Canada student loans impoverish the future
By Danielle Webb, CUP Atlantic Bureau Chief
Issue date: 10/30/08 Section: Opinions
ANTIGONISH (CUP) - There's something seriously wrong with a country that allows its future - its students - to begin their adult lives weighed down by a mortgage-like debt.
Earlier this year, I received a student loan balance update informing me that in my quest for higher education, I have so far accumulated $30,000 in debt to my province and country. Upon graduation, I will be expected to pay about $400 a month - a sum that has been set for me, regardless of my state of employment.
Graduates are rarely able to pay these loans back in a timely manner. They are often shackled with tens of thousands of dollars in debt up to 10 years after graduation, when many are also trying to build families and save for their futures.
The Canada Student Loans Program has been taking advantage of na've, newly graduated high-school students by allowing them to withdraw upwards of $10,000 a year, without any introduction to financial management or a promotion of alternatives.
A 2007 study conducted by the Coalition for Student Loan Fairness, a group that advocates Student Loans reform, states: "Even people with mortgages or car loans rarely encounter the problems that graduates experience with the administration of student loan debt."
This same study found that CSLP loans are financed at prime plus five per cent, translating to anywhere from 8.5 to 11 per cent interest rates. This is more than double what it costs the government to borrow the money. And struggling graduates are being forced to pay higher interest rates than they would on a new car or even their mortgage.
Meanwhile, CSLP is annually turning a profit on their debt repayment program. The federal government expected the program to produce a $550-million surplus in 2007.
A study conducted by Winston Jackson, a former professor at St. Francis Xavier University in Nova Scotia, said student loans were just the beginning of an individual's financial problems.
Jackson found that graduates who took out loans in university make nearly 20 per cent less in terms of annual income than those who went through school loan-free.
Unfortunately, many students feel that they have no other option but to take out loans.
While Canada Student Loans imagines itself as a saviour to those who could not otherwise afford an education, reality is it's a for-profit agency more than prepared to saddle those same young students with debts that will follow them long into their adult lives.
In an age when the value of post-secondary education is so high that you almost can't get a job without graduating university, the government must be taking steps to ensure that Canada's future generations aren't being forced to live under the poverty line because of their degrees. Education should be increasing potential, not holding people back.
Earlier this year, I received a student loan balance update informing me that in my quest for higher education, I have so far accumulated $30,000 in debt to my province and country. Upon graduation, I will be expected to pay about $400 a month - a sum that has been set for me, regardless of my state of employment.
Graduates are rarely able to pay these loans back in a timely manner. They are often shackled with tens of thousands of dollars in debt up to 10 years after graduation, when many are also trying to build families and save for their futures.
The Canada Student Loans Program has been taking advantage of na've, newly graduated high-school students by allowing them to withdraw upwards of $10,000 a year, without any introduction to financial management or a promotion of alternatives.
A 2007 study conducted by the Coalition for Student Loan Fairness, a group that advocates Student Loans reform, states: "Even people with mortgages or car loans rarely encounter the problems that graduates experience with the administration of student loan debt."
This same study found that CSLP loans are financed at prime plus five per cent, translating to anywhere from 8.5 to 11 per cent interest rates. This is more than double what it costs the government to borrow the money. And struggling graduates are being forced to pay higher interest rates than they would on a new car or even their mortgage.
Meanwhile, CSLP is annually turning a profit on their debt repayment program. The federal government expected the program to produce a $550-million surplus in 2007.
A study conducted by Winston Jackson, a former professor at St. Francis Xavier University in Nova Scotia, said student loans were just the beginning of an individual's financial problems.
Jackson found that graduates who took out loans in university make nearly 20 per cent less in terms of annual income than those who went through school loan-free.
Unfortunately, many students feel that they have no other option but to take out loans.
While Canada Student Loans imagines itself as a saviour to those who could not otherwise afford an education, reality is it's a for-profit agency more than prepared to saddle those same young students with debts that will follow them long into their adult lives.
In an age when the value of post-secondary education is so high that you almost can't get a job without graduating university, the government must be taking steps to ensure that Canada's future generations aren't being forced to live under the poverty line because of their degrees. Education should be increasing potential, not holding people back.
Viewing Comments 1 - 3 of 3
Julian Benedict
posted 11/02/08 @ 5:44 PM EST
Congrats for a passionate article on the state of the student loan system. I think that your article raises many important issues, and your reference to our 2007 report reminds us how much things change in government. (Continued…)
Cecilia Shubert
posted 12/12/08 @ 11:25 AM EST
With all the current talk of government baleouts why are student loan borrowers not standing up and demanding help.
Nicole Doiron
posted 12/13/08 @ 1:31 AM EST
great article! Many Canadians must leave the country to work abroad, especially those from the Maritimes. It's really too bad because all the graduates I know who chose to remain in the Maritimes and are paying off their students loans ARE living under the poverty line. (Continued…)
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