Looking to repay student loans - Potential interest relief?

[hoekmg2]

Hi... I am writing on behalf of my girlfriend, who has recently graduated from college and is looking to put her student debt issues behind her.

She received $7,221 in 2002 and $2,733 in 2003 for a total student loan of $9,954 (all loans were Canada-Ontario Integrated Student Loans). No payments have been made on the loans, which I believe are now with CBV.

She attended school for the entire 2002-2003 year, but ended up taking the 2nd semester of the 2003-2004 year off (went back to school again the following year). As she took the semester off, she was advised that the loan repayment had to begin. When she attempted to receive interest relief, she was unsuccesful, and the loans eventually went into default. From starting school in 2002 until graduation in 2008, she had been in school almost the entire time, with only a couple of semesters off here and there.

It is my understanding that as she had essentially been a student for this entire time, had the proper forms been filled out (which, again, she apparently tried to do), the accrual of interest that will have been added to her balance could have been avoided. Is this correct?

We can obtain the proper evidence that she has been a student, but is there anyway that the interest could be forgiven? We are not trying to avoid the repayment of the principal, but do not think that the interest that has accrued should be required to be repaid, given that she has remained in school for almost the whole time.

- Do we have any ability to have the interest re-evaluated?
- We are not even sure of the current balance - how could we obtain an accurate up to date balance of the account?
- I understand that the interest rates would be P+1.00% for the provincial portion and P+2.50% for the federal portion... are these rates still effective when the loan is in collections, or are they increased?

She received a letter from the gov't recently advising that they can and will apply any GST or income tax refunds to the loan balance (she hasn't filed taxes in quite some time, as she wouldn't have any taxes due). This is what has prompted this post. Given that the gov't is still prepared to withold tax refunds, it would seem that they still own the loan (i.e. have not sold the loan to CBV)... is this correct? Who would we need to negotiate with... the gov't or CBV in order to get this resolved?

Thanks a lot for any suggestions / feedback!