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Advice; Reapplying for student loan after default

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gilmikeb View Drop Down
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    Posted: 04/February/2014 at 6:04am
Hi everyone,
 I was wondering if anyone could help me with this issue, or any one who has experienced a similar problem. I have defaulted on my student loan a couple of years ago. The integrated OSAP loan has been split into two: the Federal and the Provincial. I have made payments to the Federal portion through Human Resources for six months before I could finally be approved for Repayment Assistance Program. The Provincial portion was awful. I had to pay at least half of the whole balance ($3000 of approximate $6000), otherwise they were going to send my file over to the collections agency. I have borrowed from a relative to pay that off, and have now since then been making monthly payments. Despite all that, another problem arose with them: it was that at least the first half of my first year dealing with them, I was using my credit card to make monthly payments and as a result, there was a one year restriction from reapplying for OSAP again (should I choose to go back to schol) from the last month when I made the payment using credit cards (which was March 2013). I have never heard such policy before. Now, since then I've been making payments using a personal cheques, and I intend to pay off the remaining balance sometime this month or next month.

Now I'm planning to go back to school soon, preferably during the summer semester, or in the fall. Now, what are my chances of reapplying for another student loan with OSAP and be successfully approved?
I'm in good standing with both Federal and Provincial. I have two other issues though: I need a letter addressed to my school's Registrar's office explaining my predicament why there was a lack of academic progress (which had resulted into defaulting my loan in the first place), and also apparently there was a loan overpayment that I need to get rid of.
Now, from my understanding, the loan overpayment automatically goes back to OSAP, and since I've been making payments for both Federal and Provincial, the sum paid should cover more than enough of that loan overpayment. I'm very confused and frustrated right now, not to mention scared. If this loan overpayment stands in the way of being approved again, I would have to pay this out of my pocket, and my savings are barely even enough for me to last until I get a job (currently, unemployed, living at home).

So can anyone tell me, exactly the success rate of getting another loan again because I'm very determined to finish my degree (living in poverty is simply soul crushing), and how exactly do I deal with this loan overpayment (or should I even worry about this at all, since from my understanding, by virtue of my making monthly payments to both Federal and Provincial, I've already covered it).
Please help. Thanks for reading.

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angel44 View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote angel44 Quote  Post ReplyReply Direct Link To This Post Posted: 22/April/2014 at 10:26pm
Sorry if this is too late, I am just coming across this page/forum now. For you to be approved for a new student loan the federal portion of your loan would need to  be rehabilitated. If you have been making payments regularly to CRA/HRSDC then this process should be relatively smooth. I do believe the provincial portion has to be repaid in full, but I am not 100% sure.
 
As for the loan overpayment. You are going to need to provide a receipt of that payment, basically proof that it's paid, before you receive any student loan funding. This will need to be presented to your financial aid office once you apply for your student loan.
 
If you have made the payments, I would suggest getting all receipts, or a full statement of all payments you have made as soon as possible so this is ready to go and to avoid future delays closer to the date when you will need to student loans/
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Johnny View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Johnny Quote  Post ReplyReply Direct Link To This Post Posted: 24/April/2014 at 12:31pm
If there is a provincial loan in default and cannot be rehabilitated then the system will require that to be paid too.  Also, for those with first and second generation loans (bank risk/shared), the same applies. 

Johnny
Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting.

solvestudentdebt.com
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