This website is a testimony to the problems Canadian Student Loan borrowers experienced from approximately 1996 to 2008 and until their loans were paid off.

The privatization of the Student Loans system by the Chretien and Martin Liberal governments broke the system and defaulted thousands of borrowers who were trying to pay their loans. There were even stories of suicide due to the harassment of borrowers.

Read the report that I prepared back in 2007 here. Canada Student Loans-The Need for Change Fortunately the new Conservative government at the time revamped the program and fixed the system for new borrowers, but borrowers under the previous program were left with ruined credit and continued harassment from debt collectors.

I call on the Canadian Government to apologize to the borrowers affected by this fiasco and make amends.

Unfortunately the Liberal government is again clobbering the Education system with their upcoming changes to International Student Visas. Yes, there's a problem, but instead of a well thought out plan, they have pulled the emergency brake on the train causing a derailment. This has introduced unprecedented instability for both private and public education institutions who serve both international and local students.

Universities can't plan. I've heard of courses being cut because the government has no process in place for universities to send the newly required acceptance letters to the government.

This means that students who have been accepted can not attend courses that start in the summer 2024 semester. With cut sections, current Canadian students will have trouble getting courses, and may have to switch to part-time which changes their enrollment status and might trigger repayment of their loans or ineligibility for funding. I've seen this before. It wreaks havoc on the student loan borrowers.

Again, the Liberal government has messed up the education environment. Will the new system needed in a rush for the acceptance letters be the new Arrivecan scandal?

I call on the government to implement a slower phased in approach and delay the requirement of the acceptance letters until a process is in place to submit these letters.


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    Posted: 29/December/2006 at 10:38am
This is an updated version of the document I've been working on... Comments welcome!

Ombudsperson
An independent ombudsman is needed to intervene and resolve mistakes and disputes and direct the NSLC to reverse interest charges, defaults, and credit rating reports when the NSLC is found to have been at fault.

Interest Rate and Payment Ceiling
The interest rate on student loans is much higher than other loans. In many cases it is not the loan that is causing the default but the exorbitant interest rates being charged on the loan. Some borrowers have paid the full amount of their loan back yet have only reduced their principle by as little as 10%.   A cap should be place on how much interest is to be paid on a loan over a period of time. For example, if a borrower has borrowed $10,000 and has paid back $15,000 then the loan should be forgiven.

Faulty Contract with Service Providers
The contract between HRDC and the NSLC is faulty in that it provides no penalties for errors and does not include incentives for the NSLC to work with debtors to rehabilitate the loan.
A consultants report stated that feedback provided by the Service Providers concerning the current incentive regime indicates that:
•     The level of incentives provided under the contract does not make it worthwhile to be pro-active about
rehabilitating accounts, although the penalties are steep enough to ensure some minimum level of effort. The net result is that many accounts are allowed to go far too long without paying, which establishes a pattern of behaviour which is hard to break.
•     In general, the incentives are not large enough to encourage performance that goes beyond the basics. Because penalties are high, the tendency is to do just enough to avoid being penalized.


Negative Incentive Banking Climate
The banks involved in student loans abandoned the program when they realized how serious the losses were from participating in the program. At CIBC, accounting procedures for student loans resulted in losses being applied to individual branches. As a result, managers and employees performance bonuses were reduced by the effect of the student loan cost accounting practices. If a borrower defaulted, the loan was removed from the branch books and sent to collections, thus eliminating the negative effect and increased the performance bonus at the branch. Keeping borrowers out of default or restoring an incorrectly defaulted loan meant reduced performance bonuses for bank staff.


Interest Free Status While In School
Canlearn website incorrectly states "The Government of Canada will pay the interest on the federal portion of your loans while you are in school full-time. During this time you are not required to make payments on your Canada Student Loans". The web site does not tell students that Canada student loans are only interest free for six years (ten years for old loans) from when students get their first loan (eg 1st year of university) and will go into repayment six years (10 old loans) after the student gets their first loan regardless of full-time student status making it impossible for students to complete long programs (eg doctoral degrees & medical school). It would be best if the time limits were removed, but at the very least the rules should be changed so that if the student exhausts their six/10 years of in school interest free status the student can complete the academic program they are currently enrolled in interest free and in non repayment status. This would allow the student to actually complete their credential and have a hope of repaying their loan.
.


