Sunday, September 28, 2008

Education: Student Loans... Navigating the platforms

One of the most difficult things when you graduate from post-secondary education is realizing you have yet to earn proper income but your student loan becomes due in 6 months.  The challenge shifts from paying it off to paying off just the interest.

For me, the two policy changes I would like to see made are:

1) Lowering the interest rate to the prime rate (it's now prime+3%)
2) Extending the interest-free period to at least two years

I reviewed the websites/platforms of the Tories, Grits, NDP and Greens to see what they had to say to the issue of student loans.  I did NOT look at their wider post-secondary policies, such as lowering tuition fees and increasing university funding.

A) Conservatives:

There is nothing on their website that I could find.  I even did a word search for "student" in their posted October 2007 Throne Speech, 0 hits.  Education was not listed in their section "Key Issues"... sovereignty was though.  In the "Taxes" section they do say they "eliminated income taxes on student scholarships, fellowships and bursaries."  Sadly, I was never bright enough to gain much from those.


Their platform was released today but I can't find it on their website anywhere.  Looking through their section on "Education & training your family can afford", they highlight a couple of achievements, all seemingly led by Victoria MP, Denise Savoie:

- Tabled the "Canada Post-Secondary Education Act" which gave the provinces cash in exchange for guaranteeing "reasonable access" to such education regardless of socio-economic status.  Sadly, C-398 was tabled in February of 2007 and never got further than first reading; of course, I don't know why, as there was never a vote on it.

- Started a petition calling for: increasing grants, decreasing interest rates, a student loan ombudsman, conduct rules for collecting agencies, increased relief situations, extending full-time studies to include medical residency, liberalize bankruptcy protection.  When this petition was sent out I don't know but it does call for decreased rates and hints at increased interest-free periods.  Strangely, they ask for this period to be 6 months, which it already is.

C) Green Party:

I dared myself to first go through the platform.  Wow, that didn't take long, it's written in bullet points using large fonts.  Their "Vision Green" section is more detailed and costed in their budget:

-"Increase funding for a needs-based Canadian National Student Loan and Bursary Program with low interest rates and reasonable repayment schedules." There is no line for this in their budget.  Does that mean it doesn't really exist as a policy?

-"Forgive 50% of a student's loan when they complete a degree or certificate program." ($2.2 Billion/year)

-In the budget only, it mentions: 200 tuition-free university positions for art students ($3 million, increasing over three years to $9 million/year), and tuition-free graduate studies for healthcare professionals who agree to work in under-serviced areas ($30 million/year, rising to $150 million/year).

D) Liberals:

I left this party last due to my bias, hopefully I am now informed what others have on offer to compare whether they truly have a "real plan" not "monopoly money" like they claim about the NDP and (probably) the Greens.

Well, to start, it took me much longer to download the Grit plan than the Green platform.  Then, you actually get to read, with logic and goals explained using real sentences.  The section on "Reforming Student Loans" and the one just before it presents:

- The creation of "200,000 needs-based bursaries of up to $3,500 per year and 100,000 access bursaries of up to $4,000 per year" once fully implemented.

- All students eligible for $5,000 student loans regardless of parent income

- Lower loan interest rates to prime rate +0.5%, claiming this is the rate given by banks to their best and most credit-worthy customers.  Hm, I know students that negotiated student loans paid off by banks for lines of credit at the prime rate.  Maybe these are rare exceptions.

- Increase interest-free grace period from 6 months to 2 years.  Well, that's exactly what I wanted, plus they actually knew the period as it stands now.

- Extend the repayment period.

- Increase access to loans for under-represented groups.

The total "Support for Students" section is costed at $1.15 Billion spread over a three-year period.  Of this, $550 million are spending plans and $600 million come from tax changes.

In summary, the Conservative plan doesn't exist.  The NDP plan lacks firm commitments, dollar numbers and is founded on claims of half-efforts lacking follow-up.  I suppose their platform will have more details.  The Green Party have some numbers, big numbers, and I'm not sure how some of their plans benefit the majority of students.  While the half-relief of debt for graduates is a positive idea, it doesn't fix any problems; nor does it help those who have socio-economic reasons for interrupting their studies.

Inspite of my bias, the standout choice is the Liberal platform which is aggressive and covers all students.  It addresses my concerns of interest rates and payment schedules.  The bursary programs could help the poorer and under-represented students.  I was impressed with the low cost of the programs.

1 comment:

Carrie said...

Another alternative, assuming nothing gets changed for students, is something some of us did in the 80's when we were all stuck with really high loans.

If we had assets, we used that as collateral to convert the student loan debt to one consolidated loan at a more favourable rate.

If we didn't have assets, parents used their assets to co-sign a new consolidated loan at a better rate.

I missed the bonus which used to exist in the 70's for writing off textbooks! That would have reallllly come in handy.