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Canada only country to charge refugees interest on travel loans: advocates

Last Updated Sep 11, 2015 at 9:00 pm EDT

Syrian refugees who came to Canada last December, Hanan Alawwad, second left, and her husband Samer Aldhmad stand with their children Nour Aldhmad, 4, from left to right, Omar Aldhmad, 1, Ayman Aldhmad, 7, and Nawwar Aldhmad, 3, while attending an announcement at a building under construction that will house and aid refugees when it opens in April 2016, in Vancouver, B.C., on Thursday, September 10, 2015. They also have a nine-year-old son who didn't attend because he was in school. The Immigrant Services Society of B.C. Welcome House will bring together housing, services and programs to help refugees and immigrants arriving in the province. It will include 18 first and some second-stage housing units that can accommodate up to 130 beds. THE CANADIAN PRESS/Darryl Dyck

VANCOUVER – Canada is the only country in the world to charge interest to refugees on travel loans, saddling struggling newcomers with debt as they try to rebuild their lives, advocates say.

The federal government requires privately sponsored and government-assisted refugees to pay for their own travel costs and overseas medical exams and will loan families up to $10,000.

“Refugees are desperate and eager to repay the loan, as a small gesture of tremendous gratitude and appreciation to the government,” said Chris Friesen of the Immigrant Services Society of British Columbia. “But at what cost?”

Friesen said families are using more of their food money to pay down the debt.

He said some countries, including the United States and Australia, require refugees to pay back loans for travel costs but don’t charge interest.

About 91 per cent of refugees pay back the loans, including Samer Aldhmad, a Syrian father of five living in Surrey, B.C., who repaid $7,019.47 in less than a year using his child tax benefit.

But Aldhmad said he’s just grateful to be living in Canada. In Lebanon, where his family first moved after fleeing Syria, he had to pay for his children’s education.

“I was paying $1,500 to pay for each kid to go to school. It was too much and I still needed to pay for the rent,” he said through a translator.

Citizenship and Immigration Canada said in a statement that refugees typically have few financial resources and are unable to access traditional lending institutions.

“The Immigration Loans Program provides them with access to funding that would otherwise not be available,” the emailed statement said.

Interest charges start after one to three years. The rate is set annually, and is 1.38 per cent for 2015.

Refugees have up to six years to repay and may request a review of their arrangement at any time, the citizenship department said.

The government loans up to $110 million per year from the Consolidated Revenue Fund. When it receives payments, the money goes back into the fund to finance new loans.

Surrey, east of Vancouver, takes in 28 per cent of British Columbia’s government-assisted refugees, and city council passed a motion in 2009 to urge Canada to stop requiring that category of refugees to repay loans.

The position was then adopted by the Union of B.C. Municipalities and the Federation of Canadian Municipalities.

Dianne Watts, now running for the Conservative Party in South Surrey-White Rock, was mayor at the time. Her campaign office did not immediately respond to a request for comment.

Coun. Judy Villeneuve has gathered 1,000 signatures on a petition to demand the federal government end the practice. She plans to ask an MP to table it after the federal election.

“This is for a very specific group of people that are coming with nothing, and are leaving situations where their lives are threatened,” she said.

The Canadian Council for Refugees estimates that Canada could absorb refugees’ transportation and medical expenses at a cost of about $13 to $15 million annually, and forgive current outstanding loans for about $38 million.

Executive director Janet Dench said many refugees take minimum-wage jobs to pay down the debt instead of getting further education or learning English or French.

“It causes a huge amount of stress for people,” she said. “We’ve heard of refugees who come into the offices of settlement workers and just cry.”

— Follow @ellekane on Twitter.

Note to readers: This is a corrected story. An earlier version misstated the name of the Immigrant Services Society.