Lost documentation
Many students are defaulted because the National Student Loan Centre and participating banks continue to lose students continuation of enrollment forms and Interest Relief applications. The legislation needs to be changed so that the NSLC can no longer use the “student’s responsibility” clause to exonerate them from accountability. In some cases, this clause has been invoked by the NSLC even though documents were sent by registered mail and signed as received with the signature confirmation

Bank Outsourcing
The outsourcing of student loan administration has led to quality of service issues and defaults due to lost documentation. Some students could not get information on where to send payments to.

Credit Reporting

Student Loan Credit reporting has failed as an incentive to pay student loans. Due to NSLC and bank errors, it has actually forced some students out of school because they have been denied funding due to incorrectly reported defaults.

Even if an error is admitted, it is virtually impossible for a borrower to have incorrect student loan information removed from the credit report. Damage to one’s credit rating is instantaneous. There should be process to dispute credit reporting information and have it temporarily removed until the matter is investigated.

Furthermore, the negative credit reporting actually inhibits the repayment of loans as graduates are unable to obtain funds to start a business, obtain credit for an automobile when required for work, or obtain accommodation due to credit checks. The negative reporting stays on file for six years after the last date of activity, meaning that if a student takes 10 years to pay off their loan, they will have a negative credit rating for another six years after paying off the loan. This is too harsh a penalty for defaulting.

The current credit reporting system has no method of reporting a rehabilitated loan under the provisions of the CSLP Program. If a loan is rehabilitated it still shows as in default on the credit bureau.

Paying off one’s student loan should be considered a positive, not a negative. Paying an outstanding defaulted loan results in a negative report that stays on for six years after the last payment. Once the student loan has been paid off, negative credit reporting should be removed. Current reporting practices act as a disincentive to paying the loan.

At present there is no reporting to the credit bureau if the borrower has not defaulted. A borrower may have paid off a 30,000 student loan and never missed a payment, but there is no positive reporting done in the system. In order to establish a credit rating after graduation, a borrower must take out credit from additional sources, otherwise they will have no credit history. This encourages additional debt.

Educational Institution Fraud
While there are penalties for a student making fraudulent claims with respect to a student loan application, there are no penalties for educational institutions (public or private) who make false claims about the length of a program or the prospects of jobs upon graduation. Postings on Canadastudentdebt.ca regularly refer to false hopes given by public and private institutions about job prospects, and in some cases, students were misled about the length of the program. While such statements meet the criteria for a fraud investigation, such matters are left to the civil legal efforts of the student as Industry Canada, HRDC and other departments have stated that it is not their jurisdiction. Legal costs to initiate begin at about $40,000. Educational institutions should be held accountable for their advertising and suggestion that jobs await graduates.

Private Institution Bankruptcy
Numerous postings on Canadastudentdebt.ca report the bankruptcy of a private institution, sometimes just days or weeks after collection their tuition. While the school administrators and owners have their assets protected, and their liabilities absolved by the Bankruptcy Act, students are left holding loans without any education for their debt. There needs to be a change in consumer protection laws, and a change to the bankruptcy act to help these students, and/or new debt reduction regulations so that students do not shoulder the debt of a failed private business.

Planning is Impossible
The regulations in place when you start your education will not be the regulations in place the following year or when you graduate. Students who carefully plan the financing of their education will almost always find their planning frustrated by government rule changes and cuts to education funding by both provincial and federal bureaucrats who do not understand the implications of their decisions. For example, a single mother who enrolled in a 4 year program, carefully worked out her part time savings, costs, grants and loans. She would have graduated with a loan of $15,000, however with provincial grant cuts, which triggered the loss of her matched federal grant, she will graduate with additional loans of $18,000 ($3000 grant provincial and lost federal matching grant times 3 years)

Interest Relief
Net income is a better and fairer measure of a borrower’s ability to pay. There should be provisions for exceptional expenses such as medical expenses or re-training   There should also be graduated interest relief. This would reduce defaults and help the program meet its targets. Currently, Interest Relief is run on an “all or nothing” model. Providing levels of 25%, 50%, 75% and 100% would provide much needed assistance and reduce default rates.


Statements of Payments and Interest and Balance
No statements of account are available to borrowers. Some borrowers have had to file freedom of information request to get any kind of information on how a balance was calculated. The banks can not provide statements because they don’t have the data, especially if a file has been passed from one collection agency to another. It seems the student loan system has no historical data about a borrower’s payments and interest charges. Statements should be available to borrowers upon request.

