For Canadians paying off their student debt, they might not be aware of a hack to pay off the interest on their principal amount sooner than later.
Canadians can actually lower their student loan debt by writing a cheque to the National Student Loan Service Centre (NSLSC) to pay off the provincial portion of their loans as early as possible.
Last year, the government eliminated accumulation of interest on the federal portion of loans in Ontario, Saskatchewan, Newfoundland, British Columbia, and Manitoba.
READ MORE: The Canadian government has removed interest rates on federal student loans. Here’s how it works.
However, Ontarians still have a floating interest which is the current interest rate plus one per cent charged for the provincial portion of the loan. That means interest rates can change whenever while paying off your debt.
The Canada Student Loans Program provides federal funding for about 60 per cent of full-time student loans, while the remaining 40 per cent is covered by the province.
However, the Ontario Student Assistance Program (OSAP) calculator estimates 70 per cent for the federal portion and 30 per cent for the provincial portion and only shows a single amount for the monthly payment.
Personal finance Tik Toker @newmoneynate posted a video further emphasizing that not a lot of students know their loans are divided into both federal and provincial amounts.
“What you can do is write a cheque directly to the National Student Loan Service Centre, only way you can do it, and say ‘Hey, I want this cheque to go towards the provincial portion.’”
NSLSC refers to this method as sending a “lump-sum payment,” a spokesperson told Now Toronto in a virtual chat.
“You can direct a lump-sum payment to either the Canada or provincial portion of your student loan for payments made by cheque…Payments made by cheque could take up to five business days to receive and process,” they said.
All Canadians have to do is include their loan number, send a written request with specific details of the payment allocation and mail the cheque to the correct address.
Any overpayment would be moved to the federal portion and the only amount left paid would be what is owed on the non-interest federal side.
