Shamus Reid: Student debt is a recipe for economic disaster
By Shamus Reid
On January 21, students across Canada marked a shameful milestone for our country: Canada Student Loan debt owed to the federal government reached $13 billion. This number does not include debt from provincial student loans or private debt, such as lines of credit.
Today’s generation of students is living in a debt crisis like no other in Canadian history.
At a time of economic slowdown, education and training are of particular importance in creating more jobs and helping people to participate meaningfully in the economy. Yet today, tuition fees are higher than they have ever been. Among those who have never participated in postsecondary education, “financial issues” are the most commonly cited barrier. At a time when more people must gain access to a postsecondary education, barriers to participating have never been higher.
Federal and provincial funding cuts to postsecondary education have created this debt crisis by passing the burden of funding our public education system on to those who can least afford it: students. According to Statistics Canada, tuition fees in British Columbia are nearly 10 percent above the national average, at just under $5,000. High tuition fees and student debt have undeniable long-term consequences on students and our society as a whole.
Those who are forced to borrow because they cannot afford to pay upfront must spend more time working, sometimes more than full-time hours, while taking classes. The result is that those who are forced to borrow have more difficulty with their academic commitments. Many students are forced to drop out for a semester to dedicate themselves to raising money for school, and many are forced to drop out all together. Canadian research tells us that as student debt rises, completion rates plummet; one study found that as student debt rose from less than $1,000 to $10,000 per year, completion rates for those with loans dropped from 59 percent to eight percent.
The impact does not stop with graduation for those who are able to complete their program. Student loan obligations reduce the ability of new graduates to start a family, work in public service careers, invest in other assets, volunteer, or take lower paying jobs in their field to get a foot in the door. A recent study on Canadians and sub-prime lending found student loans significantly contribute to financial problems experienced by young adults, suggesting that high student debt payments force many households to rely on high-interest and sub-prime loans.
The burden of student debt is also not borne equally by all Canadians. The lower the income earner, the more loans they are forced to take, and thus, the more interest they must pay.
Student debt is neither inevitable nor necessary. Members of Parliament have a stark choice to make: let students go deeper into debt during a time when personal debt is already threatening the fundamentals of our economy, or take a leadership role and make affordable education one of the cornerstones of economic recovery.
At a time when over 70 percent of jobs will require at least two years of postsecondary education, a college diploma or university degree is not a path to riches; it is simply a necessary step to become an average income earner and contribute to the Canadian economy and social fabric.
In the United States, proposed stimulus legislation prioritizes postsecondary education to the tune of $550 billion. Just like new infrastructure spending, an educated, debt-free workforce will pay dividends for years to come.
A highly educated society is one with a stronger economy and more jobs, and is necessary for Canada to weather the economic storm that has begun. Yet both provincial and federal governments continue to treat it as a privilege reserved for those who can afford it.
Students across Canada are calling on our members of Parliament to work together and commit to increase the Canada Social Transfer for postsecondary education to reduce student debt and tuition fees, graduate student funding to encourage innovation, financial support for Aboriginal students, and student summer jobs funding. In B.C., the government must also realize that now is the time to invest in higher education, and must commit to reducing tuition fees, establish up-front grants, and eliminate interest on student loans.
Shamus Reid is chair of the Canadian Federation of Students-British Columbia. He is a student at the University of Victoria.
Jan 24, 2009 at 9:43am
I find it baffling that it has taken this long for society and government to figure this out. Post secondary education in this country should be 100% free to all Canadian citizens. The rewards would greatly outweigh the cost. Have students sign a contract that outlines their duty to this country after the completion of their free education. If you leave Canada for a higher paying job abroad (USA) within 10 years post study, you must pay back the country for the full cost of your education. This would be particularly beneficial for our country wide doctor shortage. If anything at least make medical school free. The problem is a short sighted government who care little about the future. Who's only concern is for the here and now. I cannot wait for that selfish generation to die off. The baby boomers who presently run our country have done more damage to this country and the world than any other generation before them. What we need are younger, more forward thinking politicians running this country. Until that happens we are doomed.