Canadians are eating another $197.3 million in bad student debt this year, despite Ottawa’s interest waivers and flexible repayment options, according to new budget filings. Blacklock's Reporter says the write-offs mark a sharp 17% jump from 2022 levels, raising questions about how well the federal student loan system is working.The Department of Social Development blamed the growing defaults on “precarious and unstable financial situations” faced by borrowers. “Data collected suggest borrowers’ repayment difficulties — namely delinquency, default or participation in the Repayment Assistance Plan — are the result of precarious and unstable financial situations,” said the report Evaluation Of The Canada Student Financial Assistance Program: Loan Repayment.The average Canada Student Loan balance for full-time students upon leaving school has climbed steadily for a decade, now sitting at $15,578. Around 558,000 students each year qualify for assistance through the program..Budget documents tabled Friday in Parliament confirmed that write-offs under the Canada Student Loan Program reached $197,249,543 this fiscal year, up from $168.8 million in 2022 — the same year Ottawa passed Bill C-32, which amended the Canada Student Loans Act to eliminate interest payments.Loans are deemed delinquent when payments are missed and classified as in default after 270 days, triggering referral to the Canada Revenue Agency for collection. Auditors reported that about 12% of loans end up in default, with most defaulters owing $10,000 or less. A 2024 Inquiry of Ministry tabled in the Commons said 264,194 defaulted student debts worth $2.95 billion were under collection by the CRA, not counting those still in good standing..Auditor General Karen Hogan warned years ago that write-offs would rise. “The value of unpaid student loans will continue to grow,” she told MPs in 2020. Hogan also criticized the Employment Department for failing to report defaulters to credit bureaus, even though borrowers had given consent — an omission she said could have pressured faster repayment.Under federal rules, students start repaying loans within six months of finishing school, with an average repayment period of about 9.5 years. Those struggling financially can apply for the Repayment Assistance Plan, renewable every six months, offering “affordable payments” over up to 15 years based on income and other debts.
