TORONTO (CP) - Unreasonably high interest rates attached to federal student loans are leaving students smothered in layers of debt for years after graduation, says a new report that calls for a complete overhaul of the loan program.

Despite promising a review, the federal government has yet to deliver, Julian Benedict, founder of the Coalition for Student Loan Fairness, said Tuesday.

"At this point, that review should have been underway months ago," said Benedict.

"I could never have imagined the level of frustration and the number of people who have been battling, literally for years, the Canada Student Loans people."

The root of the problem is high interest rates, said Benedict, who noted Ottawa borrows money to fund the Canada Student Loans Program at 4.1 per cent, but then lends it to students to the tune of 8.5 to 11 per cent.

"We have some of the highest interest rates on students loans in the developed world," Benedict said.

Last year, about 350,000 college and university students across the country relied on federal loans worth $1.9 billion.

Ann-Marie Zammit-Quayle, who graduated from Hamilton's McMaster University with a bachelor's degree in science and biology, said high interest rates contributed to her financial humiliation.

Raised by her father along with her siblings after her mother passed away, the 32-year old said that despite getting top grades and scholarships she couldn't keep up with her monthly interest payments.

"There's no way that I can ever get out of this, and I still owe $35,000 on my federal loans because of the interest," said Zammit-Quayle, adding that harassing calls from collection agencies started just months after she graduated.

"They were saying, 'We're going to come and take everything from you. Can't you get a loan? Can't you ask your father for help?' But he's not in any position to help me."

Benedict said few borrowers have confidence in the program and it needs to be reformed. The reduction of interest rates and a crackdown on abusive collection agencies are among the recommendations the coalition made in its report.

The federal government has been tight-lipped about what it's planning, said Benedict.

"The government can make these changes, and most of them we think are pretty moderate, but the question is, are they prepared to do it?" he said.

A spokeswoman for Monte Solberg, the minister responsible for the government's loan program, says the department is conducting consultations and will continue to do so over the summer.

"The best way to gather information is to have discussions with the people directly involved and that is what we are doing," said communications director Lesley Harmer.

The director general of the loan program, Rosaline Frith, says consultations are going well but the findings won't be released until a thorough review is conducted.

"We have been doing our work properly. We started by trying to do a diagnostic and understand the issues that we're facing," she said.

Frith said what they're hearing from the consultations falls very much in-line with the report's recommendations, but any conclusions they make will first be released to the government.

However, she says Ottawa can choose not to adopt the findings.

Other recommendations in Tuesday's report include appointing an ombudsman, the immediate reinstatement of a six-month, interest-free period after graduation as well as loan forgiveness for students who die or are permanently disabled.

Zammit-Quayle said an interest-free period is not enough and that students should be given time to find work before making payments.

"Who has time to look for a job when you're studying for finals?" she said.

"If you do not have a job in the first six months of graduation you should not be expected to pay anything. Back then, I was babysitting for only $20 a week."

Benedict says his group is also calling for the consolidation of the "patchwork" of federal and provincial bills, simplifying to whom, how much and when the former student is expected to pay off their debt.

He says the stories disgruntled students have been contributing to his group's online petition has been overwhelming.

"The collection agencies are harassing loan borrowers at work, they're harassing their families, and there's no place for these students to go," he said.

Zammit-Quayle says all of her friends, also in their 30s, are still paying off their student debt.

"Lending people who don't have money is dangerous to begin with, but lending it to students? I feel like the (loan program) just set us up for a fall," she said.

"The fact that there's so many of us in the same position has to say something."