This website is a testimony to the problems Canadian Student Loan borrowers experienced from approximately 1996 to 2008 and until their loans were paid off.

The privatization of the Student Loans system by the Chretien and Martin Liberal governments broke the system and defaulted thousands of borrowers who were trying to pay their loans. There were even stories of suicide due to the harassment of borrowers.

Read the report that I prepared back in 2007 here. Canada Student Loans-The Need for Change Fortunately the new Conservative government at the time revamped the program and fixed the system for new borrowers, but borrowers under the previous program were left with ruined credit and continued harassment from debt collectors.

I call on the Canadian Government to apologize to the borrowers affected by this fiasco and make amends.

Unfortunately the Liberal government is again clobbering the Education system with their upcoming changes to International Student Visas. Yes, there's a problem, but instead of a well thought out plan, they have pulled the emergency brake on the train causing a derailment. This has introduced unprecedented instability for both private and public education institutions who serve both international and local students.

Universities can't plan. I've heard of courses being cut because the government has no process in place for universities to send the newly required acceptance letters to the government.

This means that students who have been accepted can not attend courses that start in the summer 2024 semester. With cut sections, current Canadian students will have trouble getting courses, and may have to switch to part-time which changes their enrollment status and might trigger repayment of their loans or ineligibility for funding. I've seen this before. It wreaks havoc on the student loan borrowers.

Again, the Liberal government has messed up the education environment. Will the new system needed in a rush for the acceptance letters be the new Arrivecan scandal?

I call on the government to implement a slower phased in approach and delay the requirement of the acceptance letters until a process is in place to submit these letters.


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SolveStudentDebt View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote SolveStudentDebt Quote  Post ReplyReply Direct Link To This Post Topic: Tax credits for interest paid on s. loans
    Posted: 07/August/2006 at 9:44am

Yes, unfortunately this is correct.

Johnny

www.cfwgroup.ca

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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faithandhope View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote faithandhope Quote  Post ReplyReply Direct Link To This Post Posted: 06/August/2006 at 5:19am
So from this discussion I understand that if you have a judgement against you (as I have) then you can not claim the interest - is tis correct? Most but not all of the money I have paid has come from withholding tax refunds.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote manfred23 Quote  Post ReplyReply Direct Link To This Post Posted: 09/February/2006 at 5:23pm

That's what I thought.  The tax guide doesn't request a specific form, just documentation that you paid that much interest.  The CA I talked to said that you can only claim payments on loans in good standing.  But the tax guide doesn't say anything about that and as far as I know the only thing preventing you from claiming the amount is if a judgement has been found against you. 

I don't find it odd that a CA would lie (after all, their client is the bank, not the debtor).  It was after some thought that I realized that they only wanted to open up communication with me so they could coerce me into applying for a third-party loan to pay off their portion of my CSL.  I pay them what I can and have increased my regular payments whenever I can, so I know I'm acting in good faith.  But if I can claim the interest on my loans, I can pay them off faster (admittedly only the government portion of the CSL but that is much better than nothing!).

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Post Options Post Options   Thanks (0) Thanks(0)   Quote Ferren Quote  Post ReplyReply Direct Link To This Post Posted: 04/February/2006 at 7:41pm

You don't necessarily need an official tax receipt to claim the interest paid. A statement from the collections agency or a letter or anything that proves you made the payments could be used.

Generally if you wanted a rough idea how much interest you paid over a year you would take your starting balance - say January 01/05 and subtract your ending balance - Say Dec 31/05 - and that would be the reduction of principal. Then you would take the total amount you applied toward the loan in total over the year and subtract the amount paid to principal from that. The resultant figure should be your total interest payment (claim).

 

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Post Options Post Options   Thanks (0) Thanks(0)   Quote Buff Quote  Post ReplyReply Direct Link To This Post Posted: 02/February/2006 at 2:50am

If your loan is in collection, you can (and should) claim the interest you paid. The original holder of the loan mails you a tax receipt, much like the ones you get for RRSP contributions. You keep a section of it and include the other part with your tax return. If you're not getting those tax receipts, get on the phone and ask for it. It's your right.

