Student program rakes in millions, activists say
Canada’s student loan program is making millions of dollars a year by gouging cash-strapped graduates who make a “deal with the devil” to extend their loan terms, credit counsellors and student activists say.
The number of students who pay a long-term financial penalty in order to renegotiate their payment schedules has risen about 77 per cent since 2002.
That means big, unearned bucks for the feds, said Julian Benedict, founder of the Coalition for Student Loan Fairness.
The option, called Revision of Terms under the Canada Student Loans Program, gives strapped graduates a short-term reduction on their monthly payments and more time to pay off their loan, but requires them to pay more interest, said Benedict.
In many cases, he added, students who don’t qualify for relief have no other choice but to make what he called a “deal with the devil.”
In a report to be released tomorrow, Benedict’s coalition will argue the additional interest payments would be better left in the pockets of graduates, where it would directly benefit the Canadian economy.
About 350,000 college and university students across the country relied on federal loans worth $1.9 billion last year.
Leesha Lin, acting policy and research director for the student loan program, insists the government doesn’t make a profit from interest paid by graduates. Students who miss payments or don’t pay back their loans along with account management costs hurt the program by almost $700 million in 2006, she said.