I remember the good old days when finance companies roamed the land with ‘good guy’ loans and interest rates so high that Superman wouldn’t be able to break free from the contract. The world of Daniel Bell (The End of Ideology 1960) and John Diefenbaker softened the blow of harsh and unconscionable credit contracts by calling them – ‘poverty lenders.’

Accordingly, a poverty lender basically provided credit services to those who could not qualify for loans with ‘conventional’ lenders like banks and credit unions. The poverty lenders provided a valuable service to those unfortunate people who needed credit – who needed a car loan or needed to consolidate their other debts into one big loan with easy monthly payments.

Of course, the reason why they couldn’t qualify for a loan at a bank or credit union was this: they were poor. These people were too poor to qualify. They didn’t have any real assets. They didn’t have well-paying or stable jobs. The banks were not prepared to take the risk that the loan would not be repaid.

The poverty lenders employed the best lawyers to write and defend their high interest or otherwise impossible credit contracts. The poverty lenders tended to be the harshest debt collectors who vigorously opposed any customer who dared file for bankruptcy. The poverty lenders wouldn’t hesitate to seize all of the debtor’s household furniture, seize cars, garnishee bank accounts and wages and harass debtors without restraint or mercy. In other words, the poverty lenders were the most vicious debt collectors of all and inflicted maximum pain and suffering on people whose only deficiency was poverty.

Flash forward to 2015. Today, the student loan program in Canada lends huge amounts of money to poor people who would never qualify for a loan at a bank or credit union because they have no income, no assets or both. The government(s) call this a public service that helps poor people get a post-secondary school education.

From time to time, such as in a recent article in the Vancouver Sun, someone blows the whistle on the government’s student loan losses. According to the article a Nov. 17, 2014, briefing note to CRA commissioner Andrew Treusch said that in 2012-2013, 162,000 borrowers had their debts written off for a combined value of $308 million.

Rather than examine the underlying issue of poverty being the source of the student loan program it goes unmentioned and unquestioned. Instead of looking at the high cost of tuition and post-secondary education as probable factors in a national dilemma with student loans, the government  ramps up its collection machine a few notches to ‘improve recoveries’ and silence critics.

The student loan program has already used parliament to collect its debts by prohibiting student loan debtors from a bankruptcy discharge for 7 years and refusing to co-operate with any proposals outside of bankruptcy for insolvent debtors. The net effect of using bankruptcy law to collect debts has been the creation of a new social class of debtors – student loan debtors – who are treated worse than any other debtor in a bankruptcy except for family maintenance arrears, fraudsters and miscreants with court orders against them. This isn’t exactly what was intended by the Canadian social justice framework when bankruptcy legislation was created and overhauled in 1992.

Of course, ratcheting up the merciless wheels of a debt collection process designed to inflict maximum pain regardless of the causes of the financial problems people have, hasn’t and never will stop the so called student loan ‘losses’. Funny how the student loan program uses the term ‘losses’ rather than ‘casualties’.

I might add that the student loan debts all by themselves can evolve into a financial problem of monstrous proportions just because of their humungous size. Every student loan has an unpredictable future. Every student loan borrower faces the possibility of a debt problem that can ruin their lives.

The thought of lending less or perhaps reducing the costs of post-secondary institutions hasn’t received any serious attention except for the government of Newfoundland that has showed great wisdom and courage this year in using grants rather than loans to promote post-secondary school graduation for everyone. They openly admit that society benefits from a skilled and employable workforce – not just the student.

Lending more and more money to the poor hasn’t worked too well for the poor. Tightening the screws on the collection process will change nothing except for the costs of collection.

This aggression against basically vulnerable people who can’t afford to pay their debts or fight back hasn’t stopped the defaults or other deficiencies with the student loan program because we keep banging our heads on the principle of lending money to people who can’t afford to repay it – to the poor and the working poor.

Today’s youth deserve a better less encumbered way of getting the basics to find a productive and fulfilling life after spending years of study and hard work.

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