Newspaper article The Canadian Press

Documents Show Political Pressure for Student Loan Program to Curb Write-Offs

Newspaper article The Canadian Press

Documents Show Political Pressure for Student Loan Program to Curb Write-Offs

Article excerpt

Feds look to up collections of student loans

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OTTAWA - Hundreds of thousands of university and college students walking onto campuses this week with help from federal loans could find themselves targeted harder 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 push to increase collection results -- and the detailed work plan to do so -- are outlined in internal government documents from last fall.

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 Canada Revenue Agency is responsible for collecting loans in default and can do so by withholding income tax refunds to cover the outstanding amount, or referring cases to the attorney general for legal action, which could lead to garnisheeing wages or seizing assets.

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."

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. About 90 per cent of those debts had passed the six-year legal statute for collection, mainly because the borrowers couldn't be located, the briefing note said.

The reason? Many of those files had out-of-date contact information and the CRA wasn't allowed to ask other departments for help because of privacy laws. …

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