for direct payments for a pretty low fee. I bet all the major banks have accounts like these.
posted by slowfasthazel at 10:23 AM on November 7, 2007

slowfasthazel has the easiest solution. I recall from looking into this a couple years ago, however, that only RBC has a reasonable implementation of this (because they own a bank in the Southern USA called RBC Centura). I have an account with them and haven't had any trouble. You can transfer money online for free.
posted by ssg at 11:31 AM on November 7, 2007

Oh, that's right. Now I remember I went with Royal Bank because they were the only Canadian bank that offered a US account (that was about three years ago). I never really used it because I ended up moving back to the states not long after, so I cannot comment on their service.
posted by slowfasthazel at 11:47 AM on November 7, 2007

I moved up to Canada from the US in August, and got an RBC account strictly because they're the only people with a US affiliate. Turns out I didn't need the US account after all, but as far as I know RBC is the only bank that can do this. It's a standard chequing account w/ debit card. Transfers between a Canadian RBC account and the US account aren't free IIRC (ssg might be right; look into it) but they're pretty cheap and beat hell out of paying wire transfer fees.
posted by the dief at 1:42 PM on November 7, 2007

Best answer: TD Canada offers US dollar accounts now. I don't have one, but every time I go in with a check in US dollars they ask if I want to open one. I would assume other banks are doing so as well, and wouldn't think it would be that hard to set up direct debit from one.

If you even need to do that. The currency's going to have to be translated at some point if your income is in $CDN. And you're going to get hit by a fee for that for a couple percent. But it would seem to me that it doesn't really matter if you do that by transferring your loonies into your USD account and then direct debiting the loan payments out of that, or just having them direct debit them right out of your main checking account and have them convert the currency as part of that. But ask your bank. And welcome to Vancouver! Nicer up here, isn't it?
posted by Naberius at 3:25 PM on November 7, 2007

Response by poster: I bank with Vancity, but they offer USD accounts too. I'll give them and the US Dept of Ed a call and see if I can't get something arranged. If not, I'll just Paypal the monthly payments to a US bank account (I think I've still got $25 in a savings account somewhere). Thanks everyone!
posted by Nelsormensch at 3:38 PM on November 7, 2007

I had a TD US Dollar account that I had to "feed" monthly, and that was an annoying thing that I was not allowed to do online- and that's still the case; you have to deposit US dollar cheques and transfer Canadian dollars in person. When I got to the point where I only had one US financial obligation (my student loans, natch), I closed the US dollar account and just wrote one loan payment per month with my regular Canuck account cheques and wrote "xxx and no/100 US." For this I had to pay something like $8 per transaction, but it was only once a month and was about the same price as the account fees were costing; then there is the time I saved.

I finally paid off my student loans last year, with proceeds from the sale of an investment property here (Calgary), but that was when the dollar was at what I considered an outrageous high of 85 cents- when you have had do come up with about US$800 per month to pay student loans, credit card bills AND car payments, and the dollar is worth 67 cents US, you celebrate 85 cents like it's the end of a war. YOU are SO LUCKY!
posted by ethnomethodologist at 11:37 PM on November 7, 2007

TD Canada offers US dollar accounts now.

This shouldn't be marked as a best answer—TD Canada Trust USD accounts are part of the Canadian banking system, not the U.S. banking system, and you can't set up direct debit from them. If you're American, you should be able to open an account with a U.S. bank, and just transfer your money over.
posted by oaf at 6:54 AM on November 9, 2007