The Canadian government on Tuesday announced enhancements to the Canada Student Financial Assistance Program’s repayment assistance plan, bringing more flexibility for student and apprentice loan borrowers.
As of Nov. 1, the zero-payment income threshold has increased by $15,000 to $40,000, up from $25,000, for single-person households. That means repayment will not be required until borrowers are earning at least $40,000 per year. The threshold will increase based on the size of the household.
Additionally, the cap on monthly affordable payments also decreased from 20 per cent to 10 per cent of a borrower’s household income, a move the government says is designed to ensure that no borrower has to pay more than they can reasonably afford.
“Starting today, more graduates can focus on building their careers instead of worrying about student loans. This is so important. A strong, skilled workforce depends on affordable, accessible education, and this change will ensure more Canadians have more flexibility when paying for school” Carla Qualtrough, Minister of Employment, Workforce Development and Disability Inclusion, said in a news release.
During the last federal election, the Liberal Party promised to increase the income threshold to $50,000 for single Canadians. Tuesday’s announcement falls short of that promise, but still represents a significant change for students.
Approximately, 180,000 students each year will benefit from these changes, according to the employment ministry.
In addition, the new zero-payment income threshold will be indexed to inflation annually.
“Raising the income threshold for the repayment assistance plan and indexing it to inflation annually will provide relief for many borrowers struggling with the impacts of inflation. The announced program changes will increase its usage and accessibility for borrowers in need,” Mackenzy Metcalfe, Executive Director of the Canadian Alliance of Student Associations, said in the news release.
The same enhancements are being made by the governments of Manitoba, Newfoundland and Labrador, Saskatchewan, New Brunswick and Nova Scotia to their repayment assistance plans. Quebec, the Northwest Territories and Nunavut do not take part in the Canada Student Financial Assistance Program, and receive alternative payments from the federal government to administer their own student loan measures.