National and Provincial Loans Relief and Forgiveness Programs (NSLSC)

[macmed]

Hi,

 

I would be interested in hearing any information people have on government student loans (provincial and national), in regards to what do after finishing med school/starting residency. I am interested particularly in loan relief or forgiveness programs. I am graduating this month from a med school in Alberta, and have a combination of National and Alberta government loans.

 

My Alberta Loans remain in an interest-free status until I am finished residency, as long as I am enrolled in an accredited residency in Canada, USA, etc. My loan completion payment (forgiveness/relief eligibility) was already automatically calculated by the Alberta government. I apparently do not qualify for any form of relief, as my debt level is below the established debt level for medicine ($63,240 is the apparent debt cut-off). I'm pretty upset about this, as I maximized my student loans every year while in medical school, but apparently I still wasn't given enough money to qualify!

 

My National students loans (NSLSC) have now lost their interest-free status, and have begun accumulating interest at a rate of prime+2.5%

 

 

 

I'm particularly interested in my National student loans. For example:

 

1) Is it worthwhile to consolidate the National loan onto a bank LOC (I can get one at prime + 0%), and pay it off with less interest on my own schedule?

 

2) Is it worthwhile to leave the loan with the NSLSC? Interest is charged at prime+2.5%, but the interest I pay should result in a tax break. I'm not sure of the amount but I think it's "interest paid" x "marginal national tax rate (which is ~15%)"

 

3) What is the debt level to qualify for loan-forgiveness/relief by the NSLSC? I was told by their representative that this information will not be available until approximately November 2010. By that point I will have paid several months of higher interest, when I could have consolidated my loan onto a bank LOC immediately. Do any residents from previous years maybe have some figures of how high your debt level needs to be to qualify for help from the NSLSC?

 

4) Is there anything in the works for making NSLSC loans interest-free for residents in the future? I know that debt and loans was one of the themes for the 2009 CFMS lobby day (http://www.cma.ca/index.php?ci_id=10043212&la_id=1). However, I'm not sure if anything is actually going to happen any time soon!

 

 

 

 

Any help, tips, or anecdotes would be very much appreciated. Especially on the issue of consolidating NSLSC to a bank LOC, or leaving it with NSLSC to take advantage of tax breaks and potential relief.

 

Thanks!!

[macmed]

A little more info I found on NSLSC interest relief data (the latest I could find is 2007). See this website: http://www.rhdcc-hrsdc.gc.ca/eng/learning/canada_student_loan/Publications/annual_report/2006-2007/part_2.shtml and do a 'word find' for "Interest relief by Monthly – Family Income"".

 

The vast majority of borrowers who qualified for interest relief and a family income of less than $500 per month. The majority of first year residents will be making ~$4000/month (gross), which puts us in the highest category ($3000+/month). Only 2% of all Interest Relief participants come from this category.

 

This makes me think that if you are making a residents salary, you will only qualify for interest relief if you have a rather large family and number of dependents.

 

Later in "6.3.3 Debt Reduction in Repayment", it seems to imply that Debt Reduction is only for people who have already applied and qualified for interest relief multiple times, and still have difficulty making payments.

 

Finally, "6.4 LOAN FORGIVENESS" seems to imply that only persons with significant disabilities will qualify for forgiveness.

[rmorelan]

Not anywhere near paying off my loan stage of things but a 15% reduction doesn't sound like much compared to getting a 2.5% reduction in interest to me.....

[Ollie]

I never actually did the math myself, but my MD Management guy said you will save more with the lower interest rate on your LOC than you will be from the tax deduction from your higher interest rate. Not to mention it makes repayment much more straightforward when you only have one account to worry about. Your LOC should be interest-only until 1 year after residency so it's nice not to have to worry about making payments as a resident unless you have the extra money (although I have managed to pay of a pretty decent chunk so far).

 

Oh yeah, as you have already figured out, there is no way you will qualify for interest relief as a resident.

[mikepierre09]

Thanks for the tips. I generally use these brushes for all my last time edits. Keep them coming.