Ten Year Bankruptcy Rule
This rule should be removed as it harms those most in need of assistance. The purpose of the bankruptcy act is to give people a fresh start. The student loan regulations go against the very nature of the bankruptcy act.

Tax Seizures
Tax seizures should be applied against the loan principle, not interest. This way the borrower will obtain some relief, as the principle will be reduced. There is also poor communication between Canada Revenue Agency, Service Providers and Collection Agencies. Borrowers who have paid off their loan through tax seizures still find themselves being harassed for a debt that has been paid.

Disability
Disability relief is only available if the disability occurred within the first 6 months after graduating. This is an absurd rule that needs to change. Disabled people’s mental health is worn down by dealing with HRDC, the NSLC, and collection agencies.

Eligibility for Programs
As stated in research, those in default are most in need. Being in default should not eliminate a borrower from assistance. Often it is a NSLC error or slowness in processing applications that resulted in the default,

Collection Harassment
Student loan debtors are in a different category than credit card debtors. Most want to pay but the abusive nature of these collectors. The abuse stories seem to come mostly from women. The abuse has to stop! Taking out a student loan and being in default does not give a collector the right to be manipulative, insulting and abusive. HRDC has lost control of its collection agencies who abuse borrowers. without any fear of recrimination.

Single Contact Point for All Loans
With the changes in programs (government and banks, national student loan centre and provincial counterparts) defaulted borrowers may face calls from up to four different collection agencies. After negotiating with a collection agency, the borrower may not know that there is still another outstanding portion that another collection agency will try to collect on. All of this makes the repayment process completely unmanageable and out of frustration many debtors simply give up trying to work with the system. Proactive defaulters who want to pay their loans call HRDC to find out who has the loan but get a response “please wait a few months and they will call you.”

Recalling Loans from Collections
There should be a provision for loans to be recalled from a collection agency back to the NSLC if the borrower has rehabilitated the loan or if it can be shown that an error was made. In is in the interest of the collection agency to keep the file to earn commission and therefore the agency is in a position of conflict of interest in rehabilitating loans. As described above, with up to four different collection agencies involved, it is impossible for the borrower to successfully co-ordinate and initiate such a request for the return of the file to the NSLC.


Bank Errors.
Banks refuse to accept accountability for errors, telling incorrectly defaulted borrowers to deal with the collection agency. The collection agency in turn tells the borrower that there is nothing they can do and that they must contact the bank

HRDC’s Knowledge of Rules
On a number of occasions it has been pointed out to HRDC and reported in the media, that HRDC does not know or follow HRDC’s own rules and regulations.

Exceptional Expenses Program.
This is a Debt Reduction Program available but HRDC does not list it on its website nor provide any information about it to borrowers.

Monthly verse Weekly Pay.
Few if any people are paid on a monthly basis. Interest Relief and debt reduction criteria should be changed to reflect economic realities. The current system discriminates against those applying in a 3 pay month, as the interest relief calculations to monthly income distort the income. The same applicants would qualify if the applied the following month.

Default Agreements
Collection agencies do not honor negotiated agreements. Borrowers who reach a repayment agreement with collection agencies find themselves being harassed a few weeks after they have sent postdated cheques because a new collector tries to get a higher commission through larger payments. This frustrates the borrower as the cycle of harassment begins again even though the borrower has done everything within their power to meet their loan obligations.

Increase the number of eligible weeks for some programs
Borrowers may find themselves in repayment even if still in school, particularly those in masters or doctoral degree. The intention of the Student Loan Program was to make sure students don’t have to pay back their loans while in school. The reduction of eligibility has forced some students to drop out of school.

International Restrictions
We are in a global economy. The restriction on remaining in Canada to obtain interest relief restricts borrowers from international education, co-op placements, and international aid service.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Casey Quote  Post ReplyReply Direct Link To This Post Posted: 29/December/2006 at 8:46pm
Hi Mark..

It's looking good!

Here are a couple more to consider..

Hardship Kit

The so called Hardship Kit should be made readily available to clients who need it. The information They should be openly available. From what I was told, collection agencies are suppose to recommend this for people who quilfy but don't do this.

HRDC employees should do their jobs

When applying for things like Hardship or disability the result is often a forum letter. It says they find no reason why you can't afford to pay.. to contact them to arrange a repayment plan. (This happens when even a trained monkey could see this is not the case.)

If you are are able to get the right person(s) to intervene on your behalf, the derision is is quickly reversed and the application accepted.  This leads one to believe the first application isn't even looked at... it's less work to ignore and hope it goes away.

