BARRIO – Costs continue to mount for the average Canadian as inflation sends food and gas prices soaring.
Combined with fast-rising rent prices, unchecked corporate greed and relatively stagnant salaries, this has left many people — especially new grads just entering the labour market — in serious financial jeopardy.
Recognizing that it’s virtually impossible for young adults to start their careers in big cities, which are rife with entry-level corporate jobs, Canada’s federal government has announced new measures to provide some relief by way of postponed student loan repayments.
“As of November 1, 2022, the zero-payment income threshold for Canada Student Loans and Canada Apprentice Loans will increase from $25,000 to $40,000 for a family size of one,” announced Employment and Social Development Canada on Tuesday.
“Repayment will not be required until borrowers are earning at least $40,000 per year. This amount will be adjusted upward based on family size.”
The salary threshold will also be reevaluated annually and indexed to inflation to ensure it keeps up with the cost of living.
In addition to raising the cap on who is eligible for delayed repayment, the government is lowering the overall cost of monthly debt payments for everyone.
Beginning this week, monthly affordable payments will be 10 per cent of a borrower’s household income, as opposed to the previous 20 per cent, ensuring that nobody “has to pay more than they can reasonably afford.”
These changes are expected to help some 180,000 struggling Canadians per year.
“Starting today, more graduates can focus on building their careers, instead of worrying about student loans. This is so important,” said Minister of Employment, Workforce Development and Disability Inclusion, Carla Qualtrough on Tuesday.
“A strong, skilled workforce depends on affordable, accessible education, and this change will ensure more Canadians have more flexibility when paying for school.”
UPDATED: Nov 3 @ 5:36pm
Finance Minister Chrystia Freeland has announced plans to erase the interest on federal student and apprentice loans as part of the government’s fall fiscal update.
The measure, if implemented, would kick in on April 1, the day after a temporary freeze on the accrual of interest on federal student loans is set to expire.
It would make the loans interest free at that point and apply to those currently being repaid as well.
But the new policy would have no impact on student lines of credit, which are provided by private financial institutions and have variable interest rates. Students and recent graduates with balances on their LOCs have seen their borrowing costs ticking up in recent months as the Bank of Canada raised its trendsetting interest rate to combat inflation.
The new policy would not affect students’ ability to access the Repayment Assistance Plan, which allows borrowers to reduce payments if they hit a financial rough patch or pause repayments entirely if their income is below $40,000 a year.