The Liberal government on Saturday gave notice it will raise the interest rate on student loans. Prime Minister Justin Trudeau in the last election campaign had promised to abolish students’ interest charges altogether..The Department of Employment in a legal notice under Canada Student Loans Regulations said interest charges retroactive to August 1 would be increased from 2.1 to 3.1%. A current moratorium on interest payments expires on March 31, 2023..According to Blacklock's Reporter, the Liberal Party in its September 1, 2021 campaign platform Forward For Everyone promised to abolish interest charges under the Canada Student Loan program. The cost was $538 million a year..“During the pandemic we waived interest on Canada Student Loans and Canada Apprentice Loans for two years because we knew young people were among the hardest hit by job losses,” the Party wrote on page 17 of its campaign document. “As we look towards the future we believe no one should be deterred from pursuing an education because interest costs make it unaffordable.”.“A re-elected Liberal government will permanently eliminate the federal interest on Canada Student Loans and Canada Apprentice Loans to support young Canadians who choose to invest in postsecondary education,” wrote the Party. “This will benefit over one million student loan borrowers and save an average borrower more than $3,000 over the lifetime of their loan.”.New Democrats have sought permanent elimination of the interest charges. “The NDP is calling for a moratorium on student loan payments and putting an end to student loan interest permanently so young people do not have to spend years under crushing debt,” MP Lindsay Mathyssen (London-Fanshawe, Ont.) earlier told the House of Commons. “Will the prime minister and the government commit to taking real action to help young people?”.Under regulations students must begin repaying loans with interest six months from the time they complete or quit studies. The pandemic moratorium on interest charges cost $157 million a year, according to the Parliamentary Budget Office..“Young people are concerned and wondering what to do,” Treasury Board Minister Mona Fortier told the House of Commons in 2020. “The government wants to make sure young people know they matter.”.The Canada Student Loan Program dates from 1964. Defaults run at an average 9%. A 2021 audit said most borrowers, 55%, worked at least part-time while at school to cover rent, groceries and textbooks..“Most students thought their government student loans and grants were adequate to meet their financial needs during their studies,” said the Evaluation Of The Canada Student Loan Program by the Department of Employment. “Some did not feel this way. When taking into account all sources of money available to them approximately three quarters of borrowers, 74%, agreed their student loan and grant were adequate.”
