The Student Loan Racket: The Failure of Canada’s Post-Secondary Educational Funding

Leaving Trent University in the 1990’s, a kazillion dollars in debt, I took a minimum wage job out in Lake Louise, Alberta.  There were no jobs to be found in Peterborough.  And I wasn’t quite ready to grow up.  Not just yet.

So I decided to go someplace where I could hike, bike, ski, and let my hair down.  There are, after all, plenty of worse places to be poor.

Sure, I wasn’t doing anything with my education.  Then again, neither were my friends in Ontario.  Not one of my classmates had, you know, a “real job.”  At the time, they simply didn’t exist.

But I did have mountains to climb, hills to hurtle down, and live music to play.  It wasn’t a bad gig…

At first.

Six months into my mountain adventure, sitting in my staff accommodation, with tendrils of smoke curling around me from my roommate’s joint (this was Lake Louise after all), I opened some most unwelcome correspondence from the Federal Government.  A week later, I received more mail. This time from the Province of Ontario.

Time had come to pay for my education.

When I sat down and calculated what my minimum student loan repayments were to be, I laughed and I laughed.

And it wasn’t from the pot.

There was no way I could possibly have afforded to pay them, you see.  Not even close.  Add to this the fact that the government had conveniently split my debt into four different “easy to pay” accounts and things became scary.  My laughter dried up.

There wasn’t just one minimum payment to hit.  There were several.  They tallied up to pretty much every penny I made.  Actually, perhaps even more.  It’s hard to remember.  And again, I can’t blame that on the pot.  Just the years.

While I did eventually manage to get six months of debt deferment, the urgency of the situation escalated.  No matter how I sliced it, there was no way I could afford to pay four different student loans to two different banks.  I immediately started a long-distance search for jobs back in Peterborough.  There were still none to be had.  So I hunkered down in the mountains.  I will admit that I was more than a little nervous.

When the due date for my first batch of four payments came and went, I breathed a sigh of relief.  There seemed to be no ramification for my actions.  Or rather, for my lack of actions.  Same thing with the second due date.

And that was when the collection agency phone calls started.

Boy howdy, that was fun.  Right out of the gate, they got nasty.  They talked tough.  They told me the courts were on their side.  They told me I could end up in jail — an outright lie, but still something to keep me up at night.  And they wanted payment in full.  Thousands and thousands of dollars.

Their job was intimidation.  They did it well.

So I dropped out of sight.  Right off the radar.  Back in the day, Revenue Canada and the folks behind student loans didn’t share the same computers.  Heck, I don’t even know if they had computers.  By quietly ignoring my taxes (it wasn’t like I made enough to owe) and tossing away any suspicious envelopes that came my way, I was able to avoid the threats.

I spent several years just a brief step ahead of the phone calls, the taunts, the lies that come with owing money to the student loan police.  I was on the lam, so to speak.  I tried not to think about my loan.  It helped me sleep at night.  Well, some nights.

But eventually they caught up to me.  Somewhere, somehow, a phone number was found.  And the harassment began in earnest.

They didn’t just want a minimum payment.  They wanted the whole enchilada.  In cash.  On the nail.

By this time, I was back in Peterborough.  Working in the non-profit sector.  Making something like $11/hr.  But I had a regular phone number that I could be found at.  And find me they did.  At home and at work.  They called me day and night.  Every day.  Every night.  It wasn’t just one collection agency, it was several.  They seemed to be working both with and against each other.

My roomates hated it.  My employer hated it.

Me?  I was getting used to it.  Sure, I had ulcers.  And would awake bolt upright in the night in fear, but…  You get used to even that.

At one point, I purchased telephone recording equipment and taped one of the collection agency goons lying to me and threatening me over the phone.  I then faxed a transcript of the conversation to the board of directors of the agency, major media contacts, my MP, the student loan ombudsman…  I forget who else, but it was a darned good list.  I was careful to carbon copy all parties.

And that stopped the phone calls.

For awhile.  For a very little while.

All was quiet until another agency called my parents to tell them that I was in serious, serious trouble unless they coughed up some coin (when you’re on the run, you learn how to talk like a criminal).  You don’t know how many laws that lie broke.  Heck, I don’t know how many laws that lie broke, and I was darn-well-versed in the legalese of student loan collections by that point.  But I can tell you this:  If a collection agency calls up one of your relatives and tells them that they are going to take major legal action against you unless they pay up your debt, that is called extortion.  It is also called “normal operating procedure” for student loan collection agencies in Canada.

While I thank my parents for getting rid of the one debt, three others still loomed.  And I was pretty darned pissed that they had weaseled money out of my folks.  It wasn’t their debt.  And they weren’t exactly rolling in the dough.

So I called the agencies.  I pled my case.  Actually, I pled my cases.  There were still a few to go.

No dice.  Each and every one of them wanted thousands of dollars.  Right then.  Right now.

No financing.  No minimum payments.  They wanted their commissions.  They wanted their cut.  They gave no shit about my financial state.

At this point, I talked to a credit councilor.  I talked to my MP.  I talked to my boss, who had chased the goons away from ever phoning my place of work again.  And they all said the same thing — off the record of course.  Hide out.  Pay when I could.  And keep a record of every time I was threatened.

So I disappeared again, surfacing only when I had enough cash to pay off one of the parasites in full.

