Every little bit helps.
On Thursday, November 3, 2022 the Canadian Government confirmed plans to cancel interest on all new federal student loans and apprentice loans, as well as student loans already currently being paid back.
Canadians already pay $556 Million a year in interest on student loans. In other words, Canadians pay banks and governments over half a billion dollars a year in interest on student loans.
The proposed changes will be effective as of April 1, 2023, provided they’re approved by parliament which is controlled by the Liberals who announced this gift.
For the past two years, interest payment on federal student loans in Canada had been suspended to support students during the COVID-19 pandemic.
According to the federal government, 50% of all post-secondary students in Canada have student loans to pay their tuition fees.
Figures from the 2020-2021 period show that as many as 1.8 million students borrowed money from the feds, totaling $23.3 billion in loans.
Is there interest on student loans in Canada?
Oh Yes there is, and it’s great business for the banks.
Before the COVID-19 pandemic, students with federal student loans were expected to pay interest on what they borrowed.
Most student loans in Canada have a federal portion and a provincial portion, with each subject to its own interest rates. For the federal part, the options were a fixed rate of 2% plus prime, or a variable rate equal to the prime rate.
However, interest fees were waived by the government in 2020 due to the COVID-19 pandemic, with the pause set to remain in effect until March 2023.
If the new proposal is approved, interest rates on student loans will be scrapped as of April 1, 2023.
The Canadian Federation of Students and TD Bank claim it takes an average student over a ten years to fully cover the balance of their student loans.
Is this what we want our children to go through? The governments and banks promoted education to our parents telling them this will give your child a better future and then selling them RESP’s to lock them in so they can’t get away. Then they also lend us the money to get the education without telling us it will take us ten years to get rid of them.
Do you want your child in debt to the banks and governments until they are thirty five?
Then do your research and learn of other plans and strategies to give your child the education they do need to succeed without tying them down in debt for half their life.
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