Canadian Student Debt Limit

by Graham Cox last modified 2011-12-27T00:21:07-04:00
The $15 billion student debt cap has been lifted for no other reason than we will, with current policy, surpass that number over the next year. This landmark deserves more attention than it is getting and the new rules are an affront to good economic management and bad for students.
by Graham Cox last modified Dec 26, 2011

The government, with the passing of the 2011 budget implementation act, has changed the rules governing how much in government-subsidized student loans can be lent out. The limit before this change was $15 billion which, by government numbers, was to be breached in January, 2013. The change that has been brought means this limit has been eliminated and the regulation of student debt has been devolved down to the ministerial level, out of sight of the public and parliament.

With the new rules, nothing public will happen when the government reaches, probably arbitrary, ceilings set by the ministry for human resources and development which oversees the Canada Student Loans Program. The government bureaucracy can now just increase the limit again without consulting the public and without looking at the effects of student debt on graduates and the economy. It is a move that essentially takes the regulation of student debt (and therefore funding for post-secondary education) out of public view and discussion will be initiated through this legislation about whether or not this level of student debt is sustainable or if other options should be sought.

For some background on why this is very troubling, the debt that is accumulated as student loans is basically public debt that the government has hidden by putting it onto the backs of students. The increased debt burden will be on top of taxes that these students will pay the federal government, meaning that they will be less likely to respond positively to increased taxes for social services. It means that even more people will be opposed to publicly funded social programs because they will be paying for their own education still as well as the next generation’s. This is a shift from a few decades ago where the previous generation pays for the next generation’s education. This is basically how all our social programs are funded — the working generation’s pay taxes and fund the system that supports the younger generation while providing a welfare insurance system for themselves.

We are hiding the costs (and the debt incurred) of social programs like education through the delaying payment for them for a generation. We are making the current young generation pay for artificially high standard of living of the middle-income group in Canada enjoys. It is bad management of the economy and is not sustainable. In fact, it is worse than this because the people that actually end up getting jobs will also be paying the subsidies to those that did not get good jobs and the increased debt burden from the incoming generation of students (increased tuition fees).

The only move from here is either privatization of the entire system to balance the weight of the social programs or the complete socialization of the program and the elimination of student debt that is outstanding. Which do you think we will get without massive public protest? The NDP do not even have a program to re-invest that kind of money into the system (of course?), but we need to start talking about the actual cost of making education a right in this country.

It is $15 billion in deferred spending by the federal government (currently held as student loans) plus $5 billion in deferred maintenance (currently held as crumbling university infrastructure) plus $600 or so million to deal with the increased enrollment (since the 1990s) plus $1.3 billion or so a year for reducing tuition fees to make the federal grants system actually work plus $2.5 billion to the grants system to eliminate the growth in student debt.

All that money will just bring us to 1990 levels. If we want to actually make PSE accessible to all who qualify and want to go then we must talk about another way we can invest and manage the system with the provinces.

It sounds like a lot of money (because it is), but it is not out of reach for Canada. It would also have a profoundly positive effect on our economy and could be paid for easily even under the current capitalist system. However, that is hardly the point, is it? The likelihood of this full program being implemented is probably the same as a full socialization of the university system in Canada and putting it all under the control of students and faculty and workers. It is almost Utopian, but this is what we need to demand if the current generation of youth is to be given a chance at a good life.

Document Actions