As getting JJ back to Canada within the next few months becomes more and more of a likelihood, the usual parental worries start to replace the more immediate ones of ensuring that his adoption is ironclad, and his Canadian citizenship is unassailable. Those worries are being incrementally replaced by worries about his long-term future; his education, his choice of métier as he reaches and passes through the horrors of adolescence, and ultimately his security and happiness as an adult.
I recently got an email from a very good friend in Canada. To put things in perspective, she is, shall we say, of an age to have two young adult sons from a first marriage, neither of whom had a teenaged mother. She is now married to a terrific and very successful guy, runs her own thriving business and does some consulting on the side. She and her second husband know how to have fun (I met up with them on their honeymoon in Bali a few years ago and can testify to this), enjoy life, and seek out opportunities to live it to the hilt.
Nevertheless, there is a fly in the ointment. You see, almost two decades ago, my friend D hit a rough patch on the path her life was taking. She was pregnant with a toddler to care for; she had just been licensed and was starting a career in a highly competitive business and going through an acrimonious and very messy divorce. She, like many Canadians, and more every year, was faithfully paying off a student loan. As a result of some dirty pool that was being played in her divorce proceedings, she had her personal assets frozen, her income attached, and she ended up on welfare for a brief period. During that time she defaulted on her student loan.
The student loan system in Canada, despite being well-intentioned, or at least politically correct, is an appalling boondoggle. Its very conception and fundamental structure are guaranteed to make the system inefficient, an immense burden on those who can least carry it, and an absolutely risk-free vast fortune for those who need it the least.
Neither Canada (nor the provinces, which run a supplementary, parallel system) actually lends students money. Not for tuition, books, learning materials, research or living expenses, or anything else. What the government does is send the bright-eyed promising young scholar off to its favourite Canadian – not a citizen, but a corporation – and tell the student to ask for money. Meanwhile, the government has told that corporation, one of Canada’s chartered banks, to go ahead and lend the kid a pile of money. Meanwhile the bank is told not to take payments on the loan until six months after the studente has ceased to be enrolled full-time in an approved institution of tertiary education. After that….they’re all yours.
It doesn’t take a rocket scientist to see that, even in the ideal scenario, this system is a profoundly flawed one. The ideal scenario, of course, is that the six months referred to above are the first six months of work in the student’s chosen profession after having successfully completed a course of study that has qualified that young person for full-time employment in his chosen field. Six months of steady paycheques, a chance to settle into life as an adult, and then monthly payments to the bank to compensate for all those years of education at their expense.
What should be apparent to anyone with the intelligence of a doorstop is that the banks have a vested interest in seeing the student default on their payments. These loans, let’s not forget, are guaranteed by the government; principal and interest. These loans are absolute government gifts in the event that a student doesn’t graduate and therefore can’t get a high paying job, or can’t get a job in their chosen profession within six months of graduation, or runs into any one of an infinite number of financial obstacles. They’re way better than mortgages or any loan secured by assets of any sort.
If a mortgage or other secured loan goes south, we all know that the bank can and will foreclose or seize assets; they’ll take ownership of the property and sell it for as little as the court will let them get away with and pocket the money plus costs plus interest. But all this, in financial terminology, is a pain in the ass. Banks don’t want an inventory of 3 bedroom bungalows, nor do they want warehouses full of RVs and motorboats, all of which need to be sold before they can make their profit; they’re neither realtors nor used car salesmen….they have neither the ethics nor the consciences of either, much less the skill sets required.
Student loans, on the other hand, are an effort-free goldmine. If a recent graduate misses a single payment, the bank holding the loan does two things at the same time: it cracks open the champagne and it sends in a demand note to the government for the entire principal plus interest on the loan and payment of the default penalties. This can amount to a hundred thousand or more dollars. At the moment student debt greatly exceeds credit card debt. We’re talking real money here. And in the event of a default, they don’t have to do a damn thing to suck it in.
But it gets better. Now the debt is transferred to the government; it becomes a Crown Debt. And most people who aren’t going through the system aren’t aware that Crown Debts have certain very nice features – for The Crown. Unlike other consumer debt, there is generally no statute of limitations on a Crown Debt. If you are a bank that is owed a thousand dollars past due on a credit card, you have six years (minus one day, for some reason) to attempt to collect it or sue. If any payments are made or the debt acknowledged in any way during that period, the debt recovery game goes on, and includes the possibility of a lawsuit. If no acknowledgement or payment is made and no suit is filed by the bank, the statute of limitations kicks in; the debt must be written off as uncollectable and it is barred from litigation. But not a Crown Debt. Like a diamond, a Crown debt is forever.
But it gets still better. The bankruptcy procedure is one that all civilised countries have as part of the system of laws that govern financial matters. In a nutshell, it provides that if a person or corporation gets so deep in debt that, after all reasonable attempts to negotiate and restructure the debts, there is no serious likelihood that the debts can ever be repaid in full, bankruptcy is a remedy that can be utilised. It allows for a court to supervise the disposal of all that corporation’s or, in a personal bankruptcy, that person’s assets, leaving only the necessities to live with a degree of dignity. The court will also attach a portion of the bankrupt’s income until the bankruptcy is discharged…usually six months to a year or two. After that, the spoils are divided proportionally among the creditors and the debts are wiped clean. The bankrupt person starts over with a lousy credit rating but can turn all that round in a few years of careful financial management.
