In my first year, everyone was heading somewhere. Living off by-the-slice pizza and skipping psych lectures was just a temporary plan. We knew we were going to travel, write a novel, get a job with a conscience. Three years later, plans have changed.
Some of my classmates are still applying for that unpaid summer internship at the United Nations, but most know that come spring, they will be living with their parents and working overtime to pay off student loans. It’s tough to watch, because I know there is another way. I also know that the Canadian Federation of Students (CFS) is fighting against it.
Income-contingent loan repayment (ICR) is a bit of a mouthful, and it can mean a lot of different things. Here’s the gist: as a student, you borrow money from the government to cover tuition and living costs. Instead of starting payments on your loans shortly after you graduate, you begin to pay once your income rises above a specified threshold.
Ideally, the threshold is set high enough so that you don’t have to pay for your education until you receive its financial benefits. If you never receive those benefits, you never start repayments, and your loans are eventually forgiven. This reduces the financial risk of attending university, making it more accessible to low-income students. ICR is already used in the United Kingdom, Australia, and elsewhere, and it was recommended by the Rae Review on higher education reform.
The CFS has some good points about the weaknesses of ICR—for instance, interest rates mean that students who pay their loans back slowly often end up paying more than rich students who can pay up immediately, though everyone seems to forget that the same thing happens under the current system. Instead of suggesting refinements to address this problem, the CFS opposes ICR completely.
Our student unions are fighting yesterday’s battle. They argue that the cost of post-secondary education should be borne by society as a whole, not by individual students. They would criticize any loan-based system. But loans are here to stay, and with OSAP consolidation dates bearing down on them and interest piling up on pricey bank loans, today’s students need a system that can cope with the ever-increasing tuition that we can’t get rid of.
Governments love ICR, though not necessarily for the right reasons: it provides an excuse to raise tuition and cut funding. That’s why we desperately need a student movement that will fight for the things we can actually get: interest subsidies, loan forgiveness, reasonable income thresholds, controlled tuition, and grant programs.
With the right ICR system, this year’s graduating class would have more cash and more prospects. They could save up and travel, or save up and take that internship, instead of saving up to write another cheque. When they are ready to settle down, the lucky ones with good incomes would start to pay for the education that gave them all of these opportunities to begin with. In the end, we would all be richer for it.
