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"Grace Period" for Canada Student Loan

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    Posted: 04/November/2016 at 2:27pm

I just graduated from two years of college end of April this year and called up the National Student Loans centre in May to find out if I needed to do anything right away about paying back my loan. She confirmed that I had six months "grace period" and there was nothing I needed to do. I should just wait until they contact me about paying it back. 

They sent me a letter end of September about how and when to go about paying my loan. When I read further down on the page it explained that the grace period meant I didn't have to pay for six months after I graduated but they were still charging me interest! I was shocked as I didn't see that information anywhere before in any correspondence with them and even when I called the Centre, she hadn't told me that.

When I called back in October to check if this was correct, the agent confirmed that yes, I was charged interest for six months and would have to pay the almost $500 interest that had accrued on my loan. She told me in the initial form that I had sent in two years ago for my loan, this information was written. I haven't seen it since to verify but nonetheless the Student Loans Centre should have made this very clear especially around the time of graduating so students who missed the information at the beginning will be in the know and have a chance to pay back their loans earlier and avert the interest.

If someone calls to ask if there is anything they need to do pay back their loan right away, they should tell them that interest will start being accrued on the Canada Student Loan as soon as they graduate and that grace period only means they don't have to start paying it back.

If I had known, I would have paid off my student loan right after graduation instead of waiting the six months! I'm so angry about this as it's so underhanded and unfair. This needs to be changed right away so other people don't have the same problem.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote administrator Quote  Post ReplyReply Direct Link To This Post Posted: 04/November/2016 at 8:34pm
This has been going on for years.... I raised in the media but it still goes on. Their own consultant reports have identified that the term is misleading.  In accounting textbooks 'grace period' means no interest and no periods. 

Would you be interested in going to the media with this?
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Mark O'Meara

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Post Options Post Options   Thanks (0) Thanks(0)   Quote administrator Quote  Post ReplyReply Direct Link To This Post Posted: 04/November/2016 at 8:36pm
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Post Options Post Options   Thanks (0) Thanks(0)   Quote administrator Quote  Post ReplyReply Direct Link To This Post Posted: 04/November/2016 at 8:43pm
From the 2011 CSLP Annual Report:
http://www.esdc.gc.ca/eng/publications/evaluations/learning/2011/june.shtml

Recommendation #3: That CSLP explore the idea of changing the name of the grace period, because the use of this term often leads to confusion for students about whether interest accrues during this six month period.

We agree that the term "grace period" may be confusing to some borrowers, and will continue to work with our provincial/territorial partners to explore a more effective way to communicate how the student loan program works. The "grace period" refers to the fact that borrowers are entitled to defer their student loan payments for six months following the completion of PSE studies, but that interest on Canada Student Loans will continue to accrue during this period. However, the confusion on the part of some borrowers may stem from the fact that some provinces do not require interest to accrue on provincial student loans during this six-month period. To mitigate any confusion, the CSLP undertakes to effectively communicate this term in all appropriate communication to borrowers, including student loan documents, on the CanLearn website, and through the Service Provider call centre.



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Mark O'Meara

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Post Options Post Options   Thanks (0) Thanks(0)   Quote administrator Quote  Post ReplyReply Direct Link To This Post Posted: 04/November/2016 at 8:43pm
Never implemented...

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Post Options Post Options   Thanks (0) Thanks(0)   Quote administrator Quote  Post ReplyReply Direct Link To This Post Posted: 06/November/2016 at 10:19am
What they don't mention here is that accounting textbooks and personal finance references usually state the definition of 'grace period' as no interest, no payments.

From wikipedia.
In personal finance, a grace period is the period during which no interest is charged on a credit card.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote Terminator Quote  Post ReplyReply Direct Link To This Post Posted: 27/February/2018 at 9:17am
Hi guys,

I recently finished my PhD and didn't realize that interest was accruing during the grace period at nearly 2 dollars a day, which seems to me like I am dealing with payday loans and not a government. I had paid off the loan but not the interest. I took screen captures of my account showing that the system showed I owed nothing. It's all in 0s. They recently removed all the loan information form my profile and now sent me a bill to pay the interests in 11 installments.

When I called to speak to them about the grace period, as well understand it (interest free as Mark argues in the McLean's mag article based on the standards set for the banking industry), they keep telling me I am still on my grace period. When I challenged their lack of transparency, and the fact that all financial institutions warn you of unexpected interests, the man on the phone explained that their duty is not to inform me or communicate with me in any way. That they only deposit and collect the money, so I wonder why is that my account has a mailbox which is supposed to be for messages?

I checked the regulations on the banking industry and the top Canadian bank's definition of grace period and it still means 'interest free'. I am appealing these interest charges on the base of their misinformation, the fact that my account always showed me that there was no option to repay until after 6 months and that it suggested I had nothing to worry about + the fact that they now removed all information regarding the loan, particularly the information that said I owed $0 on my loan.

Also, the address for appeals, you have to call and spend your time listening to prompts to get because that is one more thing they don't make publicly available.

This is the address: 

Canada Student Loans Program 
Human Resources and Skills Development Canada 
P.O. Box 2090, Station D
Ottawa, Ontario 
K1P 6C6

Is there anything else I should keep in mind or anything you recommend? Has anything changed?

Thanks,
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Post Options Post Options   Thanks (0) Thanks(0)   Quote administrator Quote  Post ReplyReply Direct Link To This Post Posted: 27/February/2018 at 9:07pm
I would suggest going to the media about this... I've tried but with no luck... let us know what you happens...  Their own reports have recommended at least changing the term because it is considered confusing.
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