FAIRER WAY FOR STUDENTS TO PAY
The Edmonton Sun
Sun 28 May 2006
Page: 17
Section:
Editorial/Opinion
Byline: BY MINDELLE JACOBS, EDMONTON SUN
Source:

The C.D. Howe Institute has added its voice to a chorus of proposals
that students should pay for post-secondary education after they graduate, based
on what they earn.

An income-contingent repayable loan scheme could eliminate defaults and
shield graduates from unreasonable debt repayment obligations, says the
think-tank.

Such a system would encourage students who are afraid to apply for
conventional loans to pursue advanced education and it could help boost the
attendance of poor students, it adds.

"That a certain group of people in society have a sharper disincentive to
attend post-secondary education when this group is already underrepresented is a
serious concern," says policy analyst Yvan Guillemette in the paper.

"If students from low-income backgrounds are more adverse to the risks
associated with education and with borrowing than students from richer
backgrounds, it could ... help close the socio-economic participation gap," he
writes.

An income-contingent repayment model would be insurance against
post-graduation uncertainty because people would repay loans on a sliding scale
based on their income, explains Guillemette.

Grads with earnings below a certain threshold would not have to repay their
loans.

As things now stand, some students are reluctant to borrow because of fears
about the future, says Guillemette.

And the current student loan system can leave students burdened with large
debt but unable to find well-paying, long-term employment.

"The problem with fixed repayments is that they are mostly insensitive to the
borrower's financial circumstances," the paper notes.

There have been other calls recently for changes to the way post-secondary
education is funded. Last year, former Ontario premier Bob Rae, now running for
the federal Liberal leadership, recommended an income-contingent plan in his
report on Ontario's education system.

Also last year, the Canadian Chamber of Commerce proposed that all existing
student financial assistance programs be wrapped into an income-contingent
repayable loan scheme.

New Zealand, Australia and the United Kingdom have such plans and Quebec
proposed a similar program last year before abandoning it.

I think the income-contingent repayment model deserves some serious
consideration because it seems a fairer way for students to pay off their loans.

The Canadian Federation of Students, however, is adamantly opposed to the
idea. It cites a study of the New Zealand experience that indicates women and
indigenous students don't fare so well.

A Maori woman can expect to spend 24 years repaying the cost of a university
degree, compared to 13 years for a New Zealand male of European ancestry, says
the federation.

Overall, a female grad in New Zealand needs 28 years to repay her loan,
compared to 15 years for a male, it adds.

I'll bet, however, that a poor male artist takes a lot longer to pay off his
loan than a female lawyer. It is not the program's fault that women primarily
choose low-paying jobs.

Erika Shaker, director of the education project at the Canadian Centre for
Policy Alternatives, also slams income-contingent repayment plans.

"Compound interest basically ensures that the people who take longer to pay
it back are paying significantly more," she says.

"We have a very effective way of gearing the paying of university and college
tuition to income, and it's called the tax system."

She suggests that Canada could emulate Ireland, where higher education is
free. That, too, has its disadvantages, though. Only the brightest students get
accepted into Dublin's Trinity College.

The average University of Alberta student would be shut out.

© 2006 Sun Media Corporation. All rights
reserved.

Illustration:
• photo of BOB RAE
•
Income-contingent

Edition: Final
Note: [email-masked]

Length: 566 words