TORONTO -- NDP Leader Jagmeet Singh, who has promised to immediately and permanently get rid of charging students interest on federal student loans, has accused the Liberal government of profiting off student debt.
Already, five provinces no longer charge interest rates on these loans -- British Columbia, Manitoba, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island -- and Singh wants the federal government to do the same.
The New Democrats, who have been attracting younger voters according to polls, have highlighted affordable post-secondary education as a key area of their platform messaging. In addition to eliminating interest charges, they have also pledged to forgive up to $20,000 in student debt and double non-repayable Canada Student Grants.
Since coming to power, Trudeau has profited off of student debt, to the tune of nearly $4 billion in interest payments, Singh wrote on Twitterthis past weekend.
"It is a fact that in the six years that Justin Trudeau has been prime minister, if you look at the federal interest thats been collected for student debt, that has been a $4-billion cost for students. And the prime minister has been responsible for that," he told reporters during a campaign stop earlier this week.
CTVNews.ca digs into whether this statement is accurate or not.
This is not a new claim by the NDP, which also made the charge in 2019ahead of the last federal election. At the time, Singh said Trudeaus government was raking in billions of dollars in interest from young people and that making a profit off student loans is wrong.
Profit is defined by how much has been earned or gained after expenses and other costs have been deducted. As Investopedia defines it, the financial benefit realized when revenue generated from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity in question.
To test the validity of Singhs statement, we looked at the numbers: how much does the government spend on the program, how much it makes, and other related details.
During the previous election, the total amount of student debt at the federal level was estimated at close to $17 billion, with nearly $3 billion in interest charged since 2015. The total amount of student debt owed now stands at $22.3 billion as of July 31, 2020, according to information CTVNews.ca requested from the Employment and Social Development Canada (ESDC).
The government handed out $1.63 billion in Canada Student Grants to more than 528,000 students during the 2019 to 2020 loan year, more than double the amount granted between 2015-2016, according to the Canada Student Financial Assistance Program Statistical Review. It also made loans totalling $3.45 billion to nearly 608,000 students.
When combined with the previous three years, the government issued a total of more than $13 billion in loans and about $5.6 billion in student grants. The amount spent on student grants over four years already exceeds the amount of interest the government recorded over the last five years.
The average Canada Student Loan balance at the time of leaving school in the 2019-2020 academic year was $13,549, according to figures provided by the ESDC. Over the last 10 years, on average, it took a little less than six years for a student to pay off their Canada Student Loan, while 25 per cent paid off their loans within three years, the agency added. That loan average jumps to $28,000 at the end of an undergraduate or masters degree, according to a Statistics Canada surveypublished November 2019, and the figure cited by the NDP.
But the government also writes off hundreds of millions of dollars in loans each year for a number of reasons, including bankruptcy, extreme financial hardship, and settlements. The majority comes from loans that have not been paid or acknowledged for six years, the Canada Student Loans Programannual reportfor 2018 to 2019 states. For the 2020-2021 fiscal year, $185.5 million in Canada Student Loans were written off, according to figures provided by the ESDC. In 2018, Ottawa wrote off more than $200 millionin outstanding student loan payments.
These figures also do not account for other costs incurred by the government, such as their repayment assistance plans, which gives some borrowers a reprieve from repaying the loan until they have earned a certain minimum amount. This means the government covers the interest portion, or may contribute toward both the principal and interest, depending on the various factors.
In addition, the government has suspended the accumulation of intereston Canada Student Loans for two years, starting from April 2021 and ending March 31, 2023. Prior to this, the government had already lowered interest rates with the variable rate set to prime, instead of prime plus 2.5 per cent, and the fixed rate set to prime plus two per cent, from prime plus five per cent.
The interest also does not accumulate on the loans while the borrower is in school, or even during the first six months after they leave. Meanwhile, the eligibility criteria to qualify for loan forgiveness was also expanded so that more students with severe, permanent disabilities may be eligible.
These are all costs incurred by the government. Throw in administrative expenses, thats another $137.1 million in 2018-2019. In the annual report for that year, loan expenses totalled $2.66 billion, while interest revenue was $841.4 million.
