Student loans: More flexibility in repayment plans
The Government of Canada on Tuesday announced improvements to the Canada Student Financial Aid Loan repayment plan, providing more flexibility for students and apprentices.
As of November 1, the organic income threshold has increased by $15,000 to $40,000, up from $25,000, for single-person households. That means there won’t be a need to repay the loan until the borrower is earning at least $40,000 per year. The threshold will increase based on the size of the household.
In addition, the monthly payment limit is also reduced from 20% to 10% of a borrower’s household income, a move the government says is intended to ensure that no borrower has to pay more. than they can reasonably afford.
“Starting today, many graduates can focus on building their careers instead of worrying about student loans. This is very important. A highly skilled workforce depends on affordable, accessible education and this shift will ensure more Canadians have more flexibility when it comes to paying for school” Carla Qualtrough, Minister of State Employment, Workforce Development and Disability Inclusion, said in a press release.
During the last federal election, the Liberals promised to raise the income threshold to $50,000 for single Canadians. Tuesday’s announcement doesn’t live up to that promise, but still represents a significant change for students.
About 180,000 students a year will benefit from these changes, according to the Department of Employment.
In addition, the new non-payable income threshold will be calculated according to annual inflation.
“Raising the income threshold for a repayment plan and indexing it to annual inflation will provide relief for many borrowers struggling with the effects of inflation. The announced program changes will increase the usability and accessibility of the program for borrowers in need,” said Mackenzy Metcalfe, Executive Director of the Union of Canadian Student Associations. know in the press release.
The governments of Manitoba, Newfoundland and Labrador, Saskatchewan, New Brunswick and Nova Scotia are also making similar improvements to their repayment assistance plans. Quebec, the Northwest Territories, and Nunavut do not participate in the Canadian Student Financial Aid Program and receive alternative payments from the federal government to administer their own student loan measures.