Previous surveys have found that a majority of Canadians believe that students are taking too much debt on in order to pursue post-secondary education today. Is it worth the investment? Right now there are billions of dollars in student loan debt for Canadians. Altogether, it’s estimated that Canadians owe billions in student loan debt or more.
Over the years there have been different political promises made to try and help address that problem. From getting rid of interest payments, to offering free education altogether one day down the line, now the NDP have recently announced that they would cancel up to $20k in student loan debt for Canadian students. They also want student loan payments to come to a stop until the pandemic is over.
Student Loan Debt is Crushing Canadian Students
The average student in Canada is facing between $17k- $26k in debt and they have no guarantee that they will get a job that will pay that debt off. On top of that they are going to be making payments that are almost as high as mortgage payments and many are struggling to get by, especially since COVID-19 hit.
A lot of students are filled with regret over that debt after they graduate. It has been found that at least 77 percent of Canadian graduates regret the amount of debt that they took on. Having to pay off that debt and struggle with those interest payments means delaying milestones in life like getting married or getting their first home.
Traditionally, we have seen that Ontario has been saddled with the most student loan debt compared to other provinces in Canada. On average they are taking on more debt to pursue their education than people are in B.C. or other places.
More frequently we continue to hear today that just because you have an education in a certain field does not mean that you are going to get a job. Getting that higher education isn’t always going to come with that guarantee of getting higher pay or even a job at all.
How Much Does School Cost in Canada?
On average we see that students pay about $6k or more per year, depending on what school they are going to and what courses they are taking this can fluctuate. Those who are living at home are seen spending around $9k on average for the year if they are going to school. If you move away though that cost can increase rapidly, up to $20k or more per year.
Since the pandemic hit last year we saw that students and graduates alike have demanded more help from the government. They were left without jobs and financial security but still struggling to make payments. This support students were looking for included asking the government for a moratorium to be extended on student loan interest payments.
Not only this but they also wanted to leave it open so that consideration for further extensions down the road could also be considered, among other proposals.
NDP Plan for $20k Student Loan Forgiveness
Just recently, the NDP announced that they had a plan to forgive student loan debt if they are able to form the next government. This means that any Canadian student might see up to $20,000 in debt forgiven by the government. They also want there to be a multi-year grace period as well for students who graduate, at least 5 years before they would need to start making back payments again. Right now the grace period is only 6 months for students who graduate.
The $20k in student loan forgiveness for Canadian students would go to families with incomes less than or equal to $60k and the income would be based on the 5 year average that they had seen since leaving the school that they graduated from.
Right now there are many Canadian students who are still struggling with debt payments despite graduating many years ago and now many are also out of a job because of COVID-19.
As far as whether or not people would be able to see some of that debt forgiveness if they made more than $60k, it would be on a sliding scale and they’d see a reduction of 50 cents for every dollar of income over that amount.
For anyone making more than $100k they wouldn’t be able to take advantage of the forgiveness opportunity.
How much would the student loan forgiveness cost?
It would easily cost billions of dollars, it’s estimated that in the first year alone it could cost $4 billion or more. That price is expected to increase as tuition and inflation rise as well. Along with that forgiveness option they are also proposing getting rid of interest on student loans and eventually moving toward a free post-secondary education system in Canada.
One of the most popular issues that students bring up around the country is the cost of living that they face and the struggle that they maintain with their student loan debt. As COVID-19 hit and meant many families faced financial uncertainty and lost jobs etc, this meant many more students and their families were struggling now.
Where is the money coming from?
Right now there are over 868,000 borrowers in the Canada Student Loan Program and there are billions in outstanding loans. They want to find the money to go along with that plan by pursuing higher taxes on the wealthiest Canadians, also by looking to close certain tax loopholes.