HRPD Committee Report

The Reform Party supports an income-contingent student loan repayment system. Such a system would ensure that students who have the ability to repay their student loans do so, while recognizing that some students have difficulty finding full-time employment following completion of their education.

The Liberal plan for assistance to post-secondary students, as outlined in Ensuring Access: Assistance for Post-Secondary Students, would cause more problems than it purports to solve. There are three main areas of contention: 

1. extending the interest-relief period from 3 years to 5 years;
2. making student loans tax deductible; and
3. a system of grants to support students in their first and second years at a post-secondary institution

Recommendation #3 of the report is to extend the interest-relief program from 3 years to 5 years after leaving a post-secondary institution. By extending this period, the Liberal government would foster long-term hardship for students by prolonging their debt-load. Allowing students to delay loan payback necessarily delays debt freedom for students. By offering the extended interest-free period, the Liberals are, in essence, giving students more rope with which to hang themselves.

2. Tax-deductible student loans invite widespread abuse 

Recommendation #5 states that the Liberal government should consider the option of making student loans tax-deductible. If student loans did become tax-deductible, there would be an enormous incentive to take the maximum amount in student loans, rather than in other loans that are not tax-deductible. Student loans should be used to help allay the costs of education, not to replace other legitimate loans by using student loan money for cars, vacations, or personal items. Therefore, the government should not provide any incentives to use subsidized student loans in place of regular bank loans.

In recommendation 14, the Liberal government wants to give out grants in the first and second year of a student’s post-secondary education. By doing this, the Liberals go against their own suggestion to simplify the student loan program; they actually make it more complex. Recommendation 14 provides the incentive for institutions to admit students with grant money, to charge tuition, and to subsequently weed out students.  

The Reform Party wants the students who begin their education to finish their education. If grants are to be considered, the government should reward students in their 3rd and 4th years as an incentive to continue to completion. Moreover, these years represent the time of greatest financial hardship for students. If the Liberals insist on giving grants, use them as a reward for effort and academic achievement, as well as an incentive to complete the degree, especially during the most financially difficult years.  

As an alternative, linking repayment amount or remission to academic performance and effort would provide more incentive for students to apply themselves to their studies. As well, using the system to reward hard work is infinitely preferable to a blanket program of income redistribution.