The federal government is collecting on loans to student borrowers—dead or alive.
Since 2002, Ottawa has forwarded 100 accounts of deceased students to the Canada Revenue Agency, recovering $14,645.53 from their estates, according to figures obtained by the non-profit group Coalition for Student Loan Fairness under the Access to Information Act.
For student loans negotiated between 1995 and 2000, the government can still collect on loans if the death or permanent disability of the borrower occurs six months after graduation. This risk-shared regime, where financial institutions assumed the risk of the loan in return for a fixed payment from the government, ended in August 2000.
The government now directly finances all loans and forgives debts if the borrower dies.
For borrowers who become permanently disabled, debts could be forgiven if the Minister of Human Resources and Social Development Canada, Monte Solberg, is “satisfied” that the borrower “will be unable to repay the loan without exceptional hardship, taking into account the borrower’s family income,” reads the Canada Student Financial Assistance Act.
“Between April 2003 and June 2007, 921 Canada Student Loans with a total value of $6.5 million were forgiven due to the death of the borrower,” wrote Pema Lhalungpa, an assistant to Solberg, in an email Monday.
But families of deceased students with risk-sharing loans have been getting calls from collection agencies, and the CSLF is calling on the government to forgive those debts.
“There is no reason to have such different rules for the collecting of certain loans versus others,” said Julian Benedict, founder of the CSLF. “I don’t think it matters to the family of the dead borrower whether the loan was taken out in ’95 or 2000.”
Deceased borrowers’ estates are contacted to “determine if there are any available funds to be applied towards the debt,” Catherine Jolicoeur, a spokeswoman for the CRA, told the Canadian Press.
After a borrower’s income tax refunds are applied to the debt, Jolicoeur said, collection activity stops even if there is still money owed.
Jen Hassum, chairperson of the Canadian Federation of Students-Ontario, said the post-mortem collection was a manifestation of a larger student debt problem in Canada. “It’s an example of people falling through the cracks of an already broken system,” she said.
“The whole problem with the system is that it relies on loans,” Hassum said. “It’s a profit-driven approach to financial assistance, because they charge interest rates, there are collection agencies involved, there are third parties that run our loan system on a day-to-day basis.”
CFS has called for an end to interest on student loans and for the creation of a national system of need-based grants.
Solberg’s ministry also disburses scholarships through the Canada Millennium Scholarship Foundation, which is up for renewal this year. The University of Toronto Students’ Union wants the CMSF and the student loan program “merged into one system that would waste less on bureaucracy,” said Dave Scrivener, UTSU’s VP external.
“Our petition is calling for the creation of a national program, using money from the CMSF towards a dedicated, direct infusion into the system for grants,” he said.
