A one-time school project gone terribly, terribly wrong.

15 August 2007

On Student Debt

Two posts over at Wandering Coyote got me thinking:

The first celebrated the cancellation of $26,000 in student debt.

The second mourned the fact that it was only $16,000 and a bit.

I dislike the student loans system. Higher education benefits everyone, by dint of the increased taxes paid by people who earn more as a result of attaining it. I believe education should be free within a few minor conditions.

Heck, we already have near-free college. Under the current standard roughly 60 percent of my student debt was forgiven, and paid off by the taxpayers of Canada. But only because a) I was a mature student , and also b) I had help and resources in the form of my parents, who expressly helped me to apply for grants and bursaries.

(b) was the more important. A close friend who is raising two kids by herself complained about her student debt and bitched that the government was worse than the Mafia. In talking to her I discovered that she didn't have (b), and that she'd never asked anyone at the Student Support office if there might be ways to reduce the debt. She was not alone. And she, a single mum, was in the hole roughly $26,000 in living costs, tuition, and child care. This was year one of a two-year program.

The job I got out of college paid just over $30k per year.

My brilliant plan? Actually it was Mum's:

1) Everyone takes testing to determine what they have the best odds of success at. They are not bound to study it, but the information cannot help but be useful.

2) Upon graduation from high school, the Canadian government commits to pay your tuition, and a student living stipend (uniform throughout all of Canada) for your first year.

3) To qualify for second-year funding you must complete your first year in the top half (third, fifth, whatever) of your course (that is, all students of the same course at the same school).

4) And the cycle continues.

By the end of a four-year program, the government is paying for only an eighth of all students, and they're the best of the crop. There could be other incentives for trades or professions that are highly in demand. And for over-subscribed occupations, the system could be made tighter, so that only the very best got their way paid for them, while the rest might be encouraged to seek other paths.

Among the advantages: Those who failed out could have the option of continuing on their own dime, or using a modified student loan program. And if at any time they joined the top half of the class again they would requalify for the money.

Those who flunked would be no worse off than under the current system, except that the Byzantine labyrinth of official forms and processes, that groaning monstrosity of administrative balderdash that is the Student Loans system as it stands, would be replaced by a much more streamlined outfit, with interest at competitive rates. And that would create incentive for students to ponder carefully whether they really, really wanted to be, for example, vets or dog groomers.

Yeah, its "Darwinian". But as it is, many "students" are fiff-faffing about in colleges saying "Well I dunno, really, I kinda like working with ____," and getting good grant money thrown at them to learn not much; when they themselves would really rather be plumbers, architects, or something other.


At 5:56 p.m., Blogger Wandering Coyote said...

OK...Your plan sounds good on, the screen...BUT there has to be a decent paying job out there at the end of it all. The problem nowadays is not only rising student debt, but a paucity of jobs one can get into that pays enough money to make high student loan payments feasible. Gone are the days when you graduate from uni and can immediately get a $35K/year job. Degrees are a dime a dozen and there are a lot of university grads working at Starbucks these days (or in my case a couple of years ago, Crapters). Service industry jobs do not cut it anymore.

I tried to get loan remission upon graduating, but the loan remission program back then made it pretty difficult to qualify, and even though I'd done what I thought I had to do to to qualify - as did my ex husband - neither of us qualified in the end.

I actually think there needs to be better government regulation of the student loan system because as it stands now, the bank or the National Student Loan Service Centre (a ridiculous organization that doesn't know its ass from its armpit) can send you this nice letter saying "we are pleased to inform you that your student loan payments have been reduced..." but in no way indicating that in actuality, the TERM has been increased to like 17 years up from 12. This happened to me twice recently. I can just imagine some 22 year old twit getting a letter like that and assuming all was well, when in actual fact this only benefits the bank in the end, not the borrower.

Also, banks front-load interest, so they get paid first and your principle payments are lower. Like I said over at my place, after 9 years of repayment, only aboout $7000 of principle has been paid down. This is so criminal!

Also, one cannot declare bankruptcy anymore with student loans. I also think this is criminal. But the reality is that one can't declare bankruptcy anymore because there would be so many people declaring it that the banks wouldn't be making a cent!

As for my mourning the fact that only $16K of my loans were cancelled, it had more to do with the fact that I have to go through a whole different application process after the BC people told me otherwise a year ago when I was getting all of this together. And it took 8 months for HRSDC to come to a decision on that one loan; I can only assume it's going to take the province a similarly long time.