Every once in awhile, one of them would find me.  I countered their legal threats with legal threats of my own — if they wanted to take me to court, I’d be more than happy to testify about the laws that they broke through their harassment.  It was a battle and a half.  Maybe three quarters.

We reached an impasse of sorts.

Eventually, once I was promoted — once I started making “real” money — I was able to get the goons off of my back.  I was able to buy my freedom.  It took almost a decade of being hunted, but I was finally free of threats and harassment.

And, man, did it feel good.

But, man, was I still pissed off.  As for my credit rating, well, let’s just say that I’m glad my wife co-signed my mortgage and put pretty much the rest of my financial life in her name.  Because, like me, my credit rating is scarred for life.

Over my decade of fear, I had become a bit of a student loan crusader.  I gave a couple of workshops on rights, responsibilities, and resources for soon-to-be graduates.  I wrote a few articles for the Canadian Federation of Students.  I was, in my own small way, an expert on harassment.

During this period, I found that I wasn’t alone in my struggles.  Hell, there were thousands of people out there who were running scared.  Thousands of graduates who had been hung out to dry by their governments and their educational institutions.  I found out that this was ludicrously common.

Want some numbers?  Here are some numbers.  This year, the Canadian Government is writing off more than 44,000 student loans that were in default, totalling $231 million.  This represents only a part of the total number of defaults from six years ago or longer. It doesn’t represent monies already taken back by collection agencies.  Or ones that have passed a ten-year statute of limitations.  There are tens of thousands of defaults that happened before this.  Tens of thousands more that happened in the past six years.  And way, way more that will happen in the next few years.  The numbers are increasing.  Rapidly.

According to the Canadian Federation of Students, the current student load debt is over $15 billion.

That’s right, I said billion.

With unemployment (and meaningful employment) for young graduates continuing to plummet, the rate of default is only going to grow and grow.

And grow.

The system, quite simply, is broken.

What I see is a hundred thousand or more student loan defaults, adding up to (easily) hundreds of millions of dollars in debt.   Each one of these defaults means a lost credit rating.  It means houses that aren’t bought, cars that aren’t leased or purchased.  It means incalculable loss of revenue to various branches of government.  And it represents a gaping hole in our economy as we lose the financial benefits of tens of thousands of indebted or credit-lost professionals.

It also means that tens of thousands of young adults will be tossed to the lions.  The lying, cheating, threatening lions of collection.

Except they aren’t lions.  They are jackals.

They scavenge in packs, and they want to lick bones clean.

All this because young people want to invest in the future.  Their future.  Our future.

There are solutions, of course.  Simple ones at that. They run a pretty good gamut, but I don’t have the time or the space here to get too deeply into all of them.  I will, however, offer a start.

1.  It is time that we, as a nation, pay for at least some of the education of our young people.  Currently, we are seeing ever-rising tuition costs for students coupled with ever-decreasing percentages of government funding for universities — see here for figures and links.

Meanwhile, the list of countries that offer free post-secondary education are both numerous and economically diverse.  They include (but are not limited to):*

• Algeria
• Argentina
• Bhutan
• Cuba
• Denmark
• Egypt
• Estonia
• Finland
• France
• Greece
• Italy
• Iran
• India
• Malta
• Mauritius
• Morocco
• Norway
• Oman
• Pakistan
• Russia
• Saudi Arabia
• Scotland
• Spain
• Sri Lanka
• Trinidad and Tobago
• Turkey
• Barbados
• Kenya
• United Arab Emirates
• Uruguay

(*Thank you Wikipedia)

I mean…  Kenya?  Really?  It has an average per capita income of less than $2000.  And India?  They have a billion and a half people.  How about Iran?  Aren’t they supposed to be evil or something?

Canada, we can do better.  And if you don’t think we can, then you might have your priorities just a little bit skewed.

2.  If we can’t find a way to pay for education, how about implementing an income contingent student loan repayment system.  The fine folks at the Canadian Federation of Students sum it up nicely:  “Graduates with lower levels of income would repay their loans over a longer period of time, while those in high-paying jobs could repay their loans quickly and pay less interest.”  Start making more money?  You start paying back more quickly.  In a position when you are struggling?  Your payments shrink or disappear for awhile.  People aren’t thrown into situations that they can’t handle — and the government doesn’t face increased defaults.

3.  Change our educational emphasis.  Not every kid is going to benefit from a degree.  At the same time, not every job is going to benefit from an employee who struggled through university.  There needs to be an emphasis placed on trades — where you can easily end up making more money than a so-called white collar university graduate, thank-you-very-much.  There needs to be an emphasis placed on training for kids who might not have the wherewithal to succeed at college and university.  And all of these programs need to be treated and promoted with equal amounts of time, energy, funding, and respect.  In particular, respect.  Our workforce and our society are far too diverse to handle a graduating class where the vast majority are expected to attend university — whether or not they have the skills to handle it; and whether or not it will be beneficial to their future in the long run.

Until some of these things start to happen, we are only inviting cycles of debt and despair.  We are only shooting ourselves in the collective foot — both socially and economically.

Education is a strange and funny notion.  It carries with it all kinds of social and economic baggage.  As a society, we are doing ourselves no favours by continuing to stress the unequivocal benefits of a university education.  And we are definitely doing no favours by having young people and their families carry the financial burden of our collectively unrealistic expectations.

The problem is in no way new.  But it is one that needs to be dealt with.

Now.