Buff

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Post Options Post Options   Thanks (0) Thanks(0)   Quote manfred23 Quote  Post ReplyReply Direct Link To This Post Posted: 01/February/2006 at 5:50pm
Does anyone know why a loan in collections would not qualify for a claim on line 319 in your taxes?  It seems to me that a payment is a payment and that people in debt need all the tools available to help them get out of debt. 

Manfred 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote BigFatherA Quote  Post ReplyReply Direct Link To This Post Posted: 12/May/2005 at 12:26pm
Being in default and in collections is different from having a judgement against you. 

Judgements are done by courts after a claim has been filed against you and you lost your court case (or did not file a defense).  HRDC usually goes for a judgement to prevent the statute of limitations on your debt.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote faithandhope Quote  Post ReplyReply Direct Link To This Post Posted: 02/May/2005 at 9:03am
Johnny  wrote:
"1) If you have a Canada Student Loan with a judgment anchored, you cannot claim the interest."

And that certainly is the case but I have wondered why?  The money is still being paid - either voluntarily or through tax set offs - but interest is being paid.
Are those people who find themselves with a judgement after defaulting not due the same consideration?
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Post Options Post Options   Thanks (0) Thanks(0)   Quote SolveStudentDebt Quote  Post ReplyReply Direct Link To This Post Posted: 25/April/2005 at 3:20pm

 

 Mrs. D,

 1) If you have a Canada Student Loan with a judgment anchored, you cannot claim the interest.

 2) If you have not paid any interest, you cannot claim something that has not been paid.

 If you are paying toward a guaranteed Canada Student Loan, and they are refusing to give you a tax reciept when you are actually due one, you come to me and I will go get one for you. If you are truly due one, they cannot refuse this.

 Johnny

 

 

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Post Options Post Options   Thanks (0) Thanks(0)   Quote MegaPo Quote  Post ReplyReply Direct Link To This Post Posted: 25/April/2005 at 12:33pm
Regarding Line 319 of your Individual Income Tax Return form... Sometimes people confuse the interest paid on student loans with interest charged on student loans. Only paid interest can be claimed on your tax return.

Let's say you had a loan balance of $10,000 at the beginning of 2003, but you didn't make a single payment all year. At the end of 2003, you might get a statement that says you were charged a total of $950 in interest during that year, so your 2003 year-end balance is a total of $10,950.

Some people have assumed they can claim the $950 in interest charges in Line 319 on the 2003 tax return. That's not how it works. (If you didn't pay, then you don't get the tax break.)

Now suppose you made a payment of $1,000 on the first business day of January of 2004. You would clear the $950 interest (which had accumulated in 2003) and you would reduce the principal debt by $50, so your new balance is $9,950.

In this case, you may claim the $950 payment, because it is an actual payment of accumulated interest. But hang on! You claim this $950 payment on your 2004 tax return, because the payment was made in 2004. It doesn't matter that you were paying off the interest that had accumulated in 2003.

Simple: You can claim (Line 319) the money you paid against the interest on your statutory student loans. You claim it in the year you paid it.

Can't get a receipt for an actual payment of interest? Ask for a statement of account for the period of January to December of that year. Insist on it! Locate your payments on the statement -- see how much of each payment went to principal and how much went to interest. Find the total of your actual payments that went to interest. Report that "total interest paid" on Line 319 and include COPY of the statement and a brief letter explaining that the account holder refused to issue a receipt. File your tax return on time!

--MegaPo
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Post Options Post Options   Thanks (0) Thanks(0)   Quote MegaPo Quote  Post ReplyReply Direct Link To This Post Posted: 25/April/2005 at 12:05pm
Okay, something is really wrong here. This shouldn't be much of a fight. Just about everybody who works with student loans knows that the student gets a receipt for interest paid.

