Mr. Speaker, in today’s changing economy, education is a critical ingredient. This is the case both for individual improvement and advancement, and for the development of human and social capital, essential to growing our country’s economy.
The