British Columbia

Canada's 'cruel' refugee loans leave non-Syrian newcomers with growing debt, say advocates

Refugee advocates want the federal government to end the "cruel" practice of forcing non-Syrian refugees to pay back interest-bearing loans to cover transport and medical costs.

Non-Syrian refugees have to start paying back cost of their transportation 30 days after arriving in Canada

Immigration Minister John McCallum poses with a Syrian family soon to be resettled in Canada. As Syrian refugees, this family will be exempt from paying back interest-bearing government loans — unlike other refugees. (Sam McNeil/Associated Press)

Refugee advocates are calling on the federal government to end what they call the "cruel" practice of requiring refugees to pay back interest-bearing loans to cover transport and medical costs.

The federal government is covering the cost of bringing in 25,000 Syrian refugees slated to arrive by the end of February, but advocates say thousands of other refugees are struggling to repay the government loans they were issued when they arrived.

Chris Friesen with the Immigrant Services Society of British Columbia says he works with immigrants who are facing a mountain of debt, and many are struggling to buy the basics of food and clothing.

"More and more refugees are using, for example, their child tax benefits; they're using part of their food money [to pay back the loans]," said Friesen.

"They're asking their children to work after school, or in some cases, even drop out of high school to help, and meet the financial needs of the family."

Refugees charged interest on loans

Loans are granted to refugees to cover the costs of their medical examinations abroad, travel documents and transportation. More loans are also available to cover rent, phone deposits and work tools.

According to Citizenship and Immigration Canada, the average loan is $3,000.

Refugees are required to start paying off the loan 30 days after arriving in Canada.

However, according to a CIC evaluation of the refugee program, looking at loans granted between 2003 and 2012, almost no one began repaying within their first 30 days in Canada.

Eventually, if the loan isn't paid back completely after a specified period of time (between one and three years, depending on the amount borrowed), refugees are charged interest on the amount remaining.

In 2015, the interest rate was 1.38 per cent.

According to the CIC's evaluation, 59 per cent of refugees between 2003 and 2012 managed to repay their loans within the interest-free period. The average monthly payment over the past three months was $162.

Friesen says Canada is the only country in the world that charges refugees interest on the loans they're issued when brought to this country — and the issue is causing a stir in the refugee community.

"We have Syrians coming into the country, staying in the same facility as other refugees who have loans, and they're asking us to explain to them why the government is giving preferential treatment to Syrians versus them."

Meanwhile, in Vancouver, Vancity Credit Union is offering new refugees interest-free travel loans for the purpose of buying out government loans and avoid paying the interest.

Refugee loans policy could change

A spokesperson for Citizenship and Immigration Canada told the CBC a review of the immigration loan program is currently underway, and Immigration Minister John McCallum has said change may be coming.

"I don't know what the options are, but I'm telling you this is a policy that we're certainly considering changing," said McCallum.

"It is possible that in coming weeks, as they say, we will announce changes to that program."

The CIC's evaluation of the program itself found loan repayment was adversely affecting how well some refugees settled into their new lives in Canada and recommended several changes to the program.

However, the evaluation, which was published in September prior to the federal election, did not go so far as to recommend ending the program.

A spokesperson for the CIC told the CBC the department agrees with the findings of the evaluation, but could not speculate on future government decisions.

"Refugees who are to be resettled typically have few personal financial resources and are unable to access traditional lending institutions," said a CIC spokesperson.

"The immigration loans program provides them with access to funding that would otherwise not be available."

Read the CIC's evaluation of refugee loans

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With files from Farrah Merali


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