All Posts Tagged With: "student debt"
Federal government writes off $540-million in student loans
The federal government is writing off $231-million in unpaid student loans after exhausting “all reasonable efforts” to track down the money from more than 44,000 cases by 2012-13. The government absorbed even greater losses of about $312 million the year before. That’s half a billion dollars in just a couple of years.
The government has essentially thrown its hands in the air and given up on ever seeing a dime of that money, meaning a lot of people can start answering their phones again without fear of getting harassed by debt collectors.
Now, as someone who actually paid income taxes a few years ago, I am outraged that all these deadbeats are costing the public purse hundreds of millions each year. But as someone currently taking loans to fund my education, this gives me some hope of avoiding the full bill.
Marc Garneau would extend grace period
Liberal leadership hopeful Marc Garneau is proposing to make it easier for students to shoulder record debt loads after they graduate.
The Montreal MP would do away with the current requirement that post-secondary students begin paying off their student loans six months after graduation, whether or not they’ve found a job.
He would give them an indefinite grace period, requiring graduates to start repaying loans only after they’ve found a good-paying job of about $40,000 per year.
Garneau, who is touting himself as the most substantive of nine leadership contenders, is to unveil his latest policy proposal Monday.
An engineer and former astronaut with impressive academic credentials, he has made building a more diversified “knowledge economy” one of the cornerstones of his campaign.
Readers react to assertion that graduates have no future
Last week’s Maclean’s cover story declared that a generation of well-educated, ambitious, smart young Canadians has no future. Many Canadians agree with that assertion, others don’t. Yesterday we offered a sampling of letters we received. Of the more than 200 responses that have flooded in online so far, here are some of the most interesting.
James Knight, President & CEO of the Association of Canadian Community Colleges published this letter:
The Association of Canadian Community Colleges (ACCC) disagrees with Maclean’s case that an entire generation of talented young Canadians have no employment future.
By working with industry, Canada’s public colleges, institutes and polytechnics are innovating, engaging in applied research and bridging skills gaps so that students gain employment in well-paying careers. College graduates find positions in everything from health care to engineering, from information and communications technology to business and entrepreneurship, and from construction to green technologies. Virtually every employment opportunity is supported by a college program.
College graduates find jobs. Depending on the region, 83 to 95 percent of Canadian college grads can look forward to working in their field within six months of graduation.
What I learned from Princess host Gail Vaz-Oxlade
After years of watching her TV shows Til Debt Do Us Part and Princess, I got the chance to listen in person to Gail Vaz-Oxlade discuss her Money Rules earlier this week on campus. Moneyaftergraduation.com and the University of Alberta’s Student Financial Aide Office hosted the free event. After an hour and a half, I felt less afraid of the sometimes ruthless world of money. I’d like to share five rules that stood out for me.
Rule 1: “Don’t pay the bullsh*t.”
By “bullsh*t,” Vaz-Oxlade means your monthly minimum credit card payments. Every credit card owner should pay more than the minimum. Those seemingly low payments required each month are meant to keep you in credit card debt for as long as possible, so you pay more interest overall. Oh, and the same go for student loans. “Aggressively pay down your debt”, says Vaz-Oxlade. She says students in debt should only worry about savings after they’ve paid off their loans.
Rule 2: Take on no more than one year of your future net income in student debt.
Vaz-Oxlade says this is a well-known rule of thumb, but I’d never heard it. Apparently every student should try to graduate with less student debt than their projected net income in their desired job. So if your career starts out paying $30,000-a-year after taxes, you shouldn’t have more student debt than that. (Law students, for example, can borrow more because they will make more.) Otherwise it eats up too much of your income, “and you won’t have a life for a very long time.”
A $250,000 settlement has students talking
U.S. television host and journalist Charlie Rose recently settled a class-action lawsuit after his production company was accused of failing to pay its former college interns. The settlement will set his production company back about $250,000, with each of the 189 interns walking away with $1,100 each for 10 weeks’ worth of work.
“$1,100? Not that bad,” I thought to myself.
Media executive turned law school graduate Steve Cohen disagreed. In the Wall Street Journal he called the lawsuit “dumb” and the settlement “worse.” He says that companies will now be hesitant to take on interns because it invites the possibility of meddling from labour activists rallying against the notion of unpaid work.
No Money Down tuition proposals make sense
Sometime in the mid-1990s, when I was a doctoral student at the University of Waterloo, I ended up chatting with a couple of very energetic student advocates who stopped by my office. Waterloo was at that time going through some kind of vote regarding their student union and earnest activists were everywhere.
