Canada Student Loan write-offs are up 34% year over year, the Parliamentary Budget Office said yesterday..According to Blacklock's Reporter, losses to taxpayers rose even as Parliament voted to ease repayment terms by eliminating interest charges..“Since most write-offs occur for individuals who have been in default for seven years or longer, this policy change will only begin to have an impact on write-offs in 2027,” said a Budget Office report Supplementary Estimates (C)..New figures showed write-offs this year will total $227,472,139 compared to $170,358,003 last year, an increase of $57.1 million or 34%. Write-offs represented 23,142 separate loans..“This is over $50 million more than what was originally projected in the Chief Actuary’s report and $57 million more than last year,” wrote the Budget Office. “Some volatility in the actual amounts written off from year to year is to be expected as decisions around which loans to write off is a multi-step process.”.Parliament last December 15 passed Bill C-32, an omnibus budget bill that amended the Canada Student Loans Act to eliminate interest payments. The measure takes effect on April 1..The Liberal Party in its 2021 election platform Forward For Everyone promised elimination of interest at a cost it estimated at $538 million a year. Loan program managers have put the cost closer to $556 million a year..“Right now the investment is $2.7 billion over five years, but then there's an ongoing cost as well of $556.3 million per year,” Erin Hetherington, director of the loan program with the Department of Employment, testified last November 22 at the Senate national finance committee. Hetherington said the “purpose behind the measure is to provide relief for borrowers who are experiencing long term affordability pressures.”.Federal student loan debts average $14,000, by official estimate. MPs in 2020 expressed unease with a recommendation from auditors that delinquent borrowers be reported to credit bureaus..“The value of unpaid student loans will continue to grow,” Auditor General Karen Hogan told a 2020 hearing of the Commons public accounts committee. Hogan in a July 8, 2020 report complained the Department of Employment did not automatically report all borrowers in default..“We found the Department of Employment did not disclose student debts in default to credit bureaus despite having borrowers’ permission to do so and recognizing this would prompt borrowers to repay their loans more quickly,” said the audit report Student Financial Assistance..MPs dismissed the recommendation as too harsh..“I’m just thinking back to the time when I was young,” said Liberal MP Greg Fergus (Hull-Aylmer, QC). “I wasn’t perhaps the most financially responsible that there is. Would you find there’d be a better solution than reporting them to a credit agency which would, of course, put a stain on their credit record which can carry forward as they’re just starting life?”.“We know how important a credit score is when you go to the bank and go to purchase a house, a car,” said Liberal MP Francesco Sorbara (Vaughan-Woodbridge, ON)..“We don’t want to penalize youth right off the bat coming out of university or college and finding themselves in a difficult position.”
Canada Student Loan write-offs are up 34% year over year, the Parliamentary Budget Office said yesterday..According to Blacklock's Reporter, losses to taxpayers rose even as Parliament voted to ease repayment terms by eliminating interest charges..“Since most write-offs occur for individuals who have been in default for seven years or longer, this policy change will only begin to have an impact on write-offs in 2027,” said a Budget Office report Supplementary Estimates (C)..New figures showed write-offs this year will total $227,472,139 compared to $170,358,003 last year, an increase of $57.1 million or 34%. Write-offs represented 23,142 separate loans..“This is over $50 million more than what was originally projected in the Chief Actuary’s report and $57 million more than last year,” wrote the Budget Office. “Some volatility in the actual amounts written off from year to year is to be expected as decisions around which loans to write off is a multi-step process.”.Parliament last December 15 passed Bill C-32, an omnibus budget bill that amended the Canada Student Loans Act to eliminate interest payments. The measure takes effect on April 1..The Liberal Party in its 2021 election platform Forward For Everyone promised elimination of interest at a cost it estimated at $538 million a year. Loan program managers have put the cost closer to $556 million a year..“Right now the investment is $2.7 billion over five years, but then there's an ongoing cost as well of $556.3 million per year,” Erin Hetherington, director of the loan program with the Department of Employment, testified last November 22 at the Senate national finance committee. Hetherington said the “purpose behind the measure is to provide relief for borrowers who are experiencing long term affordability pressures.”.Federal student loan debts average $14,000, by official estimate. MPs in 2020 expressed unease with a recommendation from auditors that delinquent borrowers be reported to credit bureaus..“The value of unpaid student loans will continue to grow,” Auditor General Karen Hogan told a 2020 hearing of the Commons public accounts committee. Hogan in a July 8, 2020 report complained the Department of Employment did not automatically report all borrowers in default..“We found the Department of Employment did not disclose student debts in default to credit bureaus despite having borrowers’ permission to do so and recognizing this would prompt borrowers to repay their loans more quickly,” said the audit report Student Financial Assistance..MPs dismissed the recommendation as too harsh..“I’m just thinking back to the time when I was young,” said Liberal MP Greg Fergus (Hull-Aylmer, QC). “I wasn’t perhaps the most financially responsible that there is. Would you find there’d be a better solution than reporting them to a credit agency which would, of course, put a stain on their credit record which can carry forward as they’re just starting life?”.“We know how important a credit score is when you go to the bank and go to purchase a house, a car,” said Liberal MP Francesco Sorbara (Vaughan-Woodbridge, ON)..“We don’t want to penalize youth right off the bat coming out of university or college and finding themselves in a difficult position.”
