In response to the COVID-19 pandemic, the government placed a six-month moratorium on federal student loan repayments and interest from March 30th until September 30th.
As we approach the end date of this moratorium, it is clear that many Canadians still need the relief provided by pausing their student loan repayments. On July 16th I wrote to the Minister of Employment, Workforce Development and Disability Inclusion to urge the government to extend this moratorium beyond its initial six-month time frame, until Canadians have been able to return to work safely.
Many Canadians are still grappling with the realities of income loss because they have been laid off, taken pay cuts, or been unable to return to work safely. Many of these individuals are burdened with very high amounts of student debt from their former studies, and will be forced to make difficult decisions about their families’ basic needs if they are forced to start repaying their student loans again as early as October.
The burden of student debt was already a significant problem before the pandemic. Students commonly accumulate more than $20,000 in post-secondary debt by the time they graduate. They are often burdened with debt repayments and interest for decades while they also deal with increasing costs of living for themselves and their families.
In December, the Minister of Employment, Workforce Development and Disability Inclusion was mandated to extend the length of the regular interest-free grace period on student loan repayments from six months to two years. This would be a positive step that would give many recent graduates more time to enter the workforce and develop financial stability before making burdensome repayments.
Ultimately, I believe post-secondary tuition should be free like it is in many European countries. Free tuition would improve accessibility and help close the inequality gap in education. This would enable more Canadians to spend on their wellbeing and benefit the economy. The Canadian government should also forgive all existing federal student debt. In February, I asked the government to eliminate the interest on federal student loans at the very least.
In the meantime, an extension on the current six-month moratorium would provide much-needed financial relief for many Canadians as they get back on their feet.
My letter to the Minister is posted below.
July 16, 2020
The Honourable Carla Qualtrough, P.C., M.P.
Minister of Employment, Workforce Development and Disability Inclusion
House of Commons
Ottawa, ON K1A 0A6
Dear Minister Qualtrough,
Thank you for suspending federal student loan repayments and interest for six months in response to the COVID-19 pandemic. This measure has provided much-needed relief to many Canadians who are struggling financially due to the pandemic.
I am writing to urge the government to extend this six-month interest-free moratorium beyond September 30th until Canadians have been able to return to work safely.
As you know, many Canadians are burdened with significant amounts of post-secondary student debt, often exceeding $20,000 by the time they graduate. Changes to Canada Student Loans beginning in the Fall 2020 semester are welcome, however they do not provide assistance for Canadians who have already graduated and are now repaying their loans.
Before the pandemic, many graduates already struggled to repay their loans due to high costs of living, and the government’s commitment to extending the interest-free grace period from six months to two years was a welcome priority. In the current economic climate, repaying these loans is now an even greater source of stress as many struggle to meet their basic needs.
I have been contacted by constituents who are in tight financial positions and are very concerned about the prospect of restarting their student loan payments in October. These constituents are starting to plan for the fall, and their student loan repayments will affect important decisions concerning their finances and wellbeing, such as childcare options.
An extended suspension of federal student loan repayments and interest would provide relief for many Canadians and enable them to get back on their feet as the economy reopens.
Thank you for your consideration.
Member of Parliament
The Honourable Bill Morneau, P.C., M.P.
Minister of Finance