It has taken a lifetime – or two – or several million - to witness the recent realization that the government in Newfoundland-Labrador has had in understanding the draconian nature of lending huge sums of money to poor people  to get a post-secondary education that’s necessary for finding a job – and doing something about it.

As reported by CBC news on August 3rd 2015, provincial student loans have now been replaced with non-repayable grants.

I’ve often wondered why the major political parties, federal and provincial, have methodically steered away from the issue of student loans for decades. The principle of lending money to people who can’t afford something has long been known. How could it be construed to be helping the poor by lending them not just payday loan amounts but gargantuan life-defining amounts that would effectively keep millions of individuals and families poor after graduation?

The second principle of contemporary jurisprudence, the fresh start principle for honest but otherwise overburdened individuals or families, was violated by the federal government by way of a housekeeping amendment to the Bankruptcy and Insolvency Act in 1997-98 that prohibited student loan debts from being discharged from a bankruptcy for 10 years (now 7 years).

No debate or public attention followed this stripping of student loan debtor’s legal rights. It just seemed that our society had evolved to such a myopic state that debtors have been considered bad, especially defaulting debtors. Who cares about debtors? Debt is a negative and perhaps even worse, too boring a topic for politicians and the media.

This all happened at a time when the total consumer debt outstanding (excluding mortgages) in Canada was almost $200 billion up from $20 billion in 1975 and destined to reach $535 billion in 2015. In other words, we had already become a nation of debtors but nobody wanted to talk about it – or scrutinize it.

The student loan division of government used parliament to collect its debts - to improve its position as a creditor over all other unsecured creditors in a bankruptcy. At the same time all mercy for student loan debtors was eliminate. It didn’t matter what caused the insolvency or how compelling the cry for compassion was – a voice so often heard in Canada for human rights and freedoms. It all fell on deaf ears.

Bankruptcy legislation was first drafted to bring impossible debt problems to a conclusion and let honest debtors have a second chance while punishing dishonest ones.  

The government of Canada and the provinces inadvertently punished poor people for attending a very expensive university or college if the student loan debtors couldn’t find a job or suffered the same kinds of problems that happen to all other consumer debtors like health problems or marital breakdown. Student loan debtors were isolated and disenfranchised.

The effect of this disregard for student loan debtors spilled over to the wider society where it has been an easy sell to the public that the government shouldn’t lose any money because of all the help they are giving to poor people by lending them impossible sums of money.

Today’s announcement by the Newfoundland-Labrador government to abolish student loans demonstrates great compassion and leadership that should be followed by the other provinces and the federal government.

I remember vividly over the last 2 decades how many times experts from all walks of life have consistently argued that, what the government in Newfoundland-Labrador has just done – couldn’t be done.

Before rushing into my usual tirade about banks doing surveys and leaving the impression their findings are indisputable facts, I just loved the reference quote in the article in the Vancouver Sun  today about a boomer who lived through double-digit interest rates in the 1980s and over the years missed more than one naïve financial goal.

Yes. How many naïve financial goals are we still being subjected to?

I have recently researched the top selling personal finance books and suddenly realized that pretty much all of them make the roadway to wealth and retirement sound far too easy.

Dave Ramsey, for  example, a zealot and leading spokesperson for debt freedom bulldozes everything in life aside to achieve this one noble pursuit of debt freedom. After you get the mortgage paid off and all of the other debts you can then, relax and enjoy life.

The lightbulb went on when I realized this is kind of the same message as other get rich quick, 9 essential steps to follow or 10 must do steps have. You forget about life until you reach your financial goals. Then go party on your yacht.  

I wonder about how many of these authors earn a minimum living wage or in some cases, even have children. I mean it costs around $200,000 to raise a child to the age of 18 (according to statistical studies from the Department of Agriculture) and that does not include post-secondary education.

So, this Vancouver Sun article that brings up the topic of naïve financial goals comes at a time when many pillars of financial wisdom have crumbled into fairy dust, like Freedom 55.

Unfortunately, not too many experts or journalists are pointing the finger at child poverty, the incredible discrepancy between the wealthy  15% of the population and middle and lower income families in terms of income and assets.

