Article in UBC paper: Student loan system broken

WINNIPEG (CUP)—Many students are forced to reduce their course loads to get involved with their university, to earn money to pay for their education, or for medical reasons. But when they do, the Canada Student Loans Program (CSLP) is often the largest barrier they face.

Students who switch to part-time status, or drop out altogether, quickly lose their eligibility to be a part of the national loan program, and immediately start accruing interest on their loans. Payments are then expected within six months.

When David Jacks was elected president of the University of Winnipeg Students’ Association, he still had another year left in his degree. The union’s bylaws mandated that he drop most of his classes while he held the office.

As soon as that happened, Jacks lost his student loan and began accumulating interest on what he had previously borrowed.

“Students who want to get involved on campus, it’s sacrificing a year of your academic life…and I certainly felt a financial penalty,” said Jacks.

“I will lose one year of my studies, and if I want to continue my studies, then the money I’ve made through this position is going directly to the student loan.”

CSLP has an interest relief line, which allows students to stop making payments on their loan, but to be eligible a students’ family income is assessed and must fit the criteria established by CSLP.

Karen, whose last name is protected due to employment reasons, dropped out of school in 2006 after she was diagnosed with breast cancer.

She was denied interest relief based on her and her husband’s projected income. She was making $1400 a month through private insurance, which she said did not even cover living expenses and medicine.

“Financially, we were in the sh*t. Those $1400 were all I had to live on.”

Jacks, who took time off for a paid position, was also ineligible.

“I can’t start a new line of credit [with Canada Student Loans],” he said. “It is difficult to get the national and provincial bodies to recognize student activism and the student union.”

The scenario is no longer rare.

Between 10 and 40 people drop out of the University of Winnipeg every month, said Colin Russell, director of academic advising in the faculties of arts and science.

Financial difficulty is one of the most common reasons for the move, he said.

“A fair number of students will cite the money that they have isn’t sustainable and they have to work more,” Russell said. “Some students will make the decision to continue with courses and maintain funding, even if it’s not to their benefit academically.

“They might have a lower GPA that’s not indicative of their ability, or if they had more money or time.”

Applying for interest relief or an additional loan upon returning to school doesn’t always work, either. Students are required to submit proof of enrollment in post-secondary studies, and to not have defaulted on any previous payments.

Many students have complained that paperwork gets lost, or the process takes too long and students are forced to find other ways to pay for their tuition while their files are being processed.

Karen’s medical forms were lost three times, she said.

After extensive complaints, the federal government placed the entire CSLP under review during 2007 and, in the 2008 budget, earmarked $123 million to Canada Student Loans Program reform.

Over half the funds, $74 million, are dedicated to improving the program’s responsiveness to borrowers’ economic circumstances.

“There’s not enough support when you phone student loans,” said Karen. “It’s not a service oriented, humanistic culture.”

“We’ve heard complaints from students about this scenario,” said Julian Benedict, co-founder of the Coalition for Student Loan Fairness.

The CSLF recently filed an Access to Information Request to CSLP to find out how many people are charged interest while still in school. They are currently awaiting results.

Many students are unaware of this complication until they go into collection, said Benedict.

While CSLP’s original borrowing conditions state what happens if students change to part-time status, these documents are a confusing collection of rules and exceptions.

“The rules are more of a challenge than they need to be for students,” said Benedict.

Hope is now high that the new government funding will be used to make CSLP more approachable and flexible. $23 million has been earmarked for an online service overhaul.

Benedict also suggested creating a national student loan ombudsman, a neutral third party to assist people with specific concerns. At the very least, he said, problems should be assigned to an individual who can handle the case.

Benedict also believes that part-time loans should be interest-free, and the interest-free grace period reinstated.

Interest relief should also not be decided based on projected income, said Karen, but case by case.

Overall, Benedict doubts that $123 million will fix the CSLP.

The final allocation will be brought to a vote in the House of Commons in the middle of March.

Monte Solberg, the minister responsible for CSLP, could not comment beyond the budget’s projection.