That year, the government also gave $492.3 million to Quebec, Nunavut and the Northwest Territories to support their own financial assistance. These three jurisdictions do not participate in the Canada Student Loans Program, which uses a single application process for students looking to receive federal and provincial aid for post-secondary schooling.
What about the $4 billion figure Singh used? If we add the amount in the Interest on Canada student loans line from the Public Accounts of Canadafrom the last five years (2016-2020), the total amount of interest collected comes to $3.63 billion. If we include 2015, the total is $4.25 billion.
However, that figure is the total amount of interest charged or recorded on the student loans, which, according to the ESDC, is different from the amount that is actually collected by the government. Since 2015, only $1.87 billion or an average of $373.7 million each year -- in interest payments were actually received or collected from borrowers on student loans, the ESDC told CTVNews.ca. That works out to less than half the amount that is recorded on paper.
Interest is recorded as revenue the moment is it owed by a borrower However, some interest never gets paid by the borrower for different reasons, Saskia Rodenburg, a media spokesperson for the department, said in an email.
Some interest is waived/forgiven through measures such as the Repayment Assistance Plan, the Severe and Disability Benefit, loan forgiveness for family doctors and nurses, or in the case of the death of a borrower. Also, some interest is written off once all measures to collect on a loan have been exhausted.
Finally, the amount the government receives in interest is put back into the Consolidated Revenue Fund, the ESDC says, and is not allocated to any area. All funds paid to the federal government are held in this central account at the Bank of Canada. Trudeau and the Liberal government do not benefit from the interest collected.
While the government does collect a very hefty amount in student loan interest each year, it is already significantly less than what it spends on student grants which has also increased. Even excluding grants, the amount the government spent on bad debt, borrowing expenses, interest subsidies, repayment assistance programs, administrative costs, totaled more than $1.1 billion for the 2018-2019 loan year. Thats higher than the $841.4 million it charged in interest payments or the actual figure collected.
[Its] hard to make the case that the government makes money, Kevin Page, the Chief Executive Officer of the Institute of Fiscal Studies and Democracy at the University of Ottawa and Canadas first Parliamentary Budget Officer, said in an email.
Whether student loans should incur interest is its own issue, but it is clearly false to say that Trudeau, or the Liberal government, is profiting from that interest.
Edited by CTVNews.ca Michael Stittle
- 8 times liberal media tried to ruin Thanksgiving, from ditching turkey to declaring genocide remains on menu - Fox News - November 28th, 2021
- Liberals introduce bill to provide sick pay, ban intimidation of patients and health-care workers - CBC.ca - November 28th, 2021
- Liberal MP crosses the floor to support independent bill for federal integrity commission - The Guardian - November 28th, 2021
- A 20-year spike in inflation could put the bite on the Trudeau Liberals - CBC.ca - November 28th, 2021
- John Rawls and Liberalism's Selective Conscience - The Nation - November 28th, 2021
- Liberal Party members running as independents, community candidates in local elections - The Sydney Morning Herald - November 28th, 2021
- No need for overdevelopment: Labor, Liberal councillors united in opposition to apartment towers - The Sydney Morning Herald - November 28th, 2021
- Harassment on rise in federal bureaucracy - Daily Liberal - November 28th, 2021
- Teen went to Byron bar before vanishing - Daily Liberal - November 28th, 2021
- Liberal dark money juggernaut raises $1.6 billion to flood left-wing groups with cash, tax forms reveal - Fox News - November 27th, 2021
- Justin Trudeau and Liberals inaugurate third term in officeausterity and mass infection at home, militarism and war abroad - WSWS - November 27th, 2021
