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Vivian Moreau: Student debt is crushing
When the collection agencies started calling me at work I really wondered if it had been a good thing to go back to school.
In 1999 it had seemed the right decision. I had been a stay-at-home mom for 10 years when my marriage blew apart. I had two young children and no marketable skills. I took out a student loan and applied to the University of Victoria’s writing program. It took seven years but I completed a B.A. and a masters in journalism from Carleton. I also had $60,000 in student loans to repay.
When I landed my first reporting job in Whistler six months later I started making payments on the loans. The payments were weighty, almost 40 per cent of my monthly net income. Whistler was not an inexpensive place to live, but the newspaper there was the only one willing to hire an older newbie reporter. I paid $1,600 a month to rent a two-bedroom suite. One daughter lived with me and another stayed with her dad on the Island. I took on a second job but, even so, fell behind on the payments. I wrote letters to the federal and provincial student loan agencies and to a bank to plead my case for some relief, but was consistently turned down.
The government agencies and the bank that had loaned me the money to go to school quickly turned my file over to a series of collection agencies. Their tactics were simple: harass me into finding some way to pay back the funds.
“Why did you go back to school if you knew you couldn’t pay back the money? Why did you choose an occupation that paid so poorly? We can take you to court, you know.”
I can’t tell you how many nights I sat on the edge of my bed crying into my hands.
My story is not uncommon. On Wednesday hundreds of college and university students protested on the legislature lawn about rising student debt loads. In 2008, 60 per cent of student loan holders in B.C. had either defaulted or were delinquent in payments.
That percentage has improved. In the last year, of the 177,248 student loan holders in B.C., 22.94 per cent are in default (behind more than five months on payments) and only 1.93 per cent are delinquent (behind two months in payments). But a further 11,530 are in a debt management program, meaning they’ve been given a six-month payment reprieve, usually because of low income. The average total a student in B.C. owes after finishing an undergrad degree is $27,000.
Although steps have been taken to give graduates a break, such as lowering interest rates and increasing the number of years to pay back loans, the system of funding loans for post-secondary education in Canada remains flawed. By example, the table used to calculate what percentage of a graduate’s gross income can go toward student loan repayment should be consistently updated. In 2008 both the feds and the province were using a table dating back more than a decade. Using that, they figured I could pay almost $800 a month in payments when my net monthly salary was $2,100.
I know this will rankle, but loans should be interest free or, at the very least, low interest. I was paying 7.25 per cent interest on my loans before I defaulted.
Some countries, such as Germany, provide free post-secondary education. When students graduate and find work they can contribute to the economy by investing in a home or vehicle. They can contribute to the arts, taking in a play or dance. They can go out for dinner.
In Canada, graduates will spend between 10 and 25 years paying off their student loan debts. Maybe then they can begin to think about having a family or buying a home.
And my $60,000 student loan debt? I got lucky. Three years ago I remarried. Shortly after, the bank that held the bulk of my loans offered a 50 per cent principle reduction if I would pay it off in one lump sum. My husband paid it. I thank him almost every day.
Vivian Moreau is a reporter with the Oak Bay News.