Sure, it's possible to find somebody who doesn't know, but I'm surprised it was someone who deals with student loans at HRDC. (Umm... HRSDC?)

If your facts are correct, then stick to your guns:

Statutory student loans are not like car loans. No, you can't claim car-loan interest payments on your tax return, but there is a specific law that permits claims for interest paid on statutory student loans.

  • It was Section 38(1) of Income Tax Amendments Act, 1998. It is part of the Canadian Income Tax Act, Part I, Division E, Subdivision A, Section 118.62.

  • Not that you can tell anybody to look it up -- they won't bother! Tell them that it is Line 319 on the federal income tax return. You won't find "interest on car loans" there!

  • You should read the information pamphlet for Line 319. Make sure you're right about this.
    Pamphlet P105


    Say... Is there a chance you are wrong about this? Check to be sure:

  • The tax receipt is for money paid toward interest on student loans, not for money charged as interest. It's a common mistake. (My next post will show an example.)

  • Did you get a judgment against you after defaulting? See, it doesn't matter if you defaulted, but it does matter if you're paying a judgment after being sued for defaulted debt. (This probably didn't happen with a federal loan.)

    Keep at it! You shouldn't have to argue with anyone about this. Stay calm and professional, but keep calling back (HRSDC, collectors, bank...). If you're in the right, you'll get your receipt eventually.


    Oh!... Tax trivia: You can file your "T1 Individual Tax Return" form before April 30, and then get your receipt, and then file a "T1 Amend" to get your fair credit. It is better to do it this way than to be late with your tax return!!

    That's a lot of work for $60.80, ain't it?

    --MegaPo
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    masy View Drop Down
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    Post Options Post Options   Thanks (0) Thanks(0)   Quote masy Quote  Post ReplyReply Direct Link To This Post Posted: 25/April/2005 at 4:40am

    That doesn't make sense. My loan is with three different collection agencies and I get a tax receipt from the CIBC student centre. Is your loan a student line of credit or did it come from the CIBC National student loan centre. If if came from the latter, call them, they are the ones who issue the receipts, because collection agencies are collecting for them.

    I've tried to get answers and clarification many times from HRDC, but honestly they are as useless as tits on a bull.

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    Mrs. D View Drop Down
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    Post Options Post Options   Thanks (0) Thanks(0)   Quote Mrs. D Quote  Post ReplyReply Direct Link To This Post Posted: 22/April/2005 at 6:02am

    Good morning everyone

    i spoke to HRDC this morning

    they confirmed what i was told by the collection agent

    they said because my loan went default i will not be getting a receipt because my s/l is at collection.

    So according to this person at the HRDC even if i paid off my loan this year i would no receipt. She said, think of it as paying a car loan you wouldn't get a receipt for that to claim on your taxes.

    Now isn't that great

     

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    Post Options Post Options   Thanks (0) Thanks(0)   Quote Mrs. D Quote  Post ReplyReply Direct Link To This Post Posted: 20/April/2005 at 2:22am

    Thank you so very much

     I will be giving HRDC a call this morning

    will keep you posted

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    Post Options Post Options   Thanks (0) Thanks(0)   Quote polyhymnia61 Quote  Post ReplyReply Direct Link To This Post Posted: 19/April/2005 at 8:24pm

    Yep, MegaPo right. Regardless of whom I paid, I always received my two receipts at tax time: one from the CIBC and one from HRSDC.

    Good luck, Ms. D...

    Poly

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    Post Options Post Options   Thanks (0) Thanks(0)   Quote MegaPo Quote  Post ReplyReply Direct Link To This Post Posted: 19/April/2005 at 12:10pm
    We missed Mrs. D's question:

    She said she paid $380 against student loans in 2003, but was told that no receipt (for income tax filing) would be issued. She said that the reason was because the payment(s) went to a third-party collector, not the lender.

    The rule: You can claim all money paid (within that calendar year) to offset the principal debt or interest of a statutory student loan.

