Newfoundland student debt solution not needed for other provinces, officials say

Steve Mertl
National Affairs Contributor
Daily Brew
Newfoundland student debt solution not needed for other provinces, officials say

The debt burden post-secondary students graduate with continues to grow, so a surge of hope went through leaders of the Canadian Federation of Students (CFS) when Newfoundland and Labrador announced it was eliminating student loans entirely in favour of non-repayable grants and bursaries.

Federation national deputy chairperson Anne-Marie Roy called it great news for students on The Rock.

“They have the lowest tuition fees and now a very important amount of grants that definitely will make education more affordable for students in that province,” Roy said in an interview with Yahoo Canada.

But the federation, which represents more than 500,000 university and college students, wants more.

While it’s unlikely other provinces will follow suit, Roy said the federation hopes they and Ottawa, which accounts for the lion’s share of student-loan funding, get N.L.’s message.

“Budgets are actually about priorities,” she said. “So it’s about the government making it a priority to invest in post-secondary education.”

The N.L. Progressive Conservative government announced about two weeks ago that as of Aug. 1, it was replacing loans with up-front needs-based grants. It also launched a program to provide a maximum $1,000 a year for part-time students who might be improving their education while holding down a job.

Tuition has been frozen at Memorial University and College of the North Atlantic since 2005. The N.L. government has finished a two-year, $15-million program to transition from student loans to upfront non-repayable grants, taking effect for the 2015-16 academic year. All post-secondary students studying in the province and some attending schools elsewhere if programs aren’t available in the province will be eligible.

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Average student debt difficult to pay off, delays life milestones

While it’s not as bad as in the United States, Canadian university and college grads owe billions of dollars. The CFS estimates nationally average debt for those graduating from a four-year undergrad program is about $27,000. The figure soars for those in professional programs such as medicine and engineering.

Quebec has among the lowest debt levels because tuition historically has been low, with the highest in Ontario, B.C. and Nova Scotia.

Federal student loans averaged $5,400 in 2012-13

The federally administered Canada Student Loan Program lent more than $2.56 billion in 2012-13, according to a report released last fall. The average per student (not including provincial loans) was more than $5,400, up slightly from the previous year.

Grads can take between 9.5 years and 14.5 years to pay off their loans, which don’t start accruing interest until studies are completed. The federal program reported the estimated default rate on outstanding loans was 13 per cent in 2011-12, down a percentage point from the previous year and less than half the 28 per cent in 2003-04.

A 2013 survey by BMO Financial Group found loan repayment was the top source of stress for grads, ahead of finding a job or achieving success in their chosen field.

In its own commissioned studies, the CFS noted the need to pay off massive loans, especially for grads who don’t land good-paying jobs right away, creates a major economic drag as they postpone purchases.

Roy said the federal government has continually raised the legislated ceiling on student debt which had stood at $15 billion set in the early 1970s. Total debt reached that figure in 2010, forcing the Conservative government to raise the cap to $19 billion. Debt is expected to reach $19 billion in January 2017, which Roy said will force another increase in the cap to $24 billion.

Canada is a signatory to a decades-old commitment to a United Nations declaration committing countries to making education affordable, accessible and ultimately free.

“Clearly as a country we’ve moved very much away from that commitment,” she said.

The Federation has argued its research shows eliminating the patchwork of student loans, education tax credits and tax-free education savings programs in favour of needs-based non-repayable grants would actually save the government hundreds of millions of dollars.

Making post-secondary education free would eliminate the problem altogether, said Roy.

“You don’t have to think about who has access to grants and who doesn’t get to have it,” she said.

The arguments have so far fallen on deaf ears.

Other provinces not likely to follow Newfoundland’s lead

“As Ontario already offers a generous aid program of grants, bursaries and scholarships, we aren’t considering a move to an all grants system at this time,” May Nazar, spokeswoman for the province’s Ministry of Training, Colleges and Universities, said via email.

“However, the government is committed to working with student organizations across the province to continue our work to modernize student assistance and improve the way student financial aid is delivered in Ontario.”

The province gave out $1.3 billion in grants and loans to students in 2013-14, of which 70 per cent does not have to be repaid, Nazar said.

Ontario also has various programs aimed at limiting students’ total debt burden on graduation, she said.

“Adjusted for inflation, the average repayable OSAP [Ontario Student Assistance Program] debt of public university and college students graduating in 2014 was 23 per cent less than their 2001 counterparts,” said Nazar.

“In addition, according to the 2012 Canadian University Survey Consortium’s Survey of Graduating Students, Ontario has the third lowest student debt for graduating undergrads. This survey also found that 38 per cent of Ontario university students actually graduated with no debt.”

The N.L. program is not applicable to British Columbia, either, said Stacey McGaghey-Jones, speaking for the B.C. Ministry of Advanced Education.

“Newfoundland has two public post-secondary institutions with approximately 42,000 students, compared to 25 public post-secondary institutions in B.C. with around 430,000 students,” she said via email, adding the Atlantic province has a net outflow of students.

McGaghey-Jones also noted about 70 per cent of B.C.’s estimated 430,000 post-secondary students do not use government financial assistance.

Nevertheless, the CFS will continue pressing for student debt relief. Roy said the Federation plans to raise the issue in the Oct. 19 federal election campaign and mount a drive to get out the student vote.

So far no party has committed to support any of the federation’s proposals. The issue got scant attention in the first leaders’ debate last Thursday, when only Green Party leader Elizabeth May raised it briefly in her closing remarks.

Some federal politicians argue education is a provincial matter, “but so’s health care,” Roy pointed out. That hasn’t stopped Ottawa from being involved.

“It’s important for us to have a discussion as a country about what our vision for post-secondary education can be and how our federal government can adequately support the provinces and make sure that from province to province we actually have a more affordable and accessible system for post-secondary education,” she said.