Student Loan Income Threshold Changes
The government of Canada has made some changes to its student loan program starting at the beginning of November 2016. Under the old rules, people that were single were to start paying back their student loans once they were earning $20,210 per year. This has now been raised to $25,000 as of Nov 1, 2016.
There are also changes for families of 5 people or more. Now the updated amount is $67,825 for the cut-off point. The updated income threshold according to family size is listed below.
|Family Size||Income Threshold|
How does this work. The Canadian Government will pay the interest that is owed regarding the revised payment. This can last up to 10 six month periods for a total of 60 months over 10 years. This is Stage One.
For stage two to begin, you either have to be out of school for 10 years, or fully completed stage 1 above.
Government now starts to cover both interest and principle that exceeds your reduced monthly payments. You need to remain eligible for Repayment Assistance Plan, the balance of your loan is gradually repaid. These repayment obligations cannot go beyond 15 years (or 10 years for persons with permanent disabilities) after leaving school.
These changes are aimed to help people become financially more stable, and be able to better make ends meet with these new guidelines.
If you are having problems repaying your student loan, it is important that you look at contacting the Repayment Assistance Program and look at the available options. There can be options where some borrowers may be able to get a lowered monthly Canada student loan payment or possibly no monthly payment. Never look to miss or skip repaying your student loans as this can negatively affect your credit rating. Always take advantage of the available options to deal with it properly.
Other changes with Grants that are available for students. For low income families, the grant has been increased to $3000, it was previously $2000. For middle income families the amount is now $1200/yearly. Also for part-time students that are low income, the grant is now $1800/yearly.