Student loan activist says feds misuse term ‘grace period’

The term “grace period” as it applies to student loans is misleading and confusing and should be scrapped, an advocate for the rights of borrowers said Thursday after filing a formal complaint against Human Resources and Skills Development Canada.

The term has come to mean two different things depending on which federal policy is looked at, argues Mark O’Meara of Canadastudentdebt.ca.

According to new credit card rules adopted by Ottawa this month, “grace period” means banks can’t charge interest on new purchases for 21 days.

But O’Meara has been fighting with the Human Resources Department for months over its use of the term as people with student loans are still on the hook for interest during the six-month “grace period.”

The term merely means students don’t have to make payments for six months after graduation while they look for work.

“Here we have one legislation using grace period as one thing and another legislation using this term inappropriately,” he said.

O’Meara said grace period “implies” an interest-free/no payment term and meant that up until the early 1990s with regard to student loans. The government has since changed its policy and, as such, should change the name of the provision as well.

“(They should) use something that’s more appropriate,” he said. “Something like payment and interest deferral period. That would be clear.”