Casey . .

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Post Options Post Options   Thanks (0) Thanks(0)   Quote Casey Quote  Post ReplyReply Direct Link To This Post Posted: 29/December/2006 at 9:11pm
Another thought..

Instead of spending so much money trying to collect SL debts, the government should spend some of this on a program to help those with problems. If they take you to court you should have the right to be defended at their expense.  Being poor should not take away your rights!

In many cases it would be more economical to write off a debt than continue collection efforts. On small debts more can be spend  trying to collect then what is owed. The government on one hand has programs to help the poor but on the other hand, they beat you up if you owe on a SL. There has to be a place for compassion, understanding and even forgiveness when you can afford to pay the debt!

Casey . .

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Post Options Post Options   Thanks (0) Thanks(0)   Quote momof2 Quote  Post ReplyReply Direct Link To This Post Posted: 03/January/2007 at 4:26am

here's a few ideas that could be added in some way...mark, you may have covered some of these ideas already, so i apologize if i'm repeating anything here...

Income Consideration

Any recipient of any social assistance payment, government tax credit or income supplement should/will have their names submitted to be AUTOMATICALLY removed from active repayment status and into either interest relief, suspended payments or automatic debt reduction and/or forgiveness, depending on their income level.

If the government themselves feel we need our income to be supplemented in one way or another, logic would follow that we should not be expected to repay our loans since we are below some income level where we are deemed self sufficient.

Repayment of student loans should be on an income congingent repayment schedule, and be administered as a payroll deduction like CPP or EI premiums.  This would ensure all parties receive receipts and payments would not be lost.  Collection agencies would no longer be required hence the need to pay them percentages and contract fees could be allocated to debt reduction programs.  Payments would be set up similar to the other payroll deduction programs as a percentage of your income,. so when your income fluctuates your payment would also fluctuate to reflect an increase or decrease in wages.  Banks make enough money, they should not be allowed to profit at the expense of our mental health.

Interest rates must be adjusted to facillitate the ability to repay the original debt.  An interest cap or cost of borrowing added to the original loan would be the ideal way to to this.  This way, you would know up front what you really owe.  People who maintain a high level of academic excellence should be rewarded for their dilligence with automatic loan deductions ( like i was told would happen but didnt really exist).  Also, consider people who provide volunteer service as a valuable asset and reward them by crediting their outstanding loans as if they were receiving a stipend.  People who repay ahead of schedule should also receive an interest credit just like a T4 slip in the mail.

Repayment of the loan should also have some form of time limit - really, is it fair for someone who exhausts interest relief, can't get a job, starts a family and has to take another six years out of their life to raise their kids to be expected to try and return to the work force with dated skills to try and support their growing family only to have a chunk of their much needed wages garnished ?  Car loans are paid in a six year time frame, student loans should not be able to drag on for 20 years - it sabotages our ability to contribute to the economy and contribute to society and stand on our own two feet.

Disabilities - any one on disability, regardless of when the disability occurred, should have their loan  recalled and if the disability is permanent or meets certain criteria should have the debt forgiven immediately - no hoops to jump through, no paperwork to fill out.  Really, if one government agency says a person can't work, then CSLP or whoever runs the show should take the government's word for it, dont you think ?? 

 

just the unorganized ramblings of a disgruntled former student who will in all likelihood never be able to pay back her loans since i can't work and i've given up on doctors who want to fix me by drugging me incessantly

professionals built the titanic but amateurs built the ark...
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Post Options Post Options   Thanks (0) Thanks(0)   Quote pacalis Quote  Post ReplyReply Direct Link To This Post Posted: 31/January/2007 at 5:08am

Three additional problems I had when I changed institutions for doctoral studies.

1. While as student I defaulted becuase my documents were lost (two years in a row). There is no way to check that your documents are received and in good status. Becuase the bank statements are sent infrequently, and I had moved, mail forwarding expired before I received any notice.
 
2. My phone number was the same, so after 8 months I got lots of harassing calls from people who would 1. not send me coresspondence, 2. didn't have email addresses (what student has a fax machine?), and 3. could not provide written material of their claim or legitimacy. There was no where to go to make sure I was not being defrauded (which I thought I was becuase I had sent my letters in). Becuase they had lost my documents, I had to pay interest to make my loan current and requalify for student status but did not get a receipt or accounting of the payment.
 
