Stats Can Survey says…: we’re in financial difficulty

By Mary Chan

Students take out larger student loans and have more trouble paying them back, says a Statistics Canada study released last Friday.

The survey examined federal Canada Student Loans in the 1990/91 and 1995/96 loan years. It found one in Þve students had repayment difficulties (i.e., received temporary assistance or defaulted) in their Þrst year out of school in 1990/91 compared to one in three in 1995/96. The study also found that students owed an average of $7,725 in 1995, up 13.4 per cent from $6,810 in 1990.

In a statement released on Friday, University of Calgary Students’ Union President Rob South sees a clear explanation for the larger student debts.

"Debt has increased because tuition has increased," he said. "Students are finding the debt loads unmanageable."

Canadian Association of Student Alliances National Director Jason Aebig, is not surprised by the results, and offered two reasons for the increases: high tuition fees and high interest rates.

"The interest rate on student loans is excessively high," he said. "The problem is that people only pay down interest, not principle."

Aebig added the time period which the study covered coincided with the period in which government funding to post-secondary education declined.

Aebig also hopes the study calls attention to what he sees as a neglected issue.

"Essentially, student debt has not been dealt with in this country yet," he said. "Hopefully, the StatsCan results will get some discussion going."

SU Vice-president External Nassr Awada hopes the study will act as a wake-up call for government.

"They believe they’ve created a program to help students fund their education and obviously that
hasn’t been happening," he said.

The government should take a more proactive, rather than reactive, approach
to student access to post-secondary education, said Awada.

"Back when tuition was $600 a semester, it was okay to take out a loan," he said. "You only had a thousand dollars to pay back and you could pay that back very quickly at a reasonable interest rate.

"Now they’re saying that tuition rates are increasing to three, four, even Þve thousand dollars and [the government has] never seen that before. So they have the same program, essentially, from when tuition was $600 and nothing’s changed."

The study comes on the heels of a federal government policy to run credit checks on certain student loan applicants. The policy, which began in most provinces Aug. 1, could not be implemented in time in Alberta. The policy applies to Þrst-time student loan applicants over 22.

Awada fears the survey may send the wrong message.

"My Þrst impression is that a lot of people are going to look at this and say students are high risk," he said. "But somebody who really looks at the root of the problem [will see] it’s not the students. The real problem is the loan and we’re hoping the government starts to address that."

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