Education Shouldn't Be a Debt Sentence!
According to documents obtained under the Access to Information Act, the federal
government is considering the implementation of income contingent student loan
repayment.
Income Contingent Repayment (ICR) schemes are pitched as a flexible and fair student-aid plan that would allow student
loan recipients to pay off their loans as their income allowed.
Even policy analysts involved in designing and administering ICR models concede this point.
According to the federal government:
". . . ICR loans would solve the problem
of university and college under-funding, by allowing institutions to increase
tuition fees to cover a greater portion, or even all of its costs. Fees would
be unregulated and institutions would charge whatever the market would bear.
Needy students and those with cash flow problems would pay the increased fees
with the help of ICR loans."
The Government of Australia describes its ICR in these terms: "The purpose...is to raise revenue from the recipients of
higher education for return to the system as part of...funding of higher
education; it is not a form of student assistance."
ICR = Wealthy Pay Less Than Poor
Graduates with lower levels of income would repay their loans over a longer
period of time, while those in high-paying jobs could repay their loans quickly
and pay less interest. Those who could afford to pay their tuition fees up front
would avoid the high interest rate payment after graduation, and end up paying less
for post-secondary education. For example, in Australia if a student can afford to
pay their income contingent loan at the beginning of every academic year, they receive
a 25% discount.
Lifelong Debt Sentence
ICR would disproportionately hurt women because it would take them,
on average, considerably longer to pay back their interest-bearing loans. Because
many women leave the workforce due to pregnancy and still earn less than men on
average, repayment difficulties would be more pronounced. Under one model considered
in Canada in 1994, 43% of women would not be capable of paying off their debt after
25 years of repayment.
Fight Back!
Download the ICR FactSheet.
Download the research paper Inequality and Injustice on the Installment Plan.
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