But guess what? That student loan doesn’t usually get included in the bankruptcy. That’s right, folks; even after the pain, loss, and humiliation of a personal bankruptcy, you probably still have to pay back that debt….the one that was risk free to the bank. You don’t start clean, a financial pariah, but a debt-free pariah; you still owe the money…you suffer all the pain, and you still emerge with the debt that probably drove you to bankruptcy in the first place.
And here’s the cool part. The government outsources the collection of these student debts. They are given to a collection agency if their first phone call doesn’t end with an acceptable repayment schedule. And believe me, collection agencies are homes for sociopaths. You would rather be stalked by Jason Voorhees.
Bill collectors, by and large, are the bottom feeders of uneducated, otherwise unemployable social misfits: junkies, drunks, aged whores who have lost any looks they might have had, retards, bullies, and other dregs of the human race. Their training consists of being told that every debtor assigned to them can make payments on the debt, but is simply being stubborn; that their function as collectors is to make life more uncomfortable to owe the money than it would be to pay it. Then they are told that the collector with the lowest numbers on the board at the end of the month is fired. Now go get’em.
They’ll try to get the welfare mother, the terminal cancer victim with two infant children, or the sole caregiver to dying parents but no income, to commit to a payment schedule that will either be impossible to meet or make their already crushing existences even more miserable. If they can’t do that, if they can’t collect from someone so impoverished that they worry constantly about feeding themselves and their children, they send it to an even lower form of humanity…they send it to a lawyer to sue.
There are law firms whose entire income is based on the prosecution of these lawsuits. They work for the government and they work in bulk. These firms are the scum of the earth, the most appallingly distasteful bottom feeding slime that ever stepped into a civil courtroom; and they thrive. They’ll sue and they’ll get their judgements. And now they can ensure that not only is the once bright-eyed and hopeful student’s life unbearable now, but they can guarantee that it will never get better.
You’ve got a student loan judgement out against you and you need a car to get to interviews? Maybe a family member gives you an old beater to help you out. The scum of the bar association will send thugs to seize it, sell it at auction, and run up costs that are more than they sell the car for, increasing your debt by the amount of the shortfall. You have a special needs child who can’t leave his bedroom for long periods? Your friends and neighbours put together their few cents from bottle returns and piggy banks and buy you a television for him at a thrift shop. If you have another TV in the apartment, those same parasitical slime bags will seize it and sell it. Two TVs is a luxury, you see.
If you start a new job, the first thing that happens is your new employer gets served with a court order requiring him to pay a percentage of your pay (40% is fairly standard) to the law firm; a wage garnishment is not an auspicious start to a career anywhere. And no employer likes to have the extra accounting to do along with the knowledge that if they err in any way they are responsible for any shortfall. In most cases, so long, new career.
I have personally seen each of these scenarios play out. In Canada. I have seen people sued for a few thousand dollars after having paid back over their entire career several hundred thousand…many times the amount borrowed. This costs the economy and this costs the taxpayer. This destroys lives. But the filth in suits who barely passed the bar make out like bandits, the banks always come out on top without breaking a sweat, and the government gets kudos for its dedication to educating the next generation. It’s a racket and it has to stop.
Years ago parents used to point out that they started out with nothing and look what they have accomplished. Yes, look! Their children start out with a debt burden that their parents couldn’t even have imagined. These young people (some of us not so young anymore…the racket has been successful for a long time now) would have loved the opportunity to start out with nothing.
Canada needs to demonstrate a genuine commitment to education. That means that every student who makes passing grades in high school should have a first year of post-secondary education and expenses paid for by our government. Not their pet corporations, the chartered banks. Then every student who maintains a sufficiently high grade point average should continue to have government subsidised education for as long as they stay in school.
The funny part about this is that everywhere this has been tried, it has not cost the taxpayer a single penny over the first ten years. The social benefits and the returns paid by having educated, taxpaying students in high-paying jobs has grossly outweighed the initial cost of educating them. But explaining that to parliamentarians who need to get elected is a waste of breath. Nobody in our current government will buck the tide of coattail riding neocon American wannabes. So unless you’re wealthy, you start your career with a debt burden that is unconscionable. Of course if you’re not wealthy, those that are would prefer you to know your place in society, forego higher education entirely; those who are wealthy will be needing people to drive them about, clean their homes, mow their lawns.
Canada needs to implement a system of tertiary education subsidy. But more urgently it needs to forgive existing student debt.
My friend D? Her email was to tell me that she thought she had retired this debt fifteen years ago; through a mistake by the scumbag Law Society member who had sued her at the depth of her once desperate life, it turns out that about one thousand dollars hadn’t been collected. Now that she’s successful, the tapeworms have woken up, tracked her down and are now placing demands upon her for payment, backed up by threats of seizure of assets, garnishments of contract payments due, and any other slimy threat they can come up with. This is great for them, because, through the miracle of compound interest, the amount demanded is now more than the initial debt. And they have the law on their side.
It’s long since time for reason to step in.