ICLR's

Does anyone know if this ICLR system has been a success in Quebec?  Did it get fully implemented?  We should get more information on this...

Quebec to base student loan payments on income

Updated Thu. Jan. 13 2005 7:50 AM ET

Canadian Press

QUEBEC -- After its cost-saving measures slashed bursaries and boosted student debt, the Quebec government launched a system Wednesday to ease the loan repayment burden on students who make little money after graduation.

Touting the program as an innovative first in Canada, Education Minister Pierre Reid unveiled a system that will delay student loan payments and subsidize interest costs for workers earning less than $25,620.

While other provinces and the federal government give some payment relief to low-income earners, the Quebec system is more flexible, Reid said.

With no time limits on the assistance, the plan will prevent more struggling former students from defaulting on loans, he added.

"It just doesn't exist in the rest of Canada, you don't have that kind of system," Reid told a news conference.

"If you have debts (elsewhere in the country) you can't afford to pay because you don't have the income, tough luck. You have to deal with all the problems of someone who does not repay his debts."

The loan subsidy program will cost $22 million when it goes into effect in November, rising to $60 million by 2015.

While Reid called his plan an income-contingent payment system, most similar plans peg overall debt -- not just payments -- to income.

"It's not in any way helping students reduce their debt," said Nick Vikander of the Quebec Federation of Students.

"Instead of a debt-management system, students need a debt-reduction system."

Ian Boyko of the Canadian Federation of Students said any system that ties repayment to income will guarantee some former students are paying for their education for years longer.

"We've dubbed these plans, 'Study now, pay forever,' " Boyko said.

"The secret isn't finding cute or complicated ways to manage payments. Students really pay down the road for convenience; you can end up with a lifetime worth of payment."

Students in Quebec protested last year when the provincial government slashed $103 million out of the provincial bursary program in favour of lending students more money.

Before the cuts, students who applied for assistance were lent up to $2,400 and were topped up with grants. The government now approves loans to $4,700 and gives out fewer bursaries.

"The complete effects will take a few years to see, but these cuts were so substantial, student debt is going to start approaching what it is in other provinces," said Vikander.

Statistics Canada says Quebec university students still pay the lowest tuition in the country -- $1,683, or less than half the national average -- after an eight-year freeze. Many other provinces have eliminated bursary programs.

Vikander and other student leaders suspect the payment relief will lead to tuition hikes.

Under Quebec's new loan system, a former student who makes $14,640 to $25,620 after leaving college or university will be allowed to pay a fraction of the normal payment while the government will cover part of the interest on student loans.

Graduates making $14,640 or less will get a holiday on all interest and payments until their prospects improve.

A former student with $16,000 in debt would normally be required to pay $174 per month.

Under the new system, a worker who makes $15,000 a year would have to pay $26 per month instead.

A graduate with a job making $24,000 would pay $156 monthly.

Reid said about 60,000 of Quebec's 380,000 residents with student debt will qualify for the subsidy.