The B.C. and federal governments have relaxed some of the rules for student loan repayment, part of an integrated loan program in effect starting July 1.
The new repayment assistance plan allows for smaller payments for lower-income students, based on income, number of dependent children and the amount of student debt owed. The program extends the repayment time and may allow forgiveness of the original loan amount.
A single parent with two children and an average annual income of $30,000 would see the minimum interest payment on a $20,000 student loan decrease from $228 to zero. A student couple with two children, combined income of $50,000 and combined loans totalling $40,000 would see their minimum payments fall from $485 to $87.
Premier Christy Clark said the new repayment rules will expand the number of B.C. students eligible for relief to 20,000, replacing strict income-based limits for loan repayment that didn’t reflect loan size or number of dependents.
“It’s going to be a really big benefit for people who might find themselves $1,000 over the eligibility line,” Clark said. “Just because you’re $1,000 better off in your gross income doesn’t mean it’s going to be a whole lot easier to pay everything back.”
The new repayment assistance plan also provides for forgiveness of some or all of the loan principal if students have dependents and their income stays low over time.
Students with a permanent disability can qualify for full loan forgiveness if they still can’t afford the full loan payment after 10 years.
B.C. student loans given out before Aug. 1, 2011 are automatically moved to the new national student loan system effective July 1. Loan recipients are supposed to receive a new agreement with the terms of the integrated loan.
People with B.C. student loans in default can qualify for the integrated loan program by making at least six monthly loan payments in a row on their defaulted loan or repaying it in full.