Student loan repayments in Canada just got less brutal thanks to this update

Paying back your student loans just got a little easier thanks to a change in Canada’s repayment program.

Employment and Social Development Canada (ESDC) introduced updates to the Canada Student Financial Assistance Program’s Repayment Assistance Plan to provide financial relief to young, early-career Canadians.

As of Tuesday, November 1, the zero-payment income threshold for Canada Student Loans and Canada Apprentice Loans will increase from $25,000 to $40,000.

This means borrowers don’t have to repay their loans until they’re earning an annual income of at least $40,000. This amount will be increased based on family size, according to the ESDC.

📢 NEW! Canada Student Loan and Canada Apprentice Loan borrowers will not have to repay their loan until they are earning $40,000 per year under the RAP. Before, the threshold was $25,000.

Learn more: https://t.co/b1Q0rRmhxA pic.twitter.com/EcIAxzMNsN

— Employment and Social Development Canada (@ESDC_GC) November 1, 2022

“A strong, skilled workforce depends on affordable, accessible education, and this change will ensure more Canadians have more flexibility when paying for school,” said Carla Qualtrough, minister of employment, workforce development and disability inclusion, in a statement.

Additionally, the federal government has also lowered the cap on monthly loan payments from 20% to 10% of a borrower’s household income.

The ESDC says this ensures that no person has to pay more than they can reasonably afford.

These updates to the Repayment Assistance Plan are expected to help approximately 180,000 students each year, according to the agency.

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Who’s eligible for this repayment assistance?

Canada Student Loan and Canada Apprentice Loan borrowers may qualify for repayment assistance if:

• They live in Canada, they are a reservist or the spouse of a reservist deployed abroad, or they are on an international internship for a year or less
• Their loan is in repayment
• They are up-to-date on their loan payments.

Manitoba, Newfoundland and Labrador, Saskatchewan, New Brunswick, and Nova Scotia will also introduce the same enhancements to their Repayment Assistance Plans.

This update does not apply to Quebec, the Northwest Territories, and Nunavut since they do not participate in the Canada Student Financial Assistance Program.

However, those provinces and territories will still receive alternative payments from the Government of Canada to administer their own student financial assistance measures.