Default risk rising in ‘broken’ Canada student loan program: federal officials

WATCH ABOVE (Sept. 6, 2018): Students still struggling to pay off debt years after graduation

OTTAWA — Federal officials warned in a presentation earlier this year that the risk of student loan defaults and delays was on the rise, noting bleakly: the “system is broken.”

Federal student debt alone is approximately $17 billion and the federal government has to regularly write-off millions of dollars in loans it will never collect.

READ MORE: 4 things many new grads don’t know about student debt

The documents, obtained by The Canadian Press, say the costs for post-secondary education have increased at rates “above wage growth and inflation” over the last decade, while the cost of living has also jumped, creating an affordability crunch for new and graduating students.

WATCH: How to manage student debt (Sept. 28 2018)

How to manage student debt
How to manage student debt

And yet, the documents acknowledge that post-secondary education is a must for many entering the job market.

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Recommendations for how to address the problem were redacted from the documents, but student groups say they should include more non-repayable grants and waiving interest payments on student loans.

READ MORE: U.S. college graduating class stunned as billionaire vows to pay their student loans

The Canadian Federation of Students and the Canadian Alliance of Student Associations are each readying to launch get-out-the-vote campaigns on campuses to get students to the polls during the fall federal election.

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