Debt ceiling raised
Canada’s outstanding student debt is projected to surpass its $15-billion limit in the 2012-2013 fiscal year, according to the actuarial report on the Canada Student Loans Program released last fall. It was previously increased from $5 billion in 2000.
Bill C-13, the Keeping Canada’s Economy and Jobs Growing Act, which was passed in late 2011, saw amendments made to section 15 of the Canadian Student Financial Assistance Act (CFSAA) with regards to the amount of aggregate debt that students can acquire.
The amendment details that the amount of outstanding student loans “may not exceed the prescribed amount,” which is to be based off of the recommendation of the minister of human resources and skills development in concurrence with the minister of finance.
Zach Dayler, the national director for the Canadian Alliance of Student Associations (CASA), explained, “From my understanding it’s actually removing the debt ceiling and switching to a straight up kind of accounting approach.”
Dayler was unable to state at which point the process is at in terms of implementation, but confirmed “I think this is one of those things where you can say, yes, this is going to happen.”
While the amendment does remove some barriers to access to financial aid, many have critiqued it as a temporary solution disguising larger structural problems. Increasing concern has been expressed in recent months from students nation-wide displeased with rising tuition costs.
“All it accomplishes is that more students will be able to take out more debt, which is really just putting off a problem that is just worsening for a longer period of time,” claimed Sandy Hudson, the Ontario Chair for the Canadian Federation of Students (CFS).
She added, “The problem isn’t the debt ceiling, the problem is affordability.”
Dayler reiterated, “Yes, it’s positive that they’re doing this because it means students can get access to money when they need it without [that] potential kind of bureaucratic challenge, but that doesn’t help address the debt load that a student has.”
“Clearly, if we just keep raising the debt level, that’s not a sustainable approach.”
As an alternative to the existing structure, Hudson proposed more emphasis on giving grants to students, which unlike existing debt, would not be expected to be repaid.
“The issue is that they already give that money out, but most of it, because it’s tax credits, ends up getting transferred to parents, for example and it’s not used in the most efficient way,” she suggested.
However, as Dayler acknowledged, additional provision of grant money would require in-depth restructuring of tax allocations and transfer payments. CASA is currently working toward eliminating some of the smaller, yet direct, barriers to student financial aid to alleviate immediate problems.
“Your parental incomes hurt students, summer work exemptions hurt students, vehicle exemptions hurt students,” he said.
“We want to make changes to some of those smaller things and hopefully getting those out of the way will hopefully open up avenues to make larger changes in a way that we won’t necessarily have to be concerned about our renegotiating and voodoo accounting of the student loan program.”