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Student Loan Repayment Relief for Borrowers in Canada

  • Published: 2016-10-31 (Revised/Updated 2016-11-07) : Employment and Social Development Canada (esdc.gc.ca).
  • Synopsis: As of November 1st 2016, Canadians will not have to repay their Canada Student Loan until they are earning at least $25,000 per year.

Main Document

Quote: "This relief is in addition to increased supports for students through the Canada Student Grants. As of August 1, the Government is providing more money."

Strengthening Canada's middle class and helping those working hard to join it means supporting students as they transition to jobs.

As of November 1, no single Canadian will have to repay their Canada Student Loan until she or he is earning at least $25,000 per year.

Borrowers who are having difficulty making their monthly Canada Student Loan payments can apply for help through the Repayment Assistance Plan. Depending on their financial situation--such as their income and family size--borrowers can get approved for a reduced monthly payment on their Canada Student Loan, or for no monthly payment at all.

With these enhancements, borrowers in need will be getting more financial relief so they can focus on finding the right job to start a career, without the management of loans becoming an overwhelming burden.

This relief is in addition to increased supports for students through the Canada Student Grants. As of August 1, the Government is providing more money.

Canada Student Grant amounts have been increased by 50 percent:

"The future prosperity of our country depends on young Canadians getting the education and training needed to succeed in the job market. As a result of this new measure, students will be better positioned to transition into the workforce after graduation." -- The Honourable MaryAnn Mihychuk, Minister of Employment, Workforce Development and Labour.

Repayment Assistance Plan

For Canada Student Loan borrowers having difficulty making their payments following their studies, the Repayment Assistance Plan (RAP) can offer help. The RAP makes it easier for borrowers to manage their student loans by paying back what they can reasonably afford, based on their family income and size. Students must apply for the RAP in order to receive this support.

Since its introduction in 2009, the Repayment Assistance Plan income thresholds, which currently begin at $20,210 (gross income), have not been adjusted and do not reflect minimum wage increases.

Budget 2016 announced an increase to the loan repayment threshold under the Canada Student Loans Program's Repayment Assistance Plan to ensure that no borrower who applies will have to repay their Canada Student Loan until they are earning at least $25,000 per year. This income threshold is for a single individual; for other family sizes, see the table below. Students earning more than this amount may also be eligible for reduced payments. Students who think they may face difficulties repaying their loans should contact the National Student Loans Service Centre to learn more. This measure will provide assistance of $131.4 million over five years, starting on November 1, 2016.

Annual Family Gross Income Thresholds for RAP Zero Payment by Family Size
Family SizeCurrent RAP ThresholdsRAP Thresholds as of Nov. 1Percentage Change
1$20,210$25,00023.7%
2$31,570$39,05223.7%
3$40,790$50,45723.7%
4$48,110$59,51223.7%
5+$54,830$67,82523.7%

In 2013--14, nearly 234,000 borrowers benefited from the RAP, of which 87 percent did not have to make any payments at all.

Enhancing Canada Student Grants

Budget 2016 also announced enhancements to Canada Student Grants (CSGs) which will help reduce student loan debt in repayment.

As of August 1, 2016, CSG amounts increased by 50 per cent:

CSGs provide up-front, non-repayable financial assistance to low- and middle-income students and students with permanent disabilities or dependents. Eligibility is assessed at the time the student applies for student loans.

Increasing the CSGs is expected to benefit over 350,000 students across Canada: approximately 247,000 low-income students; 100,000 middle-income students; and 16,000 part-time students per year. This measure will provide assistance of $1.53 billion over five years, starting in 2016-17.

Budget 2016 also announced expanding eligibility for CSGs to help even more students receive non-repayable assistance through an investment of $790 million over four years. The new eligibility thresholds are expected to be in place for the 2017--18 academic year, following consultations with provinces and territories. Under the new model, the existing low- and middle-income thresholds will be replaced with a single progressive threshold under which grant amounts will gradually decline based on income and family size.

Provincial and territorial information for Canada Student Loans and Grants

The Government of Canada works with most provincial or territorial governments to deliver federal and provincial student loans and grants.

Non-participating jurisdictions

Quebec, Nunavut, and the Northwest Territories chose not to participate in the Canada Student Loans Program and receive an alternative payment from the Government of Canada to administer their own student financial assistance measures.

Resources:

Repayment Assistance Estimator - tools.canlearn.ca/cslgs-scpse/cln-cln/rae-ear/rae-ear-1-eng.do

Student-Financial-Assistance - www.esdc.gc.ca/en/student_financial_aid/index.page

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