- John Ivison: Liberals so focused on carbon taxes, they missed the flood coming in the back door - National Post - November 27th, 2021
- Liberal support is disintegrating but barely going to Hanson, Palmer or the LDP - The Spectator Australia - November 27th, 2021
- How Scott Morrison is trashing the Liberal brand - The Canberra Times - November 27th, 2021
- Man pranks conservative radio show by naming a ton of punk bands in his liberal bash - Boing Boing - November 27th, 2021
- NDP, Progressive Conservatives have provincial candidates for Niagara Falls; Liberal candidate to be announced soon - NiagaraFallsReview.ca - November 27th, 2021
- Careers - Liberal Party of Canada - November 25th, 2021
- Is the honeymoon period over for liberal arts in Asia? - Times Higher Education (THE) - November 25th, 2021
- Morrison accuses critics of wanting kangaroo court as Liberal MP crosses floor over integrity bill - The Guardian - November 25th, 2021
- Liberal economists got the memo: Build Back Better couldn't possibly worsen inflation | TheHill - The Hill - November 25th, 2021
- Early signs of Liberal leadership ambitions as Chrystia Freeland biography in works - The Globe and Mail - November 25th, 2021
- Its a bad culture: former Liberal treasurer calls for $200 cap on political donations to boost integrity - The Guardian - November 25th, 2021
- Justice minister urges new 'liberal' Constitution in Turkey | Daily Sabah - Daily Sabah - November 25th, 2021
- Politics Briefing: Erin O'Toole takes shot at Liberals, avoids internal party issues in caucus speech - The Globe and Mail - November 25th, 2021
- Bengal violence to farm protests: How liberal privilege shapes the way we think about what matters - Firstpost - November 25th, 2021
- Northern Ontario Liberal Anthony Rota re-elected as Speaker of the House of Commons - Globalnews.ca - November 25th, 2021
- Five years of struggle: Liberal backbencher warns national mental health will take time - The Sydney Morning Herald - November 25th, 2021
- Liberal storm over candidates to take on Steggall, Kelly in NSW seats - The Sydney Morning Herald - November 25th, 2021
- Opinion | Woke Went the Way of P.C. and Liberal - The New York Times - November 19th, 2021
- Liberal 'dark-money' behemoth funneled more than $400M in 2020 - Politico - November 19th, 2021
- Former Liberal leader to join forces with Labor veteran in bid to target Morrison ahead of election - The Guardian - November 19th, 2021
- The intellectual rights war on Americas institutions - Vox - November 19th, 2021
- Liberals push to speed up NSW preselections amid frustration at tactics of key Scott Morrison ally - The Guardian - November 19th, 2021
- Liberals to introduce tougher version of bill to ban conversion therapy - CBC.ca - November 19th, 2021
- Michelle Beckley, one of the Texas Houses most liberal members, joins Democratic primary for lieutenant governor - KPRC Click2Houston - November 19th, 2021
- Clock already ticking on Liberal promise to introduce host of bills in first 100 days - CBC.ca - November 19th, 2021
- The India that Vir Das and liberals want and the one they wont talk about - ThePrint - November 19th, 2021
- Britain's establishment has split into two, each convinced it is the underdog - The Economist - November 19th, 2021
- Meet the Liberal team running for Georges River Council - St George and Sutherland Shire Leader - November 19th, 2021
- Statement by Steven Del Duca on the 552nd Anniversary of the Birth of Guru Nanak Dev Ji - Ontario Liberal Party - November 19th, 2021
- The Liberals. The shrinking tribe - The Spectator Australia - November 15th, 2021
- Conservatives, NDP demand release of documents linked to 'troubling' claims Clerk of House favoured Liberals - CBC.ca - November 15th, 2021
- China Liberal Receives Recognition and Recommendation by Industry Experts for Its All-in-one Teaching Machine AI-Space - PRNewswire - November 15th, 2021
- What happened to woke: Liberal media blame Republicans for the term's downfall - Fox News - November 15th, 2021
- Clock already ticking on Liberal promise to introduce host of bills in first 100 days - Coast Reporter - November 15th, 2021
