Canadian student loan interest is more than double charged by most countries and is forcing thousands of students to default on their loans.
The federal student loan program is charging more interest than necessary and forcing thousands of grads to default, according to a report by the Coalition for Student Loan Fairness. The Vancouver based group said the government borrows the money to fund the program at an average rate of 4.15 per cent. But when students repay the loans, starting six months after graduation, they pay between 8.5 and 11-per-cent interest, more than double what it costs the government to borrow the money.
According to a 2005 report, authored by Mr. Alex Usher, of the Educational Policy Institute; Global Debt Patterns: An International Comparison of Student Loan Burdens and Repayment Conditions; New Zealand and Germany charge no interest on student loans in repayment. Sweden, meanwhile, charges only 3.1%; the United Kingdom and the United States charge only about 3.37%. The Netherlands charges only 3.05% on student loans, while Australia charges just 2.40%. In contrast to most of the developed world, Canada is currently charging between 8.5% and 11% in interest on student loans
“The No. 1 way that the government can reduce defaults is to reduce the interest rates on student loans,” said Julian Benedict, the coalition’s founder.
More information at this Province article.
October 4th, 2007 at 10:49 am
I think it’s not right. If you want to encourage people to persue education, we should be finding ways to entice them, not discourage them. Loans for students should have a much lower interest rate.
December 22nd, 2007 at 8:00 am
It is appallingly disgusting to see the government of Canada with their secured overwhelming towering pensions and salaries with countless raises protected from the backs of student loans. Meanwhile the powers to be within the government manage to weave their greasy paws into the student loans repayments by charging interests once the students are trying to repay their loans from the astronomical mountains of money due at the end of the degree (s) earned. As an employed individual we never recover the equivalent rising cost of living should we be so lucky to receive a raise within our salary. Politicians at all levels are secured with their fat pay cheques and pensions and raises that spilled far beyond logical—significantly above the yearly rise cost-of-living. And here we are, students freshly out of University, trying to honour our loans, and the principal of the loan never gets touched through the monthly payments while government officials are laughing all the way to the bank. Take ALL of the interest off our loans, then we could see the bottom line of principal depleting, and to perhaps exhale even for a moment that there will be an end to repaying the student loans, thus, encouraging honest individuals who may one day hold a position within the government undertaking not to gouge those who took the chance in entering into a unfathomable sum through student loans.
February 2nd, 2008 at 9:47 pm
From the graph above, we should also note that there are NO university tuitions in Sweden, Germany and several other couuntries. If they borrow money, then it’s to cover the cost of living. Here in North America, kids from not-so well off families will take on a quarter century and more worth of student loan debt as the price for pursuing what used to be affordable and accessible for all. Fascism anyone?