In November 2019, students studying in British Columbia achieved a hard-fought victory—the elimination of interest rates on government-issued student loans.
Well, the provincial portion, anyway. Students in BC still have to pay interest on the portion of their loan that comes from the federal government—which was roughly a 60/40 split between federal and provincial interest, respectively.
That’s why the VIU Students’ Union (VIUSU), along with 39 other students’ unions representing over half a million students across Canada are participating in the Knock Out Interest campaign. The BC Federation of Students (BCFS) has banded together with unions across the country, urging the federal government to eliminate interest on the federal portion of student loans.
The campaign comes at a tense time for many Canadians. Many are struggling to stay connected and make ends meet financially during the pandemic, while wealthy corporations, like Bell Media, roll out massive layoffs while benefiting from government assistance.
Even the United States has extended its freeze on federal student loan payments and interest. Canada, on the other hand? The federal government ended its freeze on September 30, 2020, leaving Canadians struggling to pay off debt and interest during an economic disaster.
Recent university graduates are struggling as they try to enter the workforce burdened with thousands in debt.
VIUSU Women Students’ Representative Anouk Borris is one such graduate. She’s facing a daunting debt from her student loans and has to put off her goals—such as buying a house and taking her master’s degree—in order to pay off what she owes.
Luckily, Borris says, she’s in repayment assistance, meaning she doesn’t have to start paying off her loan yet because her income isn’t high enough. But, the price will be steep when she finds full-time work.
“I’ll be paying about $300 a month,” she says. “And, that’s about half of my rent right now. It’s kind of crazy that that’s what I owe.”
In a press release, the VIUSU said the average amount of interest on a student loan in Canada is $4k based on the allotted 10-year payment schedule. That’s at current interest rates, too, which are substantially lower than they were before the province fully eliminated interest on its portion of student loans in response to pressure from BC students.
Borris hopes to pay off her loan faster than the allotted time, so she doesn’t have to shell out thousands in interest, but that means paying even more than her original $300 per month.
Borris wasn’t irresponsible with her money as a student, either.
“I was a person who tried my best to not use student loans. I worked good, full-time jobs in the summer, I penny-pinched throughout the years … and I still ended up needing to access these types of funds,” she says.
Borris is far from alone. Students are finding it increasingly difficult to get an education without taking on heavy debts. Student debt in Canada has increased 78 percent since 1999, meaning the average student loan balance upon graduation has ballooned to over $30k. Like Borris, many graduates hoping to further their schooling to enter high-skilled jobs simply can’t—a huge factor being debt and financial strain.
Student debt has repercussions for everyone in Canada, not just students and graduates. According to the Knock Out Interest website, people with a university education pay substantially more in income taxes, meaning some of the largest contributors to the economy are being restricted.
It’s not just money, Borris says—people need the jobs and services graduates are trying to provide.
“This is your doctor; this is your lawyer. … You want people to be well-educated in those jobs. I mean, if you can’t be a doctor until you’re fifty because you can’t afford to, you’re already looking at retirement soon,” Borris says, laughing.
She adds that she is exaggerating, but the point still stands. If young graduates like her can’t continue their schooling because of unavoidable student debt, the next generation of skilled workers will be delayed, and the community won’t see their benefit.
Interest on student loans seems especially counterproductive, because as BCFS Chairperson Tanysha Klassen said in a press release, “Charging interest on student loans is a tax on those who cannot afford to pay for their education up-front.”
So, if student loan interest is harmful to young Canadians, our communities, and the Canadian economy—who benefits?