Government accused of milking student loan plan

[thrisiakaye]

TORONTO — Canada's student loan program is making millions of dollars a year by gouging cash-strapped graduates who make a “deal with the devil” to extend their loan terms, credit counsellors and student activists say.

The number of students who pay a long-term financial penalty in order to renegotiate their payment schedules has risen about 77 per cent since 2002.

That means big, unearned bucks for the feds, said Julian Benedict, founder of the Coalition for Student Loan Fairness.

The option, called Revision of Terms under the Canada Student Loans Program, gives strapped graduates a short-term reduction on their monthly payments and more time to pay off their loan, but requires them to pay more interest, said Mr. Benedict.

In many cases, he added, students who don't qualify for relief have no other choice but to make what he called a “deal with the devil.”

“The only option they give you is, ‘Well, we're not going to lower your interest rate and make it reasonable, but we'll allow you to extend your repayment and pay more interest.”'

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