Canadians with federal student loan debt are getting a break on payments and interest over the next six months, as Ottawa ramps up its extraordinary effort to stabilize the Canadian economy during the COVID-19 crisis.
The sweeping loan holiday applies only to the federal student debt portion, and Wednesday’s announcement does not address any provincial or territorial payments to private financial institutions. Canadians won’t need to apply for this payment pause; it will be automatic. Alternatively, borrowers can keep up with their payments if they choose.
“I went to law school and having the debt and having the worry, it’s an anxiety,” Employment and Workforce Development Minister Carla Qualtrough told CBC.
The National Student Loan Service Centre said the pause on payments and interest accumulation takes effect Mar. 30 and will last until Sept. 30. But Qualtrough didn’t rule out possibility of extending the repayment break.
“This situation is so fluid we would not rule out doing that,” she said. “As the situation becomes more complicated and becomes more serious, there’s never going to be a point we don’t consider extending anything that we announced today.”
The federal NDP’s critic for diversity and inclusion and youth, Lindsay Mathyssen, said she welcomed the loan break but hopes the government eliminates student loan interest for good.
“We believe that students shouldn’t have to at all pay interest on student loans,” Mathyssen said. “We never believe it is right for the government to profit off of students’ futures.”
The break on loans is part of an $82 billion rescue package for the Canadian economy, which includes $27 billion in direct supports and another $55 billion to help business liquidity through tax deferrals.
The Canadian Federation of Students is also calling for further help for unemployed students who will need help paying tuition for the upcoming semester, and for international students who don’t have the same health coverage.
“What we are really asking for is to ensure that every student can receive money for their rent and living expenses and is able to finish their semester. So we want a plan that addresses that, ” CFS Chair Sofia Descalzi said.
The Canadian Alliance of Student Associations applauded the federal government’s move to provide student loan relief and joined the Ontario Green Party in calling on provincial and territorial governments to follow Ottawa’s move.
“I’m glad that the federal government has taken the lead on this,” CASA Chair Adam Brown said. “I would hope that this sort of response would be mirrored on provincial levels as well.”
Canada’s six largest banks issued a joint statement today saying that they’ll work with customers on a case-by-case basis to help them “manage through challenges such as pay disruption due to COVID‑19.”
But the Canadian Bankers Association did not say if this means banks would specifically offer relief to customers struggling with student loans from financial institutions.
A spokesperson for the National Bank of Canada, Jean-Francois Cadieux, told CBC customers having difficulty paying off their student loans could be eligible for special measures.
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