One-step closer to being student debt free
November 9, 2022, 11:13 am
Sierra D'Souza Butts, Local Journalism Initiative Reporter
It was music to my ears hearing that the federal government decided to make all federal student loans 100 per cent interest free starting April 2023.
For me personally, this is great news. I’ve been paying back my student loans, which started to accumulate interest six-months after I graduated, for exactly a year now.
Although I’ve been making monthly contributions, I have only paid about 10 per cent of what I owe, and according to my student loan account, it will take me another nine years to fully pay it off.
As long as that is, I certainly don’t regret going to school. I view my student debt as an investment.
That borrowing money from the government to achieve a higher education was me investing into my future. It was an investment into my career, and into my life.
Unfortunately, not everyone had that same opportunity as I did.
For some people it was not that simple to just borrow money from the government and go to school. I know of people who didn’t even consider pursuing post-secondary because they knew what it would cost them.
There were people who chose to go to college rather than university because it was more affordable, or people who took a year off to work in hopes of saving enough money to go back to school the following year.
The point is tuition isn’t cheap and it is barely affordable for the average Canadian.
Based on 2019 data from the Government of Canada website, more than 1.8 million Canadian students owe the federal government a total of $20.5 billion.
At the time of leaving school, the average loan balance for college students was $15,300 and for university students it was $28,000, according to a Stats Can study in 2015.
That doesn’t even include the fixed interest rate that accumulates during the time it takes for young Canadians to pay the loan back.
With the federal government now permanently eliminating student loan interest, the average student loan borrower will save $410 per year, according to the government’s fiscal update.
In my opinion, this is a great start to help young Canadians who carry significant student debt become closer to being debt free.
The government making student loans permanently interest free shows that they are investing into future generations, and that they recognize the expectations for education in our modern economy and labour market.
The quicker it takes for people to pay off their student loans, the sooner they can start contributing to Canada’s economy.
In an ideal world, post-secondary education would be free, and in fact, would benefit Canada’s economy.
In a dialogue between economist and research associate Hugh Mackenzie, and University of Saskatchewan associate professor of economics Kelly Foley, they discuss the advantages and disadvantages of free post-secondary education.
On the pro side, Mackenzie argues that free tuition would provide economic benefit to Canada as higher post-secondary participation is associated with higher living standards, better health outcomes, and enhanced social and community engagement.
Mackenzie also addresses that free tuition would change the relationship between family income and university enrolment, meaning that students who come from low-income backgrounds would be more likely to attend post-secondary schooling than they do now.
Although Foley agrees that increased participation in post-secondary education in Canada is positively related to family income, Foley argues that free tuition would benefit students from high-income families more than it would help students from low to mid-income families.
Overall, Foley argues that free tuition would not change the number of young Canadians who attend post-secondary schooling.
(It is a great, relatively short dialogue that I recommend everyone should read).
Although Canada has not yet reached the mark of providing free post-secondary education, the government has made a significant change for Canadians with current and future student loans, by making it permanently interest free.