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Amortization of Student Loan repayment

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pogorelichfan View Drop Down

Joined: 24/February/2007
Location: Canada
Points: 87
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    Posted: 24/February/2007 at 9:41am

Dear Readers,


I suppose I'll get a few angry replies for making this suggestion, but I hope people in gov't, as well as student advocates will consider it nonetheless.


If we accept the fact that student tuition fees are going up at an alarming rate, and that they are likely to continue increasing, we need to modify the student loan programme to recognize that students can no longer pay their loans off in the standard ten year time limit provided by the federal gov't in particular.


In reality, student loans are mini-mortgages that require a repayment schedules that reflect the debt loads Canadians are carrying; thus, I suggest the following:


Federal student loans borrowers should have the ability to extend their amortization periods to a maximum of around 250 months.  Currently, federal student loans must be paid back within a standard 114 month period--which can, admittedly, be extended (if you know to ask) to 174 months. 


The BC Student loan programme already offers students extensions of up to 234 months, no doubt reflecting (or acknowledging) the debt levels students already face. 


Yes, I know about interest relief; I know about the extra interest costs; and I've heard all the carping about the 'potential' for student tuitions to increase as a result of such a plan--but my concern is only this:  I never want to default on my loan because one's financial health pretty much goes down the crapper if you do!  I would rather make smaller monthly payments and actually have a life than go into financial purgatory for ten years--assuming I could pay $600.00 per month in payments.


Longer amortization periods also mean people have an option OTHER THAN interest relief, which really doesn't 'solve' anything--except put off the inevitable repayment.  Plus, your credit rating is affected if you go on interest relief--say goodbye to that car loan you might need!


All in all, it would be a step in the right direction...


Best, Julian.


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