Recently, there’s been a lot of news about how student loan holders will no longer need to make monthly payments when they earn under $25,000 a year. Without a doubt, this policy change will help struggling individuals across the country meet their financial requirements. There is one concern with this story, the $25,000 threshold may not apply to you and individuals need to apply to get this benefit.
This week, we dive deeper into this new policy change and clarify how it works.
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Do You Really Need To Make Under $25,000?
Not at all! The $25,000 threshold is only for single individual households. This income threshold is actually based on your household income and not just your individual income. So you’ll have a different threshold amount if you’re married, common-law, or have children.
For example, the qualifying amount is $50,457 if there are three individuals living in your household or $39,052 for a two-person household. As you can see, the payment threshold changes drastically by household size.
The chart below shows the qualifying amount for various household sizes.
Depending on your household size, the increased threshold can really help out certain demographics. Single individuals that recently left school will gain more stability until they find a decent job. New parents can also benefit from this program if one of the parents is on mat/pat leave.
For other individuals, this also increases the qualifying income for reduced payments. Similarly, this can also assist medium income households.
But What About The Interest?
This is one of the most helpful aspects of this program. You do not have to pay interest on the portion of your student loan that the government pays. That means that you will not pay any interest if you qualify for zero loan payments.
For individuals with reduced payments, you’ll similarly only pay interest on the portion of the loan that you pay.
If you’re able to pay extra on your zero payment/reduced payment loan then you’ll drastically reduce the amount of time left until you pay your loan. Every extra payment will be applied directly to your principle.
How To Get a Zero Payment
Importantly, you must apply for this benefit! Unfortunately, many people will not realize that they now qualify for this policy and accordingly, not benefit from it. To qualify, you must apply for repayment assistance. This can easily be done online or by faxing in a completed form. After you apply, the government will assess your application and then act accordingly.
You must apply every six months to consistently qualify for this benefit. This can be a bit frustrating, but is well worth your time. I actually recommend that student loan holders apply for this benefit event often as you may still be approved for lower monthly payments.
The increase to the qualifying income threshold will help many student loan holders across the country. It’s important to remember that you need to apply for this benefit and that the qualifying amount is not necessarily $25,000.
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