“Too little, too late”: Federal government freezes interest on student loans, but monthly repayments continue

TORONTO – As of April 1, the interest rate has been set at zero percent for the federal portion of student loans, but activists say that’s not enough to support recent graduates, many of whom continue to struggle to find a job while the pandemic persists.

The proposal to lower the interest rate is included in Bill C-14, which provides for the implementation of the measures included in the fall economic update. While this bill has yet to pass the House of Commons, the National Student Loans Service Center (NSLSC) has already implemented the interest moratorium, which will last until March 31, 2022. .

Patty Facy, who obtained a master’s degree in information from the University of Toronto last year, said the moratorium was “too little, too late”. Facy is part of the #FreezeTheNSLSC campaign, launched by recent graduates calling on the federal government to freeze student loan payments during the pandemic.

During the first wave of the pandemic last spring, the federal government implemented a freeze on student loan repayments for six months until October 1, 2020. This time around, loan holders will still have to make their payments. monthly, although federal interest stops accumulating.

The interest moratorium will also not apply to the provincial portion of student loans, although some provinces such as British Columbia, Nova Scotia, Prince Edward Island and Manitoba do not impose no provincial interest.

“(The monthly payments) run into the hundreds of dollars for people. I’ve seen people who have $ 200 a month, up to $ 800 a month,” Facy said in a telephone interview Wednesday. “It doesn’t really provide a short-term solution to the fact that there’s a pandemic and people are struggling to make ends meet. It seems like a very negligible kind of relief measure.”

NDP MP Heather McPherson, who represents Edmonton Strathcona and is the party’s deputy house leader, says students were unfairly left out of the equation when the federal government granted financial support to employees and the self-employed through the through the Canada Stimulus and Business Benefit.

“We knew that the economy was not going to come back, that there would be no jobs for the new graduates, so it was cruel to force them to start repaying their loans when we had to. money for big and small, big business, we had money for individuals, but we didn’t have money for students? That was just absurd to me, “McPherson said at the time. of a telephone interview Thursday.

McPherson introduced a non-binding motion in the House of Commons in November calling for another moratorium on student loan repayments, which was passed unanimously before the fall economic statement was announced.

“Every member of the government agreed that the smart thing to do was to have a moratorium on student loan repayments. That is what a motion for unanimous consent is. do, “and then they didn’t do it at all,” McPherson said.

The Conservatives have also criticized the government’s handling of federal student loans. Steveston — Richmond East MP Kenny Chiu, who is also the Conservative critic for diversity, inclusion and youth issues, told the House of Commons in February that the government should have retroactively canceled the interest charged after the initial moratorium expired last October.

“The Liberals have had months to reassess and act on the student loan interest measures and did nothing until it was too late. Now the students have racked up months of unnecessary interest because of what has become all too common: the incompetence of the liberals, ”Chiu said.

Marielle Hossack, spokesperson for the office of Federal Employment Minister Carla Qualtrough, told CTVNews.ca in an emailed statement Thursday that the interest freeze will bring “more than $ 329 million in relief to up to 1.4 million Canadians “.

“We know that students and young Canadians always face challenges, and we will continue to do what it takes to be there to support them and help them through these difficult times,” said Hossack.

When asked in the House of Commons why the Liberals did not freeze student loan repayments, Qualtrough pointed to the Repayment Assistance Program (RAP), which allows graduates to avoid repaying until that they earn at least $ 25,000 per year.

“We have improved the repayment assistance program so that applicants do not have to repay their student loan until they earn at least $ 25,000 per year. We have expanded eligibility for Canada Student Loans and Grants for part-time students and students with dependent children. will continue to be there to support students and will remain committed to making post-secondary education more affordable, ”Qualtrough said on March 22.

But eligible loan holders must first apply for the program through the NSLSC, which has been plagued by clogged phone lines, arrears and delays.

“This center is deeply underfunded and deeply broken, so students haven’t even been able to get their hands on the center for months at a time,” McPherson said. “The system itself is so broken. You set up a system that is deeply flawed, deeply broken, doesn’t go far enough, and then you make it so that the students can’t access it. I mean, can- can you imagine anything more frustrating? “

In the 2019 federal election, the Liberals also promised to increase PAR eligibility to those earning up to $ 35,000 a year, which has yet to be implemented.

“Obviously, the government realizes that this is not enough. It does not provide adequate relief to begin with. And that was before the pandemic. You can imagine now that there are people who need loan relief who earn more than $ 25,000 they are not eligible for the HBP, ”said Facy.