One other thing: I so wish that skilled trades were played up more by the guidance counselors at high school. Back in my day, if you were "academic" you were encouraged to go to university. Looking back, if someone had said, "maybe culinary school would be a good idea..." or some other skilled trade, things might have turned out differently. Meanwhile, the "unacademic" people were encouraged to go into trades. In the case of my brother, however, he nearly flunked out of high school, but since UVic lowered its standards the year he finally finished high school, he got in. And he became an A student, graduating with a degree in music. It just took the right environment and the right subject matter to motivate him.

At 6:37 p.m., Anonymous Anonymous said...

Can you explain point 2 to me?

Barb, posting anonymously :-)

At 7:45 p.m., Blogger Wandering Coyote said...

Whose point 2?

At 8:48 p.m., Anonymous Anonymous said...

Metro's, or his mom's, to be exact:

2) Upon graduation from high school, the Canadian government commits to pay your tuition, and a student living stipend (uniform throughout all of Canada) for your first year.

At 10:35 p.m., Blogger Wandering Coyote said...

Well, I interpret that as the federal gov. would pay your living expenses to a certain degree. That's a huge cost for students that have to go away from home to study. When I was at uni, tuition was still relatively reasonable, but my living expenses were very high. Rent, bills, groceries, and transportation sucked most of my money away - and I had a job, too, just to keep myself afloat.

At 12:48 a.m., Anonymous Anonymous said...

It's the first I've heard of them paying your way--unless Metro means scholarships and bursaries. C'mon Metro...shouldn't you be blogging through a bout of insomnia about this time?

At 5:07 a.m., Blogger Metro said...

Without doubt there has to be a job. But among other things, my idea would hopefully lead people to follow their passions--possibly into cookery, for example. Passionate people find work in the areas they're dedicated to, or sometimes make their own work (see: Raincoaster's blogging courses).

It would also, if run right, disincentivize programs and careers that are over-subscribed.

Re. regulation. The government tried to shuffle off student loans onto the banks some years ago. The banks took one look at the regulations and bailed. They were being asked to lend out money for no profit, in essence.

The banks were right. Student loans shouldn't be a business proposition, but an investment in the nation, by the nation. Far too important to leave to something as grubby as an industry that each year declares record profits and lays off another thousand people.

On the other hand, better "consumer education" might go a long way to helping people a) figure their debt load for the next X years and b)live cheap on student loans.

Which brings me to:

@Anonymous Barb

I am. It's nearly five AM now. But it's actually the Drinker's Hour today.

Point 2: Basically, every student who survives high school gets a free year. After that, the money goes to the top X percent.

The living stipend would be some set amount--not adjusted for cost of living geographically--that everyone got to help buy groceries.

Hope that clarifies.

At 8:55 a.m., Anonymous Anonymous said...

So, you're speaking hypothetically, then? This currently doesn't happen, does it?

AB (aka BA)

At 9:14 a.m., Blogger Metro said...


Yes, this is just a notion. There is some student support built into student loans, along with tuition, but as it stands it's just more debt on the mountain.

My parents grew up in England, they took examinations to see whether they would advance to grade 12, then another set to see whether they would attend uni, take a technical or trade program at a college.

This was done because your town council usually footed the bill and wanted to be sure their investment had the best chance at working out well for all. The increasingly mobile workforce and the insistence that people be allowed to choose their own programs killed this idea.

In the case of my parents, neither was allowed to do the speciality they wanted, but they each got full funding to do something in a similar field. The councils got two motivated, successful students and they got careers.

At 9:55 a.m., Anonymous Anonymous said...

Ah, it's all a notion. For a second there, I thought I might be able to cash in some RESPs and put a deposit on a second home. You and your notions....



At 8:34 a.m., Blogger Metro said...

A second home?

In your part of town it's hard enough scraping up cash for a first!

Heck, we arrived here with a pocketful of cash liberated from the sale of some property, and found that even with that we had to get a mortgage on more than half of the house.

At 8:13 p.m., Anonymous Anonymous said...

Well, it's not going to happen, so don't worry. I'd be surprised if the RESP will pay for more than one semester of post-secondary who knows what, lol. In housing dollars, that's the equivalent of the price of an outhouse in, say, Port Alberni? Not much of a second home (although no one can discount the importance of an outhouse).


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