Many of the Freedom 55 financial plans from the past did the same thing as the financial freedom books – push all else aside – spousal entertainment – children’s extracurricular activities – vacations - and a few years later the fat RRSP’s were either cashed in early to meet basic living expenses and pay down worrisome debt levels, or used to pay family court lawyers to wind up broken relationships and families.

The figure cited in the Vancouver Sun of an average of $24,000 for non-mortgage debt for Vancouverites, really doesn’t tell us very much. We need to know a lot more -  who owes the debt,  the income groups, the family size, the age group, the assets or lack thereof, whether or not they have a student loan and on and on. Without these details, this figure of $24,000 is just a mathematical number upon which journalists and banks wildly editorialize about everything under the sun including who is optimistic, who worries and does not worry about debt and on and on.

I didn’t particularly like the comment that the troublesome non-mortgage debt figures are balanced by the finding that 29 per cent of Canadians don’t owe any money at all. Excuse me. Hello!!!

Nothing is balanced. This survey simply shines a little light on the probability that the wealthy don’t owe too much debt and the majority of working individuals and families do.

I find the rest of the hypothecating, philosophizing, opinion-izing or outright gossiping hard to take seriously as there are few demographic facts to back up the hot air. 

Look out renters. The news is out. Rents are predicted to go up in Metro Vancouver.

An article in the Vancouver Sun today announced that low vacancy rates and unprecedented demand is pushing rents higher and higher. It appears that the high cost of home ownership (real estate) is kicking would be buyers down the food chain a couple of notches to expensive rental accommodation.

High rents have a tendency to keep people poor and out of the real estate market.

Once again a cry for affordable housing can be heard from an important part of the population - middle and low income families. This crescendo-ing sound of desperation comes at a time when consumer debt in Canada is at an all-time high at $535 billion dollars (excluding mortgages.)

Impossible rents and impossible mortgages combine to broadcast a very strong message to governments that something is wrong with this picture.  Middle and lower income families are being displaced to the suburbs and even worse, out of the real estate market entirely instead of being accommodated in some meaningful way.

The argument that nothing can be done because it’s a simple matter of the economic law of supply and demand has been made before. It was made for many years before the credit crunch of 2007-08 brought the world to its knees. What followed was massive government intervention to keep auto manufacturers, big banks and other corporate entities deemed too big to fail out of bankruptcy.

High rents have, in the past, led to rent controls and may once again if something substantive is not done to accommodate young, elderly, middle and lower income families with affordable housing.

Post-secondary school students also become victims of high rents because they do not have an income. They are students. Society needs a highly skilled and technically trained workforce so it’s not just the students that benefit from their studies but society at large. There is a public interest element to the cry for help for affordable housing.

There are solutions – new ones waiting to be discovered by innovative thinking and decisive public policy. There are also old ones like rent controls, wage and price controls and doing nothing - which ultimately leads to disaster for everyone.

I think it’s time for governments to act on affordable housing.

Today there is good and bad news.

The good news came from a StatsCan report about all of the household debt in Canada that many  experts have been complaining about – how Canadians have been accused of being bad money managers but guess what? This report confirms that we are not broke and precariously dangling from a cliff of troublesome household debt, but quite the opposite. Canadians have significant assets to back all of the debt – and more. There is a net-worth surplus.

As published recently by the Vancouver Sun, a former chief economic analyst for Stats Can, Philip Cross, revealed that two-thirds of the $1.8 trillion in household debt were mortgages.

Finally someone agrees with what I’ve been saying for many years.

thank god for good lawyers

CBC news reported that a 26 year old cancer patient was denied long-term disability payments despite having disability insurance through her employer’s group plan. The reason: her cancer was a pre-existing condition.

Following the headline, they interviewed a lawyer who pointed out there were many nasty little secrets hidden in the fine print of insurance contracts that routinely allowed insurance companies to avoid payment.

Remember, if you are experiencing financial difficulties do not wait. Call Solutions Credit Counselling at 1(877)588-9491 or fill out our Debt Consolidation Questionnaire and get your Free Credit Counselling Advice today.

For more information visit Debt Canada - your Canadian credit education centre.

If you are a woman in debt, speak with Women and Money first. We specialize in helping women with their personal and business financeMoney management advice you can count on!


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