Heavy student loan debt often just the first of many financial problems future Canadian adults face

Photo By Phoebe Lo

Students’ pockets are lightened once they’re forced to pay back their loans. 

ANTIGONISH, N.S. (CUP) – There’s something seriously wrong with a country that allows its future – its students – to begin their adult lives weighed down by a mortgageike
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 for up to 10 years after graduation, when many are also trying to build families
and save for their futures. The Canada Student Loans Program (CSLP) has been taking advantage of naïve, newly graduated highschool 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 loan 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 percent, a figure that translates anywhere from 8.5 to 11 percent interest rates. This is more than double what it costs the government to borrow the money. 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 percent 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. When I applied for a student loan, if I had realized just how much money $30,000 was, or how long I would be paying it back, I might have considered alternative options. I might have researched other forms of financial support, thought about attending school part-time, found higher paying summer or year-long jobs or tried for more scholarships. While Canada Student Loans thinks of itself as a saviour to those who couldn’t otherwise afford an education, the 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 a post-secondary education is so high that you almost can’t get a job without graduating from 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 increase your potential, not hold you back.