Parliament’s budget watchdog says the NDP plan to cut student debt would cost about $4 billion.
The New Democrats’ campaign-style pledge this spring promised to cancel up to $20,000 in tuition, freeze loan payments through July 2022 and scrap interest payments, among other measures.
In a report released Wednesday, parliamentary budget officer Yves Giroux said the proposal would amount to $3.95 billion over five years, with the reduction of as much as $20,000 per student borrower by far the priciest plank.
Giroux also calculates that the plan’s extension of the non-repayment period from six months after graduation to five years would actually cut more than $400 million in upfront government costs.
The NDP’s announcement of the plan in March came ahead of a possible election this year as federal parties prepare to battle it out for the hearts and ballots of young voters.
Statistics Canada found last fall that more than 60 per cent of post-secondary students were concerned about using up their savings and taking on more debt.
The Liberals imposed a moratorium on Canada Student Loan payments between April and September 2020, but the freeze has long since thawed and student groups have urged Ottawa to suspend payment obligations again.
NDP Leader Jagmeet Singh said Wednesday forgiving student debt would be an economic driver to jumpstart opportunities amid the COVID-19 pandemic and provide recent graduates with relief from “crushing debt.”
“Those who’ve been hit among the hardest have been young people. New graduates, students — the jobs they normally were able to find are no longer there,” he said.
The unemployment situation was particularly bad last year. It improved between May and August but still ran two to three times the rate in the pre-pandemic summer of 2019, according to Statistics Canada.
By April of 2021, the unemployment rate for younger Canadians was 16 per cent, about double the level for the country as a whole.
Lindsay Mathyssen, the NDP critic for youth, said student debt payments “the size of mortgage payments” and post-secondary costs have forced some students to delay their education, even as the job market shrinks in some sectors.
Ottawa has taken in more than $4 billion in student-interest revenues since 2015, according to previous budget office reports.
More than 868,000 borrowers hold Canada Student Loans amounting to $9.77 billion, states an auditor general’s report released last July.
Singh’s proposal goes beyond his 2019 election campaign promise to nix all current and future interest on federal student loans.