- Brad Wall: Nothing progressive about Liberal policies hiking the cost of living - National Post - November 15th, 2021
- Conservatives more effective than liberals on Twitter: study | The Asahi Shimbun: Breaking News, Japan News and Analysis - Asahi Shimbun - November 15th, 2021
- Harvard To Begin To Offer 'Young Liberal Leaders' Scholarship Which Will Grant Up To $100000 In Tuition Reimbursement To Young Democrats - ValueWalk - November 15th, 2021
- Hockey backs former journalist and calls for a contested Liberal preselection in Willoughby - Sydney Morning Herald - November 15th, 2021
- Federal Court dismisses bid to prevent reporting on alleged abuse of public resources - Sydney Morning Herald - November 15th, 2021
- BC Liberal critic Kirkpatrick presses the NDP to stop the clawback of autism funding - Voiceonline.com - November 15th, 2021
- CNN commentators fume after CNN report on Kamala Harris office dysfunction: 'I had to push back heavily' - Fox News - November 15th, 2021
- Garden a focus of William Tyrrell probe - Daily Liberal - November 15th, 2021
- Forbes evacuation order as flood threatens - Daily Liberal - November 15th, 2021
- Single-use plastics to be banned in NSW - Daily Liberal - November 15th, 2021
- The wealthy pay more than their 'fair share' and liberals know it | TheHill - The Hill - November 13th, 2021
- Emily Kaplan On The Rise of the Liberal Latter-day Saints - KUER 90.1 - November 13th, 2021
- Winsome Sears: The latest Black conservative to make liberals nervous | TheHill - The Hill - November 13th, 2021
- Discredited anti-Trump Steele dossier was embraced by liberal media: Here are five of the biggest offenders - Fox News - November 13th, 2021
- Newsweek editor accuses White, affluent liberals of 'using the pain of African Americans' to further goals - Fox News - November 13th, 2021
- Brazil: Bolsonaro joins Liberal Party ahead of 2022 election - DW (English) - November 13th, 2021
- Opinion: F.W. de Klerk was neither a liberal nor a reformer. But he was a pragmatist - The Globe and Mail - November 13th, 2021
- Protesting Alleged Liberal Bias in Higher Ed, Scholars Announce a University of Their Own - EdSurge - November 13th, 2021
- Betsy DeVos: Liberal 'wokeness' will always 'rename, rebrand, or repackage' 'insidious ideas' such as critical race theory to keep them alive - Denver... - November 13th, 2021
- Opinion: That Liberal-NDP deal in full: the NDP agree not to do what they weren't going to do anyway - The Globe and Mail - November 13th, 2021
- Liberal government vows to hire more staff to address veterans' backlog, caseloads - The Globe and Mail - November 13th, 2021
- Joe Concha: Only reason these liberal pundits have a job is to sow division in America - Fox News - November 13th, 2021
- Sen. Josh Hawley claims without evidence that liberals are attacking masculinity - NPR - November 13th, 2021
- Liberal Diversity, Equity, Inclusion Drive On College Campuses Is Becoming A Routine Part Of Hiring, No Evidence That Intellectual Talent Improves -... - November 13th, 2021
- How a grocery store visit highlights voters' fears that Kevin Vuong could be a lame duck MP - CBC.ca - November 13th, 2021
- Liberal media fawns over SNL skit about Goober the Clown who had an abortion when she was 23 - Fox News - November 13th, 2021
- Liberals leaving nuclear's future 'to the market' while other countries bet big - National Post - November 13th, 2021
- Thats ideology: City of Sydney Liberal team take on Moore over bike paths - Sydney Morning Herald - November 13th, 2021
- Rex Murphy: Stephen Harper is right how Liberals are treating the West is inexcusable - National Post - November 13th, 2021
- Talkin' Truthful Trash With Liberals And Conservatives - The Chattanoogan - November 5th, 2021
- The Limits of Liberal Science - The Bulwark - November 5th, 2021
- On abortion, Germany is not as liberal as you may think - Euronews - November 5th, 2021
- Churchill: New York isn't as liberal as everyone thinks - Times Union - November 5th, 2021
- Opinion: Is carbon pricing Liberal policy? For the most part, it's anything but - The Globe and Mail - November 5th, 2021
- Liberal, Green leaders withdraw from COVID commitee as striking health-care workers forced back - Globalnews.ca - November 5th, 2021