How the Liberal Government plans to help students enter the work force.
There is a popular saying that there are only two guarantees in life: death and taxes. Well, in the early 21st century, there may as well be a third guarantee added; student debt.
According to the Wall Street Journal, in the average class of 2015, the most recent college and university graduates, 71% of those students graduated with about $35,000 in debt. Student debt is a major crisis many students face as they graduate and move into the workforce, making this a popular topic going into the Prime Minister Elections.
The youth vote is an important one, and major upheavals in government over the past decade have come through those parties who try and acquire voters who otherwise would not vote. Justin Trudeau and the Liberal Party knew this, and made the smart move to address the elephant in the room when touring on university campuses across Canada: student debt.
The Plan
On October 5th, in the last weeks leading into the October 19th Federal Election, Justin Trudeau and the Liberal Party announced at the Wilfrid Laurier University in Waterloo their plans for student debt relief if the Trudeau and the Liberals are elected into the majority government.
The plan as follows:
· The Liberal government would increase the maximum Canadian Student Grant for low-income students to $3,000 for full-time students and $1,800 for part-time students.
· $50 million would be added to the budget that supports indigenous post-secondary students.
· Regarding student debt, repayments would not kick in until after graduates are earning at least $25,000 a year.
Considering the current Conservative government hasn’t made any strides in the issue of student debt in the past five to ten years, this was a big play by Trudeau and the Liberals. These may seem like small strides to the average onlooker, but these policies would drastically change the way graduates enter the workforce.
How These Policies Can Change Student Debt
The big change, and most important part of the liberal plan, regards when students must begin to pay off their student loans. For example, in Ontario, students have six months after they graduate before they must begin to pay off their Ontario Student Assistance Program (OSAP) loans. Six months may have been enough time for graduates to get situated into the workforce a decade or two ago, but no longer. The problem here arises from the increasing demands of entry-level work.
“My [OSAP] payments are nearly $250 a month, which I can barely afford because I’ve been stuck at an entry-level ‘internship’ that only pays $23,000.” –an anonymous book publishing employee in Toronto.
“How am I supposed to get a job when all of the entry-level [jobs] I apply for want 1 to 3 years of experience?” — Courtney Freeman, a 2016 graduate.
Student debt is the executioner’s axe that looms over the heads of students graduating, adding increasing amounts of pressure to find a job immediately after they graduate. Unfortunately, those jobs don’t always exist.
“I literally walked into an interview for an entry-level job and was told to come back when I have more experience. I’ve completed a bachelor’s degree and an internship in that field,” said Connor King, a University of Toronto Humanities 2015 graduate. His OSAP payments just began in November, and his part-time job that he has held since his second year of school isn’t enough to help him pay his loans. “I live at home to save money on rent, and I’m still broke because of my student debt that didn’t even help me get a job in the first place.”
Many recent graduates are facing this increasing frustration, something Trudeau hopes to fix.
“Finding the money to pay for school is only half the battle. Repaying student loans after you leave is often as challenging,” Trudeau said in his Wilfrid Laurier speech.
Preventing loans from kicking in until a graduate begins to earn $25,000 a year is a huge step in fixing the problems students face as they graduate.
With the modern world requiring more and more experience, full-time internships are becoming more and more important. Student loan repayments kicking in before those internships can develop into full-time jobs can often be devastating to a recent graduate who then has to work a second, paying job, just to pay off their monthly loan payment.
What’s great about the $25,000 limit, is that most entry-level jobs pay much more than that. According to talentegg.ca, the average retail full-time position starts at around $30,000 for an assistant manager. Management consultant positions hover around $50,000. Engineer positions around $50,000. Insurance positions can start as low as $30,000 but quickly move to $50,000. Tech jobs earn around $45,000 to start.
As you can see, that is much more than $25,000. Trudeau isn’t trying to stop student debt entirely, or fix the system, he is just trying to help students right out of the gate, by taking away a huge amount of pressure in post-grad life.
But Does This Actually Change Anything?
“I already have a billion reasons to be anxious about graduating. Take paying my debt out of that equation and I have one less thing to worry about,” says 2016 University of Toronto Grad, Rebeca D’Alessandro. “It’s also one less thing to cry about to my therapist,” she jokingly adds.
Student debt is a real issue that many students face going into their post-university life. It adds unnecessary amounts of stress to the already crazy world that is the job market, and forces graduates to kill themselves if they need to pay off their loans before they are feasibly ready.
Justin Trudeau and the Liberals are by no means changing the game of student debt in Canada, but they are taking a great first step to ease the pressures of entering the workforce.
It may not fix the system, but it sure is a start.
