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Canada's Student Loan Repayment Rules Are Changing & You Could Have Less To Pay

Borrower payments could shrink or go away altogether.

MTL Blog, Associate Editor
The McGill University Arts Building in the fall.

The McGill University Arts Building in the fall.

After graduating from university, the last thing you want to worry about is crushing monthly debt payments, especially amid a looming recession and high inflation.

Given Canada's shaky financial forecast, the federal government announced on Wednesday that it's adjusting the Repayment Assistance Plan managed by the Student Financial Assistance Program to help out struggling graduates. Not only is it upping the income threshold to postpone repayment timelines but monthly minimum payments have been reduced.

"More graduates can focus on building their careers, instead of worrying about student loans… this change will ensure more Canadians have more flexibility when paying for school," Minister of Employment, Workforce Development and Disability Inclusion Carla Qualtrough said in a statement.

How will the Student Financial Assistance Program's Repayment Assistance Plan change?

As of November 1, the zero-payment income threshold for Canada Student Loans and Canada Apprentice Loans has increased from $25,000 to $40,000 for a single person. That means repayment is on hold until borrowers earn at least $40,000 per year. Depending on the size of a family, that baseline income amount can change.

The cap on monthly affordable payments will also be lowered to 10% (down from 20%) of a borrower's household income. Around 180,000 borrowers are expected to benefit from the change.

Will Canada's student loan repayment system adjust with inflation?

The Repayment Assistance Plan will track the cost of living and adjust the new zero-payment income threshold every year, depending on inflation.

"Raising the income threshold for the Repayment Assistance Plan and indexing it to inflation annually will provide relief for many borrowers," said Mackenzy Metcalfe, the Executive Director of the Canadian Alliance of Student Associations.

How will Canada's student loan repayment changes help graduates?

The federal changes are expected to offer relief from the impacts of inflation. Under the Repayment Assistance Plan, borrowers may qualify for a reduced monthly payment or no monthly payment for up to six months at a time, and no borrower will have a repayment period of more than 15 years (or 10 years for borrowers with disabilities).

How do you know if you qualify for extra government assistance?

Borrowers with a Canada Student Loan or Canada Apprentice Loan qualify for repayment assistance if they meet the following requirements:

  • they live in Canada, they are a reservist or the spouse of a reservist deployed abroad, or they are on an international internship for a year or less;
  • their loan is in repayment; and
  • they are up-to-date on their loan payments.

How do you apply for student loan repayment assistance in Canada?

To receive repayment assistance, you can apply online through the National Student Loans Service Centre (NSLSC). You can also fill out the Repayment Assistance Plan application form. There's no time limit on when you can apply for repayment assistance, but you will have to re-apply every six months if you need ongoing help.

Repayment Assistance Plans for provincial government loans in Manitoba, Newfoundland and Labrador, Saskatchewan, New Brunswick, and Nova Scotia will introduce changes similar to the federal ones.

Quebec, the Northwest Territories and Nunavut do not participate in the Canada Student Financial Assistance Program and instead receive alternative payments from the federal government to determine their own student financial assistance measures.

@mtlblog

Some pretty big changes have come in to place regarding Canada’s Student Loan Repayment rules, and you could actually have less money to pay 💵🇨🇦 #canada #studentloans #studentdebt #canadian #canadatiktok

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