OTTAWA - The Liberals are finally overhauling a program that provides loans to refugees to cover the cost of their resettlement to Canada, but they're stopping short of demands the system be scrapped entirely.

Instead, the government is proposing to eliminate interest charges on all new loans and give new borrowers more time to pay them back, according to a notice of the pending changes posted online by Immigration, Refugees and Citizenship Canada.

"Eliminating interest charges and extending the repayment period as well as the period before the loan becomes repayable will give resettled refugees more time to focus on their integration, without needing to give immediate attention to loan repayments," the notice says.

Those who currently have a loan would not accumulate any further interest but their repayment schedule would remain the same; recipients must begin paying back the loan 30 days after landing in Canada and have between one and six years to repay, depending on the amount.

The immigration loan program was set up in the aftermath of the Second World War to help immigrants from Europe who couldn't cover the costs of their travel to Canada. But today, 98 per cent of the program's users are refugees hand-picked by the government or private sponsors to settle in Canada.

A 2015 evaluation of the loan program found the existing repayment terms were having a negative effect on the ability of refugees to settle in Canada and suggested the government find a better way to help cover their transportation and other costs.

The government issues about $13 million in loans annually, and about 93 per cent are eventually repaid. Most of the money goes to fund the cost of travel to Canada.

Resettled refugees aren't forced to take out a loan, but between 2008 and 2012, an average of 94 per cent of refugees resettled by the government had one, according to government statistics.

"There is somewhat of a running joke in the sponsorship community, which is: 'How do we welcome refugees to Canada? With debt,'" Malaz Sebai, a director on the board of the major refugee sponsorship group Lifeline Syria, told a Senate committee in 2016.

The evaluation of the loan program was published as the federal government was in the process of settling thousands of Syrian refugees. Loans were waived for new arrivals from Syria, but not for refugees from elsewhere, prompting cries of a double standard.

In the notice posted online late Friday, the department acknowledged that many have asked for the loan program to simply be cancelled.

"The desire to reduce the financial impact of the loans undertaken by resettled refugees was weighed against the financial priorities of the government of Canada and potential costs of various options."

The government estimates it would lose about $7.3 million in foregone interest over the 10 years following the start of the new program.

The amount of money needed to be set aside to cover the cost of the loans would also increase to $126.6 million a year, up from about $110 million.

News from © The Canadian Press, 2017