The Federal Government Made Changes To Student Loans In 2022 & Here's What You Might've Missed
Canada's federal government made a few changes to student loans last year that could have an impact on your loan repayments.
According to the government, this was done to make repayment plans "more flexible" and ensure there is support for post-secondary students to finish their education and "transition successfully to the workforce."
So, if you have federal student loans, here's what you might have missed in 2022 and what you should know about student loan repayments.
Student loan interest forgiveness
The federal government has waived interest on Canada Student Loans until March 2023 but it also announced plans to scrap student loan interest for all new and existing federal student and apprentice loans.
If this change is approved, the forgiveness of student loan interest would come into effect on April 1, 2023.
According to the federal government, not paying interest on student loans would save the average borrower $410 each year.
Increased zero-payment income threshold
Canada Student Loans and Canada Apprentice Loans have a zero-payment income threshold which regulates how much money someone has to make a year before they're required to start repaying their loans.
The federal government increased the threshold of the Repayment Assistance Plan to $40,000, up from $25,000.
So, borrowers who are in a family unit of one and earn under $40,000 now won't have to start repaying their student loans.
Also, the threshold amount will be adjusted upward based on family size.
The federal government has committed to keeping the zero-payment income threshold in line with inflation each year.
Lowered monthly affordable payments cap
The federal government has lowered the cap on monthly affordable payments of student loans.
Now, the maximum amount that borrowers need to put down when repaying their loans every month can only be 10% of their household income.
The monthly cap for affordable payments used to be 20% of an individual's household income.
There are other things students should know about for 2023 like loan forgiveness for certain graduates, doubled student grants, tax credits for student loan repayments and more.
Students can also get federal benefits in 2023 including the climate action incentive payment, Canada Housing Benefit top up and Canada Learning Bond, which offers up to $2,000 to help pay for post-secondary education!