Then, as now, the topic of how to deal with rising tuition fees was in the air, and I noted that I had been intrigued by what was then commonly called “income-contingent” loan repayment. The basic idea was that you could borrow what you needed through the regular venues of student loans, but then when it came time to repay the loans, the rate at which you had to repay would depend on how much money you were making at the time.
If we wanted these groups, we’d fund them voluntarily.
Liam Ledgerwood’s piece for The Arthur at Trent University generated more than a couple letters to the editor. After reading his argument below, check out one of those responses, written by two student politicians who support the fees. What do you think? Tell us in the comments section, on Twitter @maconcampus or on Facebook.
When I was an eager and green first year at Trent University, I remember my father telling me a story about one of his university friends back in the 80s. Like Trent, York University offered any student group “free” money to help finance its activities. Well, my father’s friend started a group, received a few hundred dollars, went and bought “prizes” (read: stuff he wanted) and held a “fundraiser” auction that went unadvertised. When no one showed up, guess who kept the prizes?
I laughed at the time, but I recently read the list of levies that each student at Trent pays to support various organizations, clubs, charities and special interest groups on campus. Every single one of us pays more than $180 per year to support more than 30 groups that most of us have a) no participation in b) receive no benefit from or c) have never even heard of.
Each year, $18.79 is charged to us to pay for Trent Radio (does anyone know the frequency?), $18.87 for Trent Annual (despite my never even seeing a Trent Yearbook through three years here), $12.50 for the politically ideological Ontario Public Interest Research Group, and the list goes on. Sure, some of these levies are “refundable,” but the total of all available refunds is only $51, and we have to go to groups individually to get our own money back. There’s no “opt out” button.
Nitro cocktails, a botched pick-up attempt & a Toronto killer
1. The Peak student newspaper at Simon Fraser University is warning students against cocktails containing liquid nitrogen, which is added by some daring bartenders who want to impress drinkers with the ensuing cloud of vapour. The reason for the warning: The Daily Mail newspaper says a British student who chugged two “Nitro Jagermeisters” ended up with a perforated stomach. Ouch.
2. “It wasn’t exactly the most successful pick-up attempt,” writes Julian Uzielli of Western’s University’s The Gazette. A student briefly lost consciousness and was taken to hospital last Wednesday after being injured in The Spoke pub. “He basically tried to pick up a girl really high in the air, and she fell on him, and he fell backwards and he hit his head,” student Tony Ayala told the newspaper.
3. People in Toronto’s Cabbagetown neighbourhood, not far from Ryerson University, are frightened by a killer who stabbed a woman, in her 50s, early on Tuesday. Toronto police released this security camera footage of the victim being followed around 7 a.m. The suspect is a white male.
Snoop Dog, Mulcair, Halloween, Movember & study space
1.Snoop Dog (Snoop Lion?) is now endorsing that gooey microwavable student staple known as Hot Pockets. In a video advertisement that already has three million views, he’s reworked his 2004 hit “Drop It Like It’s Hot” into “Pockets Like It’s Hot.” He may be a sellout, but that bicycle with a microwave attached is a wicked idea.
2. Speaking of ridiculous advertisements, Anne Kingston tears apart Brad Pitt’s new commercial, in which he says: “It’s not a journey. Every journey ends, but we go on. The world turns, and we turn with it. Plans disappear, dreams take over. But wherever I go, there you are, my luck, my fate, my fortune. Chanel No. 5, inevitable.” Uhhh… What?
3. In an interview with the University of Regina’s Carillon, NDP leader Thomas Mulcair said some notable things. His assertion that “the average student finishes university with over $40,000 in debt,” doesn’t match any estimate I’ve seen. (Even the debt warriors at the Canadian Federation of Students peg the average at $27,000.) He also says youth are mostly concerned about the environment. “Most young people are a little bit less concerned about the economics, except for the fact that they realize that consistent failure to invest in post-secondary education is playing tricks on them,” he added, suggesting the federal government “get back to the level of [PSE] funding that we saw before the 1990s, before the Liberals started downloading to the provinces.”
It takes a lot of creativity to finance second degrees
Last fall, when Kristen Pennington started at the University of Toronto faculty of law, she was surprised to learn of “an assumption” that students wouldn’t work during the school year. “I’d never been in school and not worked,” the 22-year-old says. “It wasn’t a question.”
