Democratic hopeful Bernie Sanders declared war on his country’s $1.6 trillion student loan debt problem by promising that he was going to tax Wall Street transactions and use the proceeds to pay it down if elected.
“This proposal completely eliminates student debt in this country and ends the absurdity of sentencing an entire generation, the millennial generation, to a lifetime of debt for the crime of doing the right thing — and that is going out and getting a higher education,” Sanders said at a news conference in Washington on Monday.
It’s a sad state of affairs for our cousins south of the border.
Instead of ranting about capital flight and damage to the economy, it’s pertinent to note that Bernie’s strange socialist tendencies are likely moot. The likelihood of Celebrity Apprentice: POTUS edition getting picked up for another four years is strong because Americans have proven throughout their history that they loathe to change horses mid-apocalypse.
They’ve only had three one-term presidents since 1945.
But it does inspire us to the great Canadian past-time of comparison, (and maybe even spark a little of the old national-inferiority complex) which leads to questions about our own debt crisis.
Granted, the U.S. has a student debt problem that dwarfs Canada’s by an order of magnitude.
Check this out:
The Americans don’t subsidize their students like we do.
Observe the tuition sheets for most Canadian universities and you’ll note a gigantic $10,000+ discrepancy between international and non-international students per semester. Compare that with the average U.S. student tuition sheet and you’ll see similar numbers with international students up here.
The Canadian higher education sector courts international students and milks them like cash cows, but they’re the reason domestic students graduate with less debt than the Americans. Do you honestly think that the 2% tuition increase (that barely keeps up with inflation) is going to help your local universities maintain their quality standards? Think again.
That doesn’t help the Canadian university student, who is still crushed under his average debt of $16,727. If they decide to go onto grad school they can expect to get their doctorate carrying an average debt of $29,000. College students have it comparative better, graduating with only $10,172.
According to Statistics Canada, the average undergrad tuition is $6,500 a year before books, school supplies, residence and other hidden fees. Science or technical student can factor in another few thousand for things like lab fees. Courses like dentistry cost close to $22,000 a year.
Here is tuition per year for the five most expensive professions:
- Dentistry: $22,297.
- Medicine: $14,444.
- Law: $13,642.
- Pharmacy: $10,279.
- Engineering: $8,099.
There’s a considerable conflict between the price of education, which needs to go up if Canadian universities are to remain competitive, and the increasing debt-load that every student carries. It doesn’t help that 70% of jobs in the new economy will require at least a university education and paying off the loan takes between nine and 15 years, according to a study from the Government of Canada.
The formula for calculating student loans hasn’t changed since the turn of the millennium. It’s still prime plus 2.5% for variable rate loans and prime plus 5% for fixed-rate loans. Banks usually give their best customers a prime rate of 3.45% while variable mortgage rates at most major Canadian banks hover around 2.4%.
The government of B.C. came up with some concessions for debt-carriers in their last budget, including eliminating interest on student loans. There is currently $1.24 billion in B.C. student loan debt outstanding with more than 50,000 new loans issued every year, according to the Ministry of Finance.
They join Manitoba, Nova Scotia and Prince Edward Island, which do not charge interest on their provincial loans.
Under the new system, someone labouring under a $28,000 federal and provincial loan will save $2,300 in interest charges over a 10-year period, and the measure will cost the government $31 million a year.
It’s worth it. Student loan interest relief will make it easier for students to get out from under their mountain of debt enough to get squashed by their rising rental costs, but hey. One thing at at time.
Here’s a revolutionary idea:
The next time the SEC catches a Fortune 500 company with their hands in the cookie jar, the punishment should be for them to pay a cross-section of university student’s student loan debt, instead of fining them millions of dollars the U.S. will spend on buying more guns.
Someone get Bernie Sanders on the line.
—Joseph Morton
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