Public Advisory: Provincial Government Announces Changes to Defaulted Student Loan Account Collections
For individuals with provincial student loans in default and who file income tax returns with the Canada Revenue Agency (CRA) from April 9, 2020 to September 30, 2020 which results in a refund, including GST credits, CRA will send refunds, including GST credits, directly to individuals instead of the Provincial Government.
This decision is not retroactive and only applies to defaulted student loan borrowers who file their income tax return with CRA on or after April 9, 2020. For income tax returns filed with CRA prior to April 9, 2020 which resulted in a refund, including GST credits, all or a portion of that refund, including GST credits, will not be returned to the defaulted borrower and will be diverted to the Provincial Government. More information can be found in the backgrounder below.
Other collections activities will continue at a reduced capacity, with recognition that circumstances may require case-by-case assessment. Defaulted borrowers requiring further assistance should contact the Department of Finance at taxadmin@gov.nl.ca.
This action is consistent with the Government of Canada and other jurisdictions in the country in response to COVID-19. The Government of Canada is placing a pause on collection activities to September 30, 2020 of federal defaulted student loan accounts, including a pause on the CRA Income Tax Set-off provision.
The Provincial Government is committed to providing financial relief during the Covid-19 pandemic. To support student loan borrowers, the Provincial Government has previously announced a temporary suspension on the repayment of Newfoundland and Labrador Student Loans at the National Student Loan Service Centre.
For the most up-to-date information related to COVID-19, please visit www.gov.nl.ca/covid-19. For general inquiries related to available government services, please email covid19info@gov.nl.ca.
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Media contact
Tansy Mundon
Advanced Education, Skills and Labour
709-693-1865
tansymundon@gov.nl.ca
BACKGROUNDER
Questions and Answers Related to Income Tax Refunds and Defaulted Student Loan Accounts
What does this new relief measure mean for my defaulted student loan account?
For defaulted student loan borrowers who file their income tax return on or after April 9, 2020, the assessed refund, including GST, will go directly to the individual.
For income tax returns filed with CRA prior to April 9, 2020 which resulted in a refund, including GST credits, all or a portion of that refund, including GST credits, will not be returned to the defaulted borrower and will be diverted to the Provincial Government.
How long will the pause be in effect?
The pause on income tax refunds, including GST credits, for defaulted student loan borrowers who filed their income tax return on or after April 9, 2020 being diverted from the Canada Revenue Agency to the Provincial Government will be in effect until September 30, 2020.
Do I need to do anything to activate this pause?
No. For income tax refunds, including GST credits, for defaulted student loan borrowers who filed their income tax return on or after April 9, 2020 being diverted from the Canada Revenue Agency to the Provincial Government will be automatically paused. However, should a defaulted borrower wish to make payments, they can do so by contacting the provincial Department of Finance by emailing taxadmin@gov.nl.ca.
Will other student loan default collections activities also be paused?
Other collections activities will continue in a reduced capacity, with recognition that individual borrower circumstances may require case-by-case assessment.
How many students will be impacted by this pause?
Up to 6,048 defaulted borrowers could benefit from a pause/suspension of the CRA Income Tax Set-off.
Will the Department of Finance still be able to process payments on my account if I wish to continue repaying during the pause?
Yes, the Department of Finance will still be able to process payments for those wishing to repay during the pause. Defaulted borrowers can arrange to make payments by contacting the Department of Finance by emailing taxadmin@gov.nl.ca.
What about my defaulted Canada Student Loan?
The Government of Canada will also be placing a pause on income tax refunds being diverted from the Canada Revenue Agency to Canada Student Loan defaulted accounts until September 30, 2020.
What if my income tax return was already diverted to the Provincial Government – will I get it refunded to me?
Unfortunately, no. For defaulted borrowers who filed their income tax return prior to April 9, 2020, all or a portion of income tax refund, including GST, assessed at the Canada Revenue Agency (CRA), will be diverted to the Provincial Government and applied towards defaulted loan account balances.
Will the Department of Finance personnel be available during this pause?
Yes. Staff are working at a reduced capacity during the pandemic and individuals are encouraged to contact the Department of Finance by emailing taxadmin@gov.nl.ca.
Where can I get more information?
For more information, please consult the Department of Finance by emailing taxadmin@gov.nl.ca or the Student Financial Services Division by emailing studentaidenquiry@gov.nl.ca.