Student Group Calls On Feds To Pause Loan Repayment, Cancel Student Debt
Brandon Rhéal Amyot wonders what they could spend their time doing if they weren’t so worried about their finances and those of other students.
Amyot is a third-year political science and media student at Lakehead University in Orillia, Ont., and has already accumulated $30,000 of student debt.
“I won’t be stepping out with my best foot forward, because I’m going to spend a decade trying to pay off my student debt for education,” Amyot told HuffPost Canada. “And education should not be about profit.”
Amyot is also an organizer with Don’t Forget Students, a group started during the pandemic to advocate for financial support for post-secondary students. Sponsored by NDP MP Laurel Collins, they initiated a House of Commons petition, calling for the federal government to:
Extend the Canada Emergency Student Benefit, which ended in September, and make it available to international students, using money allocated for the Canada Student Service Grant and money remaining from the $9 billion allocated for students in the spring;
Include recent or new graduates in Employment Insurance and the Canada Recovery Benefit;
Extend the moratorium on student loan interest and repayment until May 1, 2021;
Expand the Canada Student Grant and increase funding for post-secondary institutions.
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“The federal government and provincial governments, frankly, I feel like they’ve forgotten about post secondary, even though it’s going to be an essential part to a just recovery,” Amyot said.
“We’re not asking for more support than anyone else,” they said. “We’re asking for equal support.”
A spokesperson for Carla Qualtrough, the Minister of Employment, Workforce Development and Disability Inclusion, said the government remains committed to supporting students and youth.
The federal government’s supports include doubling the funds available through the Canada Student Grant program, Marielle Hossack said, and planning to create more jobs through programs like Canada Summer Jobs.
“We know students and young Canadians are still facing challenges, and we will continue to do what it takes to be there to support student[s] with comprehensive measures and help them get through these challenging times,” Hossack said.
Feds pause interest, not repayments
The federal government announced in its 2020 budget it would eliminate interest on the federal portion of Canada Student Loans for the 2021-22 year.
Hossack said the elimination of interest on the federal portion of student loans will help up to 1.4 million students and graduates.
But members of Don’t Forget Students have been calling for a moratorium on repaying loans, a measure the feds implemented during the first wave of the pandemic.
The student employment rate was 52.5 per cent in February, but dropped to 29.8 per cent in April, according to Statistics Canada. In September, the agency found nearly one in four Canadians under 30 were neither in school nor working during the first wave of the pandemic.
More than half of the students surveyed by the Ontario Confederation of University Faculty Associations said the pandemic has affected their finances.
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MP Lindsay Mathyssen, the NDP’s post-secondary critic, told HuffPost students seem to have been an “afterthought” for the government during the pandemic.
it’s “ludicrous” for the federal government not to hold large companies accountable for paying their fair share during the pandemic while many students’ finances are suffering, she added.
“It’s so unfair, and the fact that the students have to fight to be seen, just to be heard, the balance is absolutely not there,” she said.
“[Students are] just asking for their fair share.”
The government’s temporary measures for students are “the bare minimum” considering how hard students have been hit by the pandemic, said Ricardo Tranjan, a senior researcher at the Canadian Centre for Policy Alternatives’ Ontario office.
He said there’s room for “much more” support from both provincial and federal governments.
Government ‘has a responsibility’ to consider forgiving student loan debt
Amyot said another measure the feds could take to support students is forgiving student loan debt.
“If the federal government decided to make the sort of investment that it has in other sectors today, that would mean students coming out of school without debt, able to immediately contribute to their communities,” they said.
Mathyssen said forgiving student loan debt “makes a lot of sense economically.”
“I think that the government has a responsibility to look into it, and should do it now. We shouldn’t have to wait,” she said.
Forgiving student loan debt is not only feasible, but Tranjan said it’s a necessary measure for recent grads facing the typically “bumpy road” of employment made more challenging by the pandemic economy.
While it would be costly, it would also have a positive effect, he said, because if students are no longer in debt, they could spend more, “instead of just giving back to the bank, which doesn’t have a spillover effect as far as reigniting the economy.”
Tranjan cautioned, however, that he believes forgiving student loan debt is insufficient in the long-term. He said the government has significantly reduced its contribution to university’s operating grants in the last few decades, meaning students have picked up the tab.
He said he hopes Canadians will rethink whether they want a more robust welfare state, or to continue moving toward “this sort of minimalist very residual welfare state that provides some very thin safety nets, but nothing beyond that.”
Not everyone benefits from student loan forgiveness
United States President-elect Joe Biden has indicated support for decreasing some individual student debt, but it’s unclear if he will take up calls from some Democrats to forgive $50,000 of debt per student borrower.
Although Canadian politicians often react to what happens in the U.S., the two country’s systems have some big differences, Christine Neill, an associate professor of economics at Wilfrid Laurier University, told HuffPost.
In Canada, student loans are both provincial and federal, except in Quebec, which has its own system. Canada also has a relatively more simple system to pay back loans and has less overall student debt than the U.S. does, Neill said.
Canadians — excluding Quebecers — currently owe the federal government about $22 billion in student loans, she said. That includes about $8 billion in debt from current students, who she noted wouldn’t benefit from a debt forgiveness program.
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People who didn’t go to college or university also wouldn’t benefit from such a program, as well as people who have already been able to pay off their loans, a group that may include students who studied in expensive programs but then graduated and got a high paying job, she added.
Jeffrey Penney, an assistant professor at the University of Alberta who specializes in education economics, told HuffPost by email that students from families with higher income would benefit more from forgiving student loan debt because statistics show they’re more likely to attend university than people from lower income families.
He pointed to a 2020 study by the U.S. National Bureau of Economic Research, which found higher income households would see greater levels of loan forgiveness in programs that forgive a set amount of student loan debt.
While people who had loans forgiven would be able to spend their income on other things, Penney said this would “come at the expense of other government spending” such as social programs. There could also be behavioural consequences of a loan forgiveness program, he said, such as students taking on larger loans or deciding not to pay back the principal if they believe the loans will be forgiven.
Repayment Assistance Plan a ‘better path’
Neill said another reason she doesn’t believe student loan debt forgiveness makes sense in Canada is because the government already has a system to help students who are having trouble repaying their debt.
Under Canada’s Repayment Assistance Plan, or RAP, people earning less than $25,000 per year don’t have to repay any of their student loans. Once their income rises above that, their payments are tailored to their income level.
People who are on the RAP for five years are then moved to a second phase where the government starts to pay some of the principal loan. After 15 years of being on the RAP, there is no requirement to pay back the loans.
Many Canadians who are eligible for the RAP don’t apply, Neill said. People have to mail or fax in an application every six months. She said the application should be available electronically and added it would be nice if payments were always determined depending on whether they’re affordable.
Income-driven repayment programs would lead to “significant forgiveness” for middle income earners, the U.S. study said, compared to universal or capped forgiveness policies that “disproportionately benefit high income borrowers.”
“That seems to me a better path to student debt forgiveness than these … one off, we’re gonna forgive everyone who’s got debt right now — but not people who had debt five years ago and not people who have debt five years in the future — type of programs,” Neill said.
Canada’s National Student Loan Service Centre received 169,000 applications for the RAP between Oct. 1, when students had to start repaying their loans, and late November, the Canadian Press reported.