3. I have no idea where the money goes or how they calculate payments. If I had $10K from the bank, I would have monthly statements. I'm sure interest has been calculated innapropriately but can't figure it out becuase I have no record of payments (particulalry tricky as I'm in the US paying with US currency).
 
Basically I've been ripped off and harrassed by something that was supposed to help me. It's hard to feel sympathy for the banks when they behave so poorly and unprofessionally.
 
PS Last note. The loan starts interest at graduation, but its carefully advertised to suggest that interest starts after the '6 month grace period' There is no 'grace' period, only a 'no payment period'. By the time of a students first notice, they have already accrued several months of interest at high interest rate- a deliberate a nasty tactic by the banks.
 
 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Mari T. Quote  Post ReplyReply Direct Link To This Post Posted: 20/February/2007 at 3:09am
Psst, a few passages that caught my eye, because I'm sure you wanted to add something there but it's missing (bolded for emphasis, the [...] is where I believe there is something missing)
 
Originally posted by administrator administrator wrote:



Interest Free Status While In School
Canlearn website incorrectly states that students [...] At the very least the rules should be changed so that if the student exhausts their six/10 years of in school interest free status the student can complete the academic program they are currently enrolled in interest free and in non repayment status.

Monthly verse Weekly Pay.
The same applicants would qualify if the applied the following month,[...]

 
Also, have these suggestions been sent to student advocacy groups?
Time brings justice.
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Yaaaaaaaaaah...
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Post Options Post Options   Thanks (0) Thanks(0)   Quote frustrated-guy Quote  Post ReplyReply Direct Link To This Post Posted: 21/February/2007 at 4:28am

Mari T noticed a typo in the "Interest Free While in School" section of the recomendations.  Mark perhaps this could be pasted in to fix the typo (but please feel free to edit if you can write this more clearly"

Interest Free Status While In School
Canlearn website incorrectly states "The Government of Canada will pay the interest on the federal portion of your loans while you are in school full-time. During this time you are not required to make payments on your Canada Student Loans". The web site does not tell students that Canada student loans are only interest free for six years (ten years for old loans) from when students get their first loan (eg 1st year of university) and will go into repayment six years (10 old loans) after the student gets their first loan regardless of full-time student status making it impossible for students to complete long programs (eg doctoral degrees & medical school). It would be best if the time limits were removed, but at the very least the rules should be changed so that if the student exhausts their six/10 years of in school interest free status the student can complete the academic program they are currently enrolled in interest free and in non repayment status. This would allow the student to actually complete their credential and have a hope of repaying their loan.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote administrator Quote  Post ReplyReply Direct Link To This Post Posted: 21/February/2007 at 5:53am
thanks for the corrections. I've updated the document.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote stealthc Quote  Post ReplyReply Direct Link To This Post Posted: 02/April/2007 at 8:34pm
Here's an idea, how about they admit their guilt, fix what they've done to their victims, and monetarily compensate their victims for all of the years of hell and mismanagement, lack of ombudsman, fraud investigation, which they were fully aware of.

I shouldn't be paying my loan back, they should be paying me for ruining my F**KIN life and letting some fraudulant bastard scam me all using their hypocritical laws.  There were numerous things that went wrong in that whole ordeal, MOST OF ALL THE SCHOOL'S BANKRUPTCY TRUSTEE DID NOT CONTACT ME (Even though I was indebted to by the school).
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Nightmare Quote  Post ReplyReply Direct Link To This Post Posted: 03/April/2007 at 1:12am
What is a Hardship Kit?
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Post Options Post Options   Thanks (0) Thanks(0)   Quote pacalis Quote  Post ReplyReply Direct Link To This Post Posted: 04/April/2007 at 5:15am
Admin,
 
Thank you so much for doing this.
 
I have an organization suggestion. The banks and everyone else hides behind the 'we don't know anything' excuse and becuase students have not been provided with documentation of 1. time line of loan status and 2. payment histories, they can't correct anything.
 
The student is already accountable. THE BANKS NEED TO BE ACCOUNTABLE. WIthout histories of payments, status, interest charges, a students can't demonstrate errors, get help from an ombusman, or go to court. Studnet's need monthly statements, like they would get from any loan, with double book accounting, evidence of payment, and notice of status and interest charges. They should also have access to their file online.
 
How is it that banks can't provide this when they can for every other loan product? I think that accountability, evidenced through monthy documented statements are the first priority and a minimum to resolve other problems in the system.
 
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