Hundreds of thousands of Canadians are now in default on their student loans
Recently released federal data shows that the federal government has generated more than one hundred million dollars in revenue from “Canada Student Loan Interest” since the start of the COVID-19 pandemic in March 2020.
Federal Public Accounts documents, released in late December by the Department of Public Service and Procurement, report that the Trudeau government brought in $169 million in “revenue” from interest payments on Canada Student Loans from March 2020-21.
Like PressProgress previously reported, while the Trudeau government initially suspended student loan repayments and interest accrual at the start of the pandemic, the pause for both ended in September 2020.
While the federal government reintroduced a new interest accrual freeze in April 2021, the repayment freeze has not returned.
Justin Trudeau says he will suspend interest on student loans.
But he doesn’t mention that students could still face stiff penalties or have their assets seized if they miss payments.https://t.co/LT3llb8wnU #cdnpoli #canlab
—PressProgress (@pressprogress) September 13, 2021
Additionally, students can have their assets seized if they miss payments.
The Canadian Federation of Students, which represents half a million post-secondary students across Canada, says students are placed in a difficult position.
“High tuition fees have a discriminatory impact on students from middle- and low-income households, who are more likely to need loans to finance their studies,” said CFS spokeswoman Candice Pinto. PressProgress.
“Because provinces like Ontario impose student loan interest rates on top of federal interest rates, people from middle and low income backgrounds end up paying more than students who can afford to pay the displayed price.
Pinto said that “the moratorium on interest charges between 2020 and 2021 was mismanaged and canceled far too quickly as we saw in September 2020, just six months after the start of the pandemic, only to be reinstated. in April 2021”.
“We know the pandemic has impacted all of us, but it has only exacerbated the challenges facing the most marginalized within the post-secondary education system.
From March 2019 to 2020, the federal government brought in more than $754 million in student loan interest revenue, totaling nearly $1 billion over two years.
Although the federal government has pocketed $169 million in interest from students since the start of the pandemic, said a spokeswoman for the Minister of Employment, Workforce Development and Disability Inclusion, Carla Qualtrough. PressProgress they “know that the pandemic has been particularly difficult for young people”.
The spokesperson added:
“Our government firmly believes that no one should be deterred from pursuing an education because interest costs make it unaffordable. This is exactly why the Prime Minister gave Minister Qualtrough the mandate to eliminate federal interest on Canada Student Loans and Canada Apprentice Loans going forward. This will benefit over one million student borrowers and save the average borrower over $3,000 over the life of their loan.
Although it hasn’t been done yet, the Financial Post recently noted that those with variable rate student loans can expect to pay more in the coming months – with interest rates likely to rise. again.
In 2019-20, the most recent year for which data is available, data shows that 8% of Canada’s 1.8 million borrowers were in default.
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