Senate Committee Testimony on Student Loans and Bankruptcy
In my opening remarks, I said the following:
I’m sure this Committee is well aware of the plight of college and university students. The cost of tuition and fees for a school year has increased from just over $1,000 in 1988 to well over $5,000 today, and that doesn’t include living expenses. That’s a 500% increase during a time when the minimum wage in Ontario has increased by 60%.
Back in 1988 a student could work for 16 weeks in the summer at minimum wage and easily earn enough to cover their tuition; that is almost impossible today, so an ever-increasing number of students must resort to student loans to fund their education.
We analyzed the data in our database of debtors we have helped over the last year and a half, and we discovered that the average insolvent debtor with student loans is a female, aged 37 years old, with over $8,000 in student loan debt. That number may not sound like a lot, but when you consider that many of these people have been paying their loans for over 10 years when they go bankrupt in Canada, it is a significant burden.
We also found that for debtors where their student loans represent more than 50% of their debts, their income is 12% less than the average bankrupt, and 56% less than the average Canadian.
Our research proves that people who file bankruptcy because of student loans are younger than the average bankrupt, disproportionately female, and have lower incomes than the average bankrupt.
Tragically the bankruptcy process has become a band-aid solution for the real problem of funding for higher education not keeping pace with the cost of that education over the years.
Our data proves that the average bankrupt with student loans is truly the honest but unfortunate debtor that the bankruptcy process was designed to help.
They need help, so we recommend that the rules be amended to allow for student loans to be automatically discharged after two years, not the 7-year rule proposed in the most recent amendments.
These debtors need a fresh start, and we believe the bankruptcy process should give them that fresh start.
Will my plea on behalf of students have any impact? I’m not naïve; I don’t expect that because I went to Ottawa the rules will change. However, I believe the Senators have a better understanding of the plight of the average student, and over time the balance may shift in favour of students.
Next week I will post some links to the videos of our appearance, and of course I will also post any further information on when the new rules will come into force when it becomes available, so stay tuned to this site.
Thanks for the effort.
I think another important component of the current situation is that if a person were to return to school 9.9 years after the date of their last credit course, their 10 year clock would start all over again (even if they didn’t use a student loan to take that single credit course). Due to a a series of unfortunate, unexpected, and unpreventable events that occurred within two years of my leaving school(medical and accidental) I was shocked to find myself even considering bankruptcy… But pragmatically I must. Now, 6 years latter, realize I will have to declare bankruptcy (I have been counseled by professionals as such as well). Now the rub is, that I have had the opportunity to take a course or two, with my employer paying for it. But it would get me a credit, and it would have to be in my name, so I had to decline. I cannot have that ten year clock start over again.
This ten year rule has been devastating to my life. I will never fully recover from the stress and I can imagine it has fruitlessly caused immense hardship on so many who otherwise would have been able to recover and look to becoming productive citizens again.
I was a student who had to drop out
due to a head injurey.I cant get a job in the field I was trained in and cant do anything………I am swamped in dept and It just piles higher and higher……..
I am 38 years old and am stuck in a rutt…….cant build on any dreams or plans………
I have been out of school for 8 years now and just have to hide from the debt collectors cause Ijust cant pay it back and live day to day……….
My kids live with their dad now as I live under this mountain of dept and see no end to the tunnel
Just waiting for some help from the legislation of
Canada to set me and my family free to soar……..
I love the descriptions of the students that you have given. I too had always intended to pay back my loan in full right away so that I could spend the rest of my life lounging in the luxurious income that would come from a great job that higher education would get me. Unfortunately, the government’s fairy tale propoganda turned out not to be true (and the dot-com bust didn’t help) and I am now poverty-stricken.
There just are not enough jobs to go around, yet the population just keep increasing. The government needs to realize that, and NOT punish students; if anything, punish those companies that trick students into getting a credit card and accumulating a crushing (non—student-loan) debt before graduating.
I am pleased to see that student-loan debts have not been forgotten. I will begin watching CPAC thanks to this blog posting.
I am in tears right now after watching the videos and reading what you and others have written. I thought no one cared.
I am 37 with a 15 year old son who’s father has not been paying child support consistantly (the struggles I’ve gone through with the FMEP is another story).
I earn about $2800/month, bring home about $2500, a decent income I thought but it’s hardly enough to make ends meet. I have over $65,000 student loan debt. I’ve used up all interest relief and 4 years after graduating from university, I still don’t earn enough to come up with the extra $728/month to pay back my student loan for the next 10 years.
I have always had every intention to pay it back. I’ve just started paying $184/month to Canada Student Loan. But I feel that I’m hitting a brick wall.
Gratefully for your effort…
A sigh of relief!
I’m very grateful for your efforts and the recognition you’ve given to this issue that affects hundreds if not thousands of people in Canada. I graduated from university in 2000, and have been struggling to keep my head above the river of debt (student loan) I’ve incurred and is literally drowning me. I owe approximately $50,000.00 in student loan, which $10,000.00 accounts for the interest. While I was in university, I signed up for numerous credit cards, which I’ve since paid off. (A total Pain in the ____) However, through the process of eliminating the smaller loans, I opted for the paying only the interest on my student loan. What a mistake!
During this time, I became pregnant, and resorted to applying for interest relief because the income I anticipated getting from unemployment wouldn’t be enough to pay at least the interest on the loan.
Lo and behold, I was denied interest relief. Oh wait, before that took place, I was told to pay the principal on the loan in order to be qualified. I thought about the irony of the whole situation – my inability to pay the loan resulted in me applying for interest relief – don’t you think?
Oh well, you can imagine what happened next… After being unemployed for a year, I was unable to make any further payments. As a result, 3rd party collection agencies began to contact me – I’m so stressed out.
Don’t get me wrong, I do make a few payments on the loan, and very much is trying my best to make consistent payments but when you have children, it’s rather difficult to do so.
I can only fathom a new beginning.
I eagerly await the outcome!
i wasn’t aware of this 10 year window. I borrowed in 1997 and just got the call yesterday and I’m assuming its because i took a credit course?? Borrowed 10K and added 6K in interest.. now, I have 6 kids, pay 2 child supports and earn a decent income. What should I do??
The agency calling said that if I up 8K, this would go away.
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