During her first year in law school, Pennington held down three part-time jobs: she worked as an after-hours receptionist at the Canadian National Institute for the Blind, as an executive assistant for a lawyer, and as manager of the undergraduate residence at Glendon Campus, part of York University, where she also lived rent-free. “I worked for my room,” she says. “It was a great expense to cross off the list.” The commute from Glendon to U of T’s downtown campus, on public transit, was “45 minutes on a good day.”
Highest in Nova Scotia and Ontario
A new report suggests tuition fees are becoming less affordable for many Canadians, forcing an increasing number of students to take on heavy debt loads.
The report from the Canadian Centre for Policy Alternatives shows that since 1990, average tuition and compulsory fees for undergraduates have risen by 6.2 per cent annually — three times the rate of inflation.
It now costs, on average, $6,186 a year to study at a Canadian university, and that doesn’t include the cost of books or food or lodging.
The left-leaning think-tank adds that extrapolating from past growth and announced government intentions, that number will rise to $7,330 in four years.
The report also shows there is wide divergence in the cost of post-secondary education across the country.
One-fifth expect $40,000
From The Canadian Press:
Most college and university students who take out loans to pay for their studies expect to graduate with more than $20,000 of debt, a new study suggests.
The BMO survey says that about half of post-secondary students are taking on debt for school, and 58 per cent of those with loans expect to owe upwards of $20,000 when they finish school.
One-fifth, or about 21 per cent, expect to graduate with more than $40,000 in debt.
That’s alright. You don’t want that anyway.
You’re young, in debt, not making as much money as you’d expected and the world keeps getting more expensive.
In many ways, our parents had it better: more jobs, cheap homes, less debt. Things that once seemed so basic, so average, so fundamentally middle class are becoming unobtainable.
Even if you’re making a bit more than the guy disappointed by $36,000 (which really isn’t bad), it’s a zero-sum game with those debt payments. Saving a critical mass of moolah is all but impossible in your twenties. Meanwhile, the big things in life require saving. Like a house and kids. And you need those things to be happy, right?
Wrong. To be clear, my goal isn’t to be political. If you want to resent the baby boomers for making all that money on real estate, if you want to march down the streets of Montreal, go right ahead.
Runaway compensation is hurting students
When students across the country united for the Canadian Federation of Students’ National Day of Action to protest tuition fees on Feb. 1, tiny Brandon University’s student union did their part.
They gathered students, foisted placards and yelled into a megaphone. The message was clear.
Drop fees. Drop fees. Drop fees.
It seems strange then, that last fall when the Brandon University Faculty Association went on strike for the second time in three years, the student union wasn’t so bothered about being asked to pay more for their professors— who make up most of the university’s costs.
Gets house arrest instead of jail
A student pleaded guilty in a North Bay, Ont. court—and received house arrest—after he was caught with a hefty load of marijuana in his car, an estimated $47,000 worth. Jameson Fletcher’s lawyer argued that his client, a Laurentian University commerce student, was selling drugs to help lessen his $40,000 school debt load, reports the North Bay Nugget. Fletcher was given a punishment of six months served in the community when it’s common to receive jail-time, said the deciding judge, Justice Jean-Gilles Lebel. Despite the light sentence, Lebel noted that many young people carry student debt and most manage to pay it down without committing crimes.
News comes as study reveals rapidly growing tuition rates
As some American students continued their Occupy protests on Wednesday, President Barack Obama was being cheered by other students in Colorado where he announced he will speed up his initiatives to help students overcome debt.
“We should be doing everything we can to put college education within reach for every American,” the President said in what CNN describes as a “campaign-style event.”
Obama announced that a program to limit the repayment of federal student loan debt to 10 per cent of discretionary income will start next year, instead of the year after. And he said that students will be able to consolidate public and private loans to save on interest charges.
Why our leaders shouldn’t dismiss the Occupy Movement
Jamie Weinman has a post on Maclean’s.ca suggesting that student debt is fuelling the Occupy Everywhere protests. Weinman quotes this Washington Post article by Ezra Klein who writes that “college debt represents a special sort of betrayal.” He says he began supporting the protests after seeing a photo on the Tumblr site, “We are the 99 percent.” It was of a handwritten sign by a student that said: “I did everything I was supposed to and I have nothing to show for it.”
