A Nova Scotian says the income threshold that triggers higher payments on student loans is set too low and that the provincial and federal governments should raise that rate to match the cost of living today.
Riley Harris graduated from NSCC six years ago and has been steadily repaying her loans since then under the repayment assistance program. The federal and provincial versions of the program mean people under a certain income don't have to make payments. It also means people can chose a payment level that works for them, which is what Harris did.
Inflation and rising living costs put more pressure on her finances recently, but she got some good news when she got a raise at work. But then her payments became mandatory and increased by almost 70 per cent compared to what she had been paying, eating up half the raise.
"So a raise that I fought really hard for in order to keep up with cost of living is now being taken directly out of my pocket by student loans," Harris said.
People collecting her federal and provincial student loans told her since her income had passed the $25,000 threshold, she had to repay more of her loans now.
"If I don't make the payments, they've told me that it will simply go to collections, go to my credit, and to me it feels like I'm being punished for going to school," she said.
Lydia Houck is the executive director of Students Nova Scotia, an advocacy group for post-secondary students and graduates.
Federal limit will rise in the fall
She said the repayment assistance program Harris is under is capped at $25,000 provincially and federally. Other options are loan forgiveness, a zero-interest benefit for graduates who stay in Nova Scotia, and a payment-deferral program for up to 12 months.
And some change is coming.
"The federal government, as of Nov. 1, 2022, is planning to increase their repayment assistance threshold from $25,000 to $40,000 in acknowledgement of the fact that costs are rising for students across the board," Houck said.
People with student loans can apply for the repayment assistance program at any point, so graduates like Harris should see the federal portion of their loan return to the no-payment option after Nov. 1.
Houck said the provincial government should consider increasing its threshold as well.
It currently has no plans to do that, but said people struggling to repay student loans should call the student assistance office at 1-800-565-8420 to see what options they do have.
Houck said the idea that graduates go straight into the workforce and earn a stable income is "far from reality." She encouraged people with student loans to keep pushing and asking for repayment options if they are struggling.
Student loan borrowing amounts haven't changed in 5 years
Houck also noted that the maximum amount you can borrow hasn't changed since 2017, meaning many potential students are priced out of an education from the start.
Harris said the province should reconsider its income cap for the repayment assistance program.
"It's just something I'd like to see addressed by the government. $25,000 is not a living income whatsoever," Harris said.
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