One of the largest student loan programs is the Canada Student Loans Program. It helps post-secondary education be accessible to students who are not financially buoyant to afford it on their own. The loans could be in the form of non-refundable grants or actual loans.
With different types of loans available, any student can enjoy the luxury provided by the Canadian government. The government partners with both territorial and provincial governments in the coordination of this loan. With many loans in Canada accessible to the populace, this loan is particularly for part-time and full-time students in schools within and outside Canada.
To access the loan, you must be a citizen, a permanent resident in a province where the loan is available. You must also be enrolled in a full course load of 60% and 40% for part-time students. You must also be enrolled in a diploma, certificate, or degrees program for over 12 weeks. Aside from this, if you’re more than 22 years old you must pass a credit check and exercise your lack of financial assistance.
The funding is available through the Canada Student Loans Program and it is offered based on your needs. For full-time students, you can access about $210 per study week and $10,000 for part-time students including all interests and principal fees.
However, different think tanks and NGOs have researched how much the government gains from this. The New Deal for People for example studied how the provincial government of Ontario profit from student loans. It discovered that a 30% tuition rebate had been introduced since 2011/2012 which increased over time. This jump is to personally profit the government.
With the summation that an estimated cost of student loan with 400,000 borrower pay year leads to about $128 million. When the repayment subsidy is affected by the Repayment Assistance Program, the low-income borrowers will collectively return about $169 million. Considering the long-term trend, the government sets 12.4% aside on every dollar lent and assumes some people will default. Through this, interest on the loans results in about $376.2 million, and when this is added with all the digits provided above, it leads to $673.2 million.
If grants are added to this calculation, about $650 million is given in grants with about $280 million in payments to some states. If $140 million is spent on administration fees, the total would still be about $1.7 billion or more. With all these, it is evident a lot is spent on student loans and the money for it is sourced from the national revenue.
However, as the government has the means to assume defaulters in enormous quantities, the chances are high that the government makes more from the loan it rolls out to students. Thus, student loan programs are expensive, and aside from this, the huge interest it acquires has led to losses in returns. The profit or loss is in two ways: the government may assume defaulters are more than those who are truly defaulters leading to an influx of cash for those in charge. The loss could be that defaulters are enormous leading to a financial loss on the part of the government.