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.
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?