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Student Loan Repayment Relief for Borrowers in Canada

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  • Synopsis: Published: 2016-10-31 (Rev. 2016-11-07) - 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. For further information pertaining to this article contact: Employment and Social Development Canada at esdc.gc.ca.

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"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:

  • From $2,000 to $3,000 per year for full-time students from low-income families;
  • From $800 to $1,200 per year for students from middle-income families; and
  • From $1,200 to $1,800 per year for part-time students from low-income families.

"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.

  • Budget 2016 provided the first significant increase to Canada Student Grants and the Repayment Assistance Plan income thresholds since 2009.
  • The increase to Canada Student Grants will provide additional assistance of $1.53 billion over five years.
  • The increase to the Repayment Assistance Plan eligibility thresholds will provide additional assistance of $131.4 million over five years.
  • In 2013--14, approximately 750,000 Canadians were repaying Canada Student Loans, of which nearly 234,000 benefited from the Repayment Assistance Plan.

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:

  • From $2,000 to $3,000 per year for full-time students from low-income families;
  • From $800 to $1,200 per year for full-time students from middle-income families; and
  • From $1,200 to $1,800 per year for part-time students from low-income families.

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.

  • In Ontario, British Columbia, Saskatchewan, New Brunswick, and Newfoundland and Labrador the Government of Canada and the provincial governments work together to provide financial assistance through Integrated Student Loans and Grants.
  • In Alberta, Manitoba, Nova Scotia and Prince Edward Island, Canada Student Loans and Grants are available alongside provincial or territorial student financial assistance.
  • In Yukon, only Canada Student Loans and Grants and territorial grants are available to permanent residents of the Yukon.

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



Related:

  1. Canadian Post-secondary Education More Accessible and Affordable - Government of Canada making significant change to student financial assistance to help students returning to class - Employment and Social Development Canada
  2. Canadian Disability Apprenticeships - Information & Fact Sheets - Information regarding apprenticeship programs, training, and grants for persons with a disability in Canada - Ian Langtree
  3. Canada Study Grant for Accommodation of Students with Permanent Disabilities - The Canada Study Grant for the Accommodation of Students with Permanent Disabilities can provide up to $8,000 per loan year - Mavis Wilkins

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