Parents, post-secondary students and their ability to manage academic expenses were a focal point of the federal government’s budget on Tuesday, with Ottawa planning to increase student grant amounts and give graduating students more flexibility in repaying their student loans.
“Every parent knows that post-secondary education is becoming increasingly expensive. The government must do its part to make post-secondary education more accessible,” said federal Finance Minister Bill Morneau during his budget speech.
The federal government’s plan to help parents and their children attending post-secondary institutions includes a 50% jump to the amounts distributed to students under the Canada Student Grant program for the 2016-17 academic year: to $3,000 a year from $2,000 for students from low-income families; to $1,200 annually from $800 for students from middle-income families; and to $1,800 a year from $1,200 for part-time students
Ottawa is also looking to simplify its current model of eligibility for the Canada Student Grant program. The proposed model would be a uniform system across the country that would set a maximum grant amount and then decrease that amount gradually, depending on a family’s income and size. The current system varies depending on the province or territory and has two thresholds of low-income and middle-income families.
The federal government will undertake consultations with the provinces and territories, and the new system is expected to be in place for the 2017-18 academic year.
The Liberals are also proposing to increase the loan repayment threshold under the Canada Student Loans Program’s Repayment Assistance Plan in this year’s budget so that no one will have to repay their Canada Student Loan until he or she is earning at least $25,000 a year. This would replace the current threshold of $20,210 a year and be in place for the 2016-17 academic year.
“This new threshold will provide increased flexibility in repayment and better reflects minimum wages, helping to ease students’ transition into the workforce,” the budget document states.
The federal government is also introducing a new way to determine eligibility for student loans and grants. The budget proposes a flat-rate contribution model in which the loan amount is based on a flat rate, which is to be determined, and assumes that students already contribute to their education. This varies from the current model, in which the amount of the loan takes students’ financial assets and income into account.
The federal government is looking to implement this change in time for the 2017-18 academic year.
Another tax change that will affect students in this year’s budget is the elimination of the education tax credit and the textbook tax credit, which will be effective Jan. 1, 2017. The budget document notes that tax credit amounts carried forward from prior to 2017 can still be claimed in 2017 and subsequent years.