Ottawa introduces 6 month grace-free period for student loans due to COVID-19

The federal government announced a series of proposed measures to help Canadians cope with self-isolation and social distancing brought about by COVID-19 precautions.

These include introducing a six-month interest-free moratorium on the repayment of Canada Student Loans for all individuals currently in the process of repaying these loans. The measure was announced on March 18 as part of a $27 billion comprehensive plan titled: Canada’s COVID-19 Economic Response Plan: Support for Canadians and Businesses.

The six-month interest-free moratorium applies only to students who have already graduated and are paying back their student loans after graduation. Essentially, it will act as a pause for any loan payments until September 2020.

The government projects the plan to cost Canadians $190 million. The measure is proposed and requires Royal Assent in order to be implemented. According to Justin Trudeau, Prime Minister of Canada, the measure should be in place for early April.

Some other measures include:

• a one-time special payment by early May 2020 through the Goods and Services Tax credit (GSTC). This will double the maximum annual GSTC payment amounts for the 2019-20 benefit year. The average boost to income for those benefitting from this measure will be close to $400 for single individuals.
• for individuals, the return filing due date for taxes for the 2019 year will be deferred until June 1, 2020.
• effective immediately the Canada Revenue Agency will recognize electronic signatures as having met the signature requirements of the Income Tax Act, as a temporary administrative measure.
• a commitment from major Canadian banks to offer more “flexible” payment options for mortgages and credit card payments.

Prime Minister Justin Trudeau announced the measures and Finance Minister Bill Morneau expanded upon them at a different press conference on March 18.

Bill Morneau said that all measures would be taken to protect the health of Canadians in these “extraordinary times” while ensuring the financial stability of all.

“These are extraordinary times and we must take extraordinary measures,” he said. “The Government of Canada will do whatever it takes to ensure that the health of Canadians is protected, families and businesses are supported and our economy remains strong, even in the face of uncertainty. I am working with the financial sector, the Bank of Canada, my provincial and territorial colleagues, and my counterparts from around the world to keep coordinating on significant actions to protect the Canadian and global economy. Canadians can rest assured that we are ready to take all necessary measures to meet the challenges ahead.”

Adam Brown chair of the Canadian Alliance of Student Associations (CASA) — the federal post-secondary student lobby group — and vice-president (external) at the University of Alberta Students’ Union said he was “really pleased” to see the new proposed measures by the federal government.

“This is really good foresight into the future for students,” Brown said. “Many students are being hit hard by the COVID-19 precautions. Some have lost jobs or are facing reduced employment hours. This moratorium will make a big difference.”

He said that CASA estimates the average student will save $160 a month once this measure is put into place.

“In a time like this, $160 a month can go a long way,” Brown said.

Council of Alberta University Students applauds federal government, calls on province to follow suit

In a tweet, the provincial lobby organization representing the University of Alberta and other post-secondary students across Alberta called on Minister of Advanced Education Demetrios Nicolaides to announce similar measures for students.

The Council of Alberta University Students (CAUS) applauded the federal government for its step toward making COVID-19 precautions easier for students and recently graduated students to handle financially.

CAUS called on the provincial government to follow suit since many Alberta students rely on both federal and provincial student loans.

Laurie Chandler, press secretary for Nicolaides, responded on his behalf, saying that at the time of publication the minister had no comment. She encouraged all students to watch Premier of Alberta Jason Kenney’s announcement later this evening.

Brown, also a member of CAUS, added that he hopes the province will follow the federal government’s leadership.

“This is not just an isolated problem,” he said. “Students in Alberta pay both to the federal government and the province.”

“Right now we need all the help we can get in this challenging and trying circumstances.”