C February 3 1999 CFS tackles student debt Free education wanted! Annette Martin Maura Parte from the Cana- dian Federation of Students (CFS) is “passionately com- mitted” to the cause of student debt. In a presentation to the Douglas College board last week; Parte brought to the table a CFS wish list for all students seeking an educa- tion. On this wish list is a future education system with no financial barriers, an abolishment of all student fees and an increase in access to education through a federal system of funding. There is no federal educational system in Canada; the responsibility for educa- tion falls to the provinces. However, the federal govern- ment provides financial support for—and claims to give high priority to—post- secondary education. Parte says that a crisis in student debt today has been caused by a series of cuts from financial support provided by the federal government to the provinces for post-secondary education. By the year 2000, these ongoing cuts will total $3-billion. Such federal funding cuts result in cutbacks to student grant programs and an increase in fees at a time when, Parte says, “Many young people won't consider education because of the daunting debt.” In his 1998 budget speech, then federal finance minister, Paul Martin, said, “Canadians do not need to be told that student debt has become a major problem. Students know it. Their families worry about it. Gradu- ates must deal with it.” Although British Columbia's provincial government has (temporar- ily) frozen tuition fees, other prov- inces have not followed this example, and student debt in Canada has almost doubled in the last decade, Maura Parte, CFS leaving the average graduating student with a whopping $25,000 to repay on completion of their educa- tion. How Student Loans are funded The Canada Student Loans Program was designed to provide financial assistance to students who can't afford to pay for their educa- tion. Under the program, the govern- ment provides loan guarantees and (for full-time students) interest subsidies. In BC, loans are provided through the BC Student Assistance Program and the Canada Student Loans Program. Although a student completes only one application form and receives one loan award, 40% of that loan is provided through the provincial program and 60% is provided through the federal program. holder has two separate and distinct loans; one provincial loan and one federal. The is now- prime. plus two-and.a half percent. Last year’s federal budget provided some tax relief for student debt in the form of repayment period extensions and debt reduction plans but, according to Parte, “the budget did little to reduce the escalating costs of education. And those gradu- ates whose debts are extended for a 15-year period, wind up paying more interest over that extended time.” Maximum aid for stu- dents has increased from $6,000 to $9,000 per year, but accepting more money on student loans means an even larger debt to be repaid after graduation. And such high- priced education has become a daunting prospect for those who have young children or other dependents to support. Parte notes that, “Tradi- tionally, post-secondary students have been able to work from May to September to make money towards tuition fees, but with unemployment levels up in many sectors, this is not always possible.” Student bankruptcy The CFS also feels that the federal government's response to the student debt crisis has been to cater more to the needs of big banks rather than the needs of students. As an example of this “pandering,” the CFS offers the recent changes to the Bankruptcy and Insolvency Act (BIA). To “increase control of student bankruptcies that are filed to avoid repaying student loans” the govern- ment passed a bill that rules indi- viduals cannot discharge their Therefore, a student debt interest on these student loans her Press Volume 23 Issue 16 student loan debts in the event of personal bankruptcy until two years after leaving their studies. This act was further amended last June to extend the prohibition period to ten years, effectively creating a two-tiered law; one tier for consumer debtors and a second for student loan debtors. In the October 1997 Consumer Quarterly, a report finds that, “the ten year prohibition on discharging student loan debt is discriminatory and reinforces incorrect stereotypes about students’ track on loan repay- ment. The changes to the BIA were implemented without any empirical evidence to suggest that students have misrepresented their financial need.” Figures from the CFS show that although an initial 20% of students default on their loans, after consoli- dation, 93% of all students repay their loans in full. These figures would not seem to indicate a need for exceptional bankruptcy measures. However, in a bid to reduce its obligations to student debt, the federal government has drafted a Memorandum of Understanding to harmonize federal and provincial student financial assistance programs. The government hopes to achieve full “Harmonisaton” by September 1999, prior to the renegotiations of risk sharing agreements with the banks. So far, the only two provinces to sign the new memorandum are Nova Scotia and New Brunswick, but already 6.5% of students in New Brunswick have failed to qualify for a student loan under the new eligibility criteria. The “Harmonisation” of loans will be explored in the next edition of the Other Press. Meanwhile, the CFS, represent- ing 60 student unions and 40,000 students, is kicking off their national, public campaign, “Join the Campaign for Higher Education.” For more information, check out their websites at www.cfs.bc.ca or www.cfs-fcee.ca or call them at 733-1880.