Posts tagged with repayment.
Get ready for the second wave of recession flu
Student-funded lobbying organizations have been making a big deal about the high student unemployment rate this summer. Rightfully so, as tens of thousands of students couldn't find the work necessary to fund the minimum financial contributions expected of them by student loan programs.
These students start the year with a deficit they'll never be able to overcome on their own. They cannot fund this deficit by increasing their hours of part-time employment; any extra money they make during the academic year will be clawed back from their student loans. In Ontario, an unemployed student is expected to contribute at least $2,710 to their studies; regardless of the fact they don't have this money.
The recession has hit the poor hardest, and the unequal socio-economic distribution of suffering extends to the student job market. Students from the lowest socio-economic backgrounds have less resources to use when looking for a summer job. Their parents don't have golf buddies whom they can reach out to and assist their children to find a summer job. To compound difficulties, their families are the least able to assist them in covering this deficit.
The challenge these students face will have to be dealt with before Christmas. If their difficulties are not addressed before the second term, there will be a significant drop in university retention rates as students hardest hit by the recession run out of funds. A recent poll conducted by Ipsos Reid, paid for by RBC Royal Bank, showed 50% of university and college students expect to run out of funds before the end of the academic year; 35% of returning students expect to hit the financial wall before Christmas.
Current students facing financial difficulty during the academic year are not the next recession story in higher education; they'll be the third wave of "recession flu." The segment of our youth population next to walk the plank of this financial crisis are recent graduates.
November is the end of the six-month student loan repayment "grace period" for the graduating classes of 2009. The unemployment rate for 15- to 24-year-olds, according to the most recent numbers from Statistics Canada, is 16.3%. The overall unemployment rate is 8.7%. The rate is reflective of the number of people looking for work. It is not unreasonable to assume a significant portion of the youth unemployment rate consists of recent graduates searching for meaningful employment.
Thousands of recent graduates could be without the financial means to start repayment of their loans. This will be the first real test of the government's new repayment scheme. Recent graduates will continue to add to their student loan debt and, for some, even partial payments may be too costly to afford.
If past experience is any guide, the response of student-funded lobbying organizations will be reactionary; they'll put out news releases in the middle of November after someone else sounds the alarm. The media will dutifully cover the story; the opposition parties may even call for the government to do something (don't count on it; they'll be focused on problems affecting demographics that actually vote), Christmas will arrive, everyone will stuff themselves with turkey and forget about the problem in time for the new year.
If student-funded lobbying organizations such as the Canadian Alliance of Student Associations and the Canadian Federation of Students wish to prove their relevance; they must become proactive in responding to the recession. They must seize the political opportunities these hard times have created. They must lobby for and succeed in securing relief for recent graduates included in any bill the government tables to reform Employment Insurance.
Now is the time to: get the student loan repayment "grace period" extended to one year; stop the accumulation of more debt during the "grace period" by making it interest free; convince the government to stop profiting from student loan interest by dropping the rate to one point above prime or lower; and push for the establishment of a secretariat for youth issues.
Tagged with
poor,
recession,
interest,
unemployment,
student,
employment,
graduates,
youth,
repayment,
loans,
insurance
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JOEY COLEMAN