The Canadian government announced it would eliminate interest on federal student loans, prompting both celebrations and calls for further action from student rights advocates.

As part of its November 3 financial update – which had a strong focus on affordability – the federal government announced plans to eliminate interest on federal student and apprentice loans starting April 1. 2023, immediately after the two-year student loan interest freeze expires.

Student debt remains a significant barrier to the socioeconomic mobility of young Canadians. Between 2000 and 2015, one in two post-secondary graduates had student debt after graduation, with an average debt load of $28,000 that typically takes between 9 and 15 years to be repaid with the program. student financial aid.

The announcement follows another government change to how student loans are repaid.

On November 1, changes to the Repayment Assistance Program (RAP) — a demand-based program that helps people in financial difficulty repay their loans — came into effect. Single-person households earning less than $40,000 a year can now qualify for a zero payment plan, which is more inclusive than the previous $25,000 threshold. The new threshold will also be indexed to annual inflation.

Additionally, monthly payments for those earning more than $40,000 a year will be capped at 10% of their household income, up from 20% under the previous version.

“From today, more graduates can focus on building their careers, instead of worrying about student loans,” said Carla Qualtrough, Minister of Employment, Workforce Development Work and Disability Inclusion, in a Nov. 1 press release. “A strong, skilled workforce depends on an affordable and accessible education, and this change will allow more Canadians to have more flexibility in paying for their education.

At this time, changes to RAP do not apply to the British Columbia Repayment Assistance Program. The new threshold is also lower than the $50,000 target promised by the Liberal government.

Chris Fischer, a fifth-year biology student from rural British Columbia, is the first person in his family to attend university. He said that while his parents were fully supportive of his decision to attend UBC, the financial burden of paying for college fell almost entirely on him.

Fischer was relying on a mix of government grants, scholarships and loans to fund his education, which meant he would graduate with about $30,000 in student loan debt next spring. He said the prospect of having to repay the loan plus interest, in addition to funding medical school and living expenses, was “pretty terrifying”, so he was pleased to hear of the federal government‘s plan to to eliminate interest.

“It will make education more accessible for a lot of low-income students like me,” Fischer said. “I feel like we are often overlooked.”

Some student advocates have pointed out that none of the recent policy changes affect private loans or lines of credit, which tend to have higher interest rates and account for about 30% of all student loans. The changes also fail to provide long-term solutions to the debt crisis, such as unconditional loan forgiveness, increased grant availability and a provincial tuition freeze.

Erin Co, AMS External Vice President and President of Undergraduates of Research Intensive Universities (UCRU), has been involved in student debt campaigns since she started working for AMS three years ago. Co said that while the recent changes are “no small feat,” there’s still work to be done.

Co said policies such as loan forgiveness are still needed to address the skyrocketing cost of living for graduates. She also said navigating the loan scheme is a “difficult task” for which students are often ill-equipped.

“No one should be paying off student loans thirty years after graduating, it’s just not feasible if someone wants to start a family and buy a house,” Co said.

Over the next week of federal lobbying, Co and other student organization advocates across Canada will raise these and other affordability concerns with policymakers in hopes they can win more. ground.

“It’s a big step forward, but I hope it’s not the end.”


Deadline Approaches for Businesses to Apply for Federal Loans | News, Sports, Jobs


US Federal Reserve official suggests substantial rate hikes may be needed

Check Also