Their point is this. While many of the people hurt by the financial crisis should have known better—people who took out mortgages they knew they couldn’t afford and bankers who invested in financial instruments they knew were overrated—students who took on debt are different. They went into debt because they had been told repeatedly by parents, teachers, politicians and the media that educational debt is a sure route to higher paying jobs. Now that we know that’s often untrue, can we really blame them for being angry?
Moody’s warns that student loan lending is unsustainable
Moody’s credit rating agency warns that “fears of a bubble in education spending are not without merit.”
Their new report uses entirely U.S. figures, but considering that the average amount of student loans owed by university students in Canada is similar to the amount owed by U.S. students upon graduation, ($27,000 versus $23,000), Canadians may worry too.
Moody’s argues that student loan lenders didn’t tighten their rules during the recession, unlike lenders in all other sectors. In fact, the growth rate in the total amount loaned to students continued to grow by 10 per cent per year. That’s despite the fact that the number of delinquent loans continues to grow too, while job prospects remain low. How will students be able to pay back all that money if they can’t find work?
Revenues are declining and students are paying for it unless administrations start taking necessary initiative
Deloitte Canada issued a damning report about the financial state of Canada’s universities on Tuesday.
Pressed by declining government revenue, declining private donations, rising pressure on students to make up the difference, universities across Canada are being forced to take a hard look at their accounts.
According to the report, the top 10 financial challenges universities will face in the coming year are:
1. Over budget and under-funded: As funding declines, cost management is key
2. The rivalry intensifies: Competition to attract the best students heats up
3. Setting priorities: The danger of making decisions in the dark
4. Moving at the speed of cyberspace: Technology upgrades are needed across the board
5. Rethinking infrastructure: A renewed focus on asset optimization
6. Linking programs to outcomes: Where training and market demand intersect
7. The best and the brightest: Attracting and retaining talented faculty
8. A sustainable future: Enhancing environmental performance
9. Education for all: Tackling diversity, accessibility and affordability
10. Regulations and reporting: New responsibilities require better disclosure
The problem is that governments and private donors are free to reduce their contributions to universities when times are tough. Students are not. When income declines and — as the report notes — costs of program delivery climb, students are on the hook for the remainder.
What universities need to do is start taking a stern look at their expenses, figuring out who is paying for them and cut where necessary. No longer can schools be all things to all people. Streamlining of core programs, focusing efforts — even at the cost of the peripheral programs — is going to become increasingly necessary.
“Despite the merits of a world-class liberal arts education, there is a danger in supporting a curriculum that is too theoretical. Today’s fast-paced world needs construction crews, hospital workers and people to build cellphone towers. Institutions must respond to these realities by ensuring their educational agendas are in sync with forecast marketplace demands,” Arsh Maini, a senior consultant with Deloitte India wrote in the report.
While there will undoubtedly be a massive outcry as universities keen on research and engineering cut their arts programs, other schools are likely to cut expensive science and engineering programs in favour of robust arts programs. This is a good thing, a healthy thing, as each school becomes the best at what they do.
This streamlining — a complete overhaul of how higher education is financed in Canada — is necessary to the continued survival of our diverse education system.
It is the slow privatization that is igniting protests
A recent study from the Higher Education Strategy Associates found that when faced with a complete picture of the financial health of a given post-secondary institution, about half of students would accept a tuition increase. Only one in six said a tuition freeze must be maintained at all costs.
This strikes me as a little odd. If students really are OK with meeting universities half-way when it comes to balancing budgets, why is there so much unrest and outrage at tuition increases that are set to happen this fall in many parts of the country?
The study revolves around the idea that education of core issues is necessary for participation in wider discussions. If students don’t know how bad a university’s finances are, they can’t sympathize with the need to cut programs or raise fees.
That being said, just because a student sympathizes with their institutions plight, doesn’t mean they have to sympathize with its cause. The root cause is declining government subsidy. That’s what students have widely been protesting in Quebec, Nova Scotia and most loudly in the U.K.
As governments place less and less priority on public education, forcing it to privatize, students are forced to pay out increasingly large user fees. These fees are then loaned to students through highly bureaucratic organizations like Canada Student Loans.
Governments in the western world have decided that they have a role to play in public education. But they’re slowly pulling back to a regulatory and assistance-oriented role, rather than a funding role.
That slow privatization is what’s pissing off students and igniting protests. It has nothing to do with sympathy for their university’s finances, but everything to do with privatization.
Some services help the wider good more when they are public than private. Health care, sewage, and roads are good examples. Education is another. The depth of my pockets should never dictate the depth of my knowledge.