Budget shortchanges student borrowers

Tuesday, April 7th, 2009

OTTAWA (CUP) " Students are paying for the government’s new student aid packages, said Julian Benedict, the executive director of the Coalition for Student Loan Fairness (CSLF).

“The budget is a huge disappointment to Canada’s one million student-loan borrowers. And the Conservatives have ensured that borrowers will continue to be gouged for high levels of interest for years to come,” he said.

Benedict is disappointed interest rates on Canada’s student loans didn’t drop with the new federal budget released Feb. 26, as they were widely expected to.

Instead, he said, the new Canada Student Grants Program appears to be largely built off of the interest payments from student borrowers.

“What the government has done is focus on students in school and starting school, and not those [who] are dealing with the consequences of finishing school,” he said.

“In other words, borrowers have largely been left out.”

Benedict said, “The government says it’s going to take in $497 million in interest in the upcoming fiscal year. Really and truly, this new grant program is being paid for on the backs of borrowers with high interest,” he said.

Many observers saw an interest-rate cut as a predictable plank in the federal budget, which would have, in turn, lowered the federal student-loan interest rate. But the current federal interest rate remained unchanged at 2.5 per cent above prime.

Human resources Minister Monte Solberg launched a review of the Canada Student Loans Program (CSLP) at the launch of the 2007 budget. That review culminated this year in a four-year, $123-million, modernization process.

Liberal MP and human resources critic Mike Savage (Dartmouth-Cole Harbour, N.S.) also expected more from the government.

“I think we’re at a point in time now where people almost uniformly believe we should reduce the interest rate on student loans. I was getting lots of rumours that [the government] would do something like that, because of the student-loan review they did,” he said.

They didn’t do anything in terms of expanding eligibility, or expanding the amount that students can borrow " there are a lot of medical students and other students who can’t even borrow enough money for their tuition, let alone the cost of going to school.”

Both Savoie and Savage dismissed funding for modernizing the CSLP, calling it too vague.

“All told, it’s $123 million to make the system better without actually dropping the interest rates for students. There’s a lot that has to be seen in this policy before we can judge if it’s effective or not,” said Savage.

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