Student debt collection to ramp up, according to government documents

By CBC News, 31 August 2015

Hundreds of thousands of university and college students walking onto campuses this week with help from federal loans could find themselves under more pressure than ever to repay billions of dollars in loans and grants.

Employment and Social Development Canada, which oversees the Canada Student Loans program, has set more aggressive collection targets after feeling pressure from its political masters to stem the rising amount of student debt the government must write off each year, an amount that topped $300 million just two years ago.

The government annually has to write off some of the $16 billion owing in student loans for a number of reasons: a debtor may file for bankruptcy, the debt itself passes a six-year legal limit on collection, or the debtor can't be found.

The amount of writeoffs were high enough that the Conservative government wanted ESDC to "improve recoveries and reduce the writeoff" of loans, the then-deputy minister at ESDC wrote to his counterpart at the Canada Revenue Agency in an October 2014 letter. (...)

The letter from then-deputy minister Ian Shugart asked the CRA for a more detailed plan to improve collection and "reassure my minister that all reasonable efforts are being made to increase recoveries and reduce (loan) writeoff amounts." (...)

To meet those targets, the CRA can now request information directly from borrowers, rather than having to ask ESDC officials to do so, and officials from the two departments have met regularly to figure out how things can be improved.

The head of one of the country's largest post-secondary student associations said the documents suggest the federal government appears more interested in image control than dealing with the issue of student debt.

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