Another reason to envy Canadians—their student loans just became much easier to repay

Paving the way.
Paving the way.
Image: Reuters/Chris Wattie
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As though it’s not enough to have a prime minister who looks great shirtless and speaks eloquently about the power of diversity, a cabinet that is half female, and a parliament that edited the national anthem to make it gender neutral, Canada’s government is now making it easier for young people to shoulder their student debt burden.

Under a new rule that comes into effect tomorrow, the nearly 750,000 Canadian students with student debt would not have to repay their loans until they start earning at least C$25,000 (US $18,650) per year.

“As a result of this new measure, students will be better positioned to transition into the workforce after graduation,” said MaryAnn Mihychuk, the minister of employment, workforce development and labor, in a statement.

Through the government’s Repayment Assistance Plan, borrowers are eligible for a reduced or waived monthly payment depending on their income and family size. The plan, which was first introduced in 2009, benefited nearly 234,000 borrowers in 2013-2014. The increase in the eligibility thresholds, from C$20,210 to C$25,000 income per year, is meant to reflect the increase in wages since 2009 and will mean additional help of C$131.4 million over five years. The new measures were announced as part of the 2016 budget.

In August, the Canadian government also announced an increase in student grants with C$1.53 billion more available over five years. Full-time students from low-income families are now eligible for C$3000 in grants per year, up from C$2000.

The United States, where student loan debt has become a key issue with a whopping $1.3 trillion in outstanding student loans, could take a cue from its neighbor. With the number of young voters growing, and the average debt owed by student borrowers more than tripling in the past 20 years to about $35,000, presidential candidates have been competing to suggest solutions. Hillary Clinton has announced a detailed plan that would include an income-based repayment schedule which caps at 10% of the borrower’s monthly income and would allow qualifying students to attend in-state public universities, tuition-free. Donald Trump, without revealing any particulars, has said that he would encourage colleges to reduce cost. Meanwhile Jill Stein, the Green Party presidential candidate, has said that she would simply erase student debt.