    To explain...
    "You can claim..." means that you are reporting (on your income tax return) that you spent some of your income on repayment of student debt. You receive a non-refundable tax credit equal to about 16% of the amount you paid. In your case, 16% x $380, or $60.80, would be applied as a payment to your tax due, if you earned income that year.

    "...all money" means all money paid in that year! It doesn't matter if you gave the money to a bank, a government, or a collection agent. Whoever applied your payment against your debt must provide you with a receipt for income tax filing.

    "...statutory student loan" = a loan granted under a government student-loan program. Note that some banks have a so-called "student line-of-credit" that only students can get, but these are not statutory student loans -- you pay tax on them just like a plain ol' car loan!

    Okay, so that's the rule. It doesn't help you much if you can't get the receipt for tax filing! Ask for it and ask for it again. Perhaps one reason this collector says that a receipt won't come is because it old (2003?). Or maybe the collector doesn't know and is just making up answers.

    Just keep asking. If they won't give you one, then call everybody including the bank, the collector, and CCRA. CCRA enforces the rules about issuing notices for things like this.

    If you still have no luck, try this with the collector:
    "During repayment of any student loan, receipts are issued each year for income tax purposes. At this time, no receipts have arrived for my payments previously provided. Therefore, it is unclear whether or not my payments have been applied to my student loans. Payments cannot continue until it can be verified that the funds are directed correctly. I trust we can resolve this error very quickly, so payments may resume."

    Here's why it works: Collectors collect. That's all they do. When they get your payments from you, they turn their efforts to someone who isn't paying. They have no incentive to do "customer service" crap, like chase down your 2-year-old receipt for $380!! But tell a collector that the payments have to stop until some paperwork problem is fixed, then your little paperwork problems get fixed!

    But call the bank anyway... It's their responsibility, and the collector might not know how to fix your problem.

    --MegaPo
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    Post Options Post Options   Thanks (0) Thanks(0)   Quote stressedmomma Quote  Post ReplyReply Direct Link To This Post Posted: 18/April/2005 at 3:12pm

     

    I also did the same with a retail card that went to collection. They were rude to me and obviously weren't trustworthy. (At one point they were sending me statements showing more owing than the actual credit card statement - like $680 for a $400 debt.)

     

    So I stopped dealing with them and dealt directly with the company. What is the collection agency's role if you are paying the company regularly? Nothing. They can't phone you up and say, "Hey, you're not paying!"

     

     

     

     

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    WantOut View Drop Down
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    Post Options Post Options   Thanks (0) Thanks(0)   Quote WantOut Quote  Post ReplyReply Direct Link To This Post Posted: 09/April/2005 at 4:14pm
    I'm with you, Hunter!  And do I ever find it amusing when I can make a collector feel like doggy poo for a change!!  After a LONG time stressing, I now try to find ways to see the humor in my situation (NOT easy most of the time, believe me ...), and if that humor comes at the expense of those poor l'il collectors, well .... I'll just have to try to live with that!!!
    In order to discover new lands, one must be willing to lose sight of the shore for a very long time.
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    Post Options Post Options   Thanks (0) Thanks(0)   Quote hunter Quote  Post ReplyReply Direct Link To This Post Posted: 06/April/2005 at 11:02am
    It is your money, so why the hell not.

    I was dealing with a debt once from Zellers, and the collector was downright rude and ignorant to me. I told Zellers that I would pay them and only them, and said it was my way or the highway. And they accepted it.
    The collector did not get her commission.

    When it comes time for me to pay the bank for their portion of it, I will be paying the bank and not the collection agency.
    If they want their money it will be on my terms.
    I am tired of collectors treating me like I am a piece of doggy poo!!

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    Post Options Post Options   Thanks (0) Thanks(0)   Quote Mrs. D Quote  Post ReplyReply Direct Link To This Post Posted: 06/April/2005 at 10:49am

    can you really do that

     

     

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