An Overview of the Hardship Provision and Other Student Loan Debt Relief Options

Hardship Provision of the Canada Student Loans Program

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Student loans can be a helpful resource for many individuals seeking higher education, but they can also be a source of stress and financial burden. One way in which individuals can alleviate this burden is by taking advantage of the Student Loan Hardship Provision available through the Canada Student Loans Program (CSLP).

Qualifying for Loan Rehabilitation through the Hardship Provision

The hardship provision allows individuals who are struggling to repay their student loans to request a temporary pause on their loan payments, known as loan rehabilitation. During this time, interest will not accrue on the loan, and collection activities will be suspended. In order to qualify for loan rehabilitation, an individual must demonstrate that they are experiencing financial hardship, such as a significant decrease in income or an increase in expenses. The hardship provision is intended to provide short-term relief for individuals who are facing financial difficulties and is not meant to be a long-term solution for loan repayment.

Applying for the Hardship Provision: What to Expect and What to Submit

To apply for loan rehabilitation, an individual must complete a Hardship Provision Application form, which can be obtained from the National Student Loans Service Centre (NSLSC). The application must be accompanied by supporting documentation, such as proof of income and expenses, to demonstrate that the individual is experiencing a financial hardship. Once the application is received, the NSLSC will review the information provided and make a decision on the individual’s eligibility for loan rehabilitation.

Understanding the Limitations of the Hardship Provision

It’s important to note that while loan rehabilitation can provide temporary relief, it does not forgive or discharge student loan debt. Once the loan rehabilitation period is over, the individual will be expected to resume making loan payments, although they may be eligible for a new payment schedule that better aligns with their current financial situation.

Additionally, it’s important to know that loan rehabilitation is only available for Canada student loans, not private student loans or loans from other country, different provisions or forgiveness plans might apply.

Exploring Other Options for Managing Student Loan Debt

Individuals who are struggling to repay their student loans should also be aware that other options are available to help manage their debt. The Repayment Assistance Plan (RAP) is another program offered through the CSLP that can help individuals who are having trouble making their loan payments. Under RAP, an individual’s loan payments are based on their income, so that they are able to make payments that are affordable for their current financial situation.

Canada Student Grant for Services and Equipment for Person with Permanent Disability (CSG-PDSE)

It’s worth mentioning that there’s also Canada Student Grant for Services and Equipment for Person with Permanent Disability (CSG-PDSE) which provides financial assistance for the services and equipment needed by students with permanent disabilities to participate in post-secondary education.

Loan Rehabilitation Does not Forgive or Discharge Student Loan Debt

The hardship provision through the Canada Student Loans Program can be a helpful resource for individuals who are struggling to repay their student loans. By temporarily pausing loan payments and allowing for a new payment schedule to be established, the hardship provision can provide relief for those experiencing financial difficulties. However, it’s important to note that loan rehabilitation does not forgive or discharge student loan debt and that other options such as Repayment Assistance Plan (RAP) and Canada Student Grant for Services and Equipment for Person with Permanent Disability (CSG-PDSE) are also available to help individuals manage their debt.

How a Licensed Insolvency Trustee can Help Students Manage Debt

The licensed insolvency trustees (LIT’s) at David Sklar & Associates can help students manage their debt by providing them with information and guidance on various debt relief options. One of the main options is a consumer proposal, which is a legal agreement between the student and their creditors that allows for a reduced payment or an extended period of time to repay their debt. The as Licensed Insolvency trustee we will evaluate the student’s financial situation and advise them on the best course of action. We can also help students understand the consequences of not managing their debt, such as wage garnishment, seizure of assets and legal actions. For more information on student loans and managing your debt contact us for a free no-obligation consultation.

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