Question Period Note: Student loan interest rates

What is the Government doing to reduce the interest rate on Canada Student Loans?

• The Government is committed to ensuring that post-secondary education is affordable and student debt is manageable even as the costs of education continue to rise.
• On November 1, 2019, we lowered the interest rate on Canada Student Loans by 2.5 per cent. Also, we stopped charging interest during the six-month period before they need to start repaying their loans.

• Over 1.1 million borrowers benefit from these changes, and on average save $2,000 over the life of their loan. This is a key step in keeping the costs of borrowing lower and helping borrowers pay off their loans.
• Our platform commitments will go even further to help low- and middle-income Canadians afford the growing costs of post-secondary education.

• The Canada Student Loans Program provides Canada Student Grants and Canada Student Loans (CSLs) to help students access and afford post-secondary education. Recent enhancements are helping more students receive more student financial assistance.

• For CSLs the Government of Canada made the six-month non-repayment period interest-free beginning November 1st, 2019. Previously, interest accumulated during this non-repayment period.

• In addition, when borrowers enter into repayment, the floating rate has been reduced to the prime rate, from prime plus 2.5 percent. Borrowers may continue to choose either a floating rate that varies as the prime rate changes, or a fixed rate of interest. The fixed rate has been reduced from prime plus 5 percent to prime plus 2 percent, which is set for the life of the loan.

• This change responds to demands by student groups who have been lobbying for elimination of interest on student loans. Interest rate on provincial student loans vary; while many provinces do not charge interest on their loans or charge the prime rate, Alberta has announced an increase to their student loan interest rate to prime plus 1 percent, and Ontario re-introduced interest during the non-repayment period as of September 1, 2019.

• Reducing interest rates builds on investments the Government of Canada has made in recent years. Students from low- and middle-income families are receiving up to $3,000 per year in grants, and no student must repay their CSLs until earning at least $25,000 per year.

• In 2017-18, over 450,000 students received a range of grants for low- and middle-income families of up to $3,000, and more than 326,000 borrowers benefited from the Repayment Assistance Plan of which 86 percent had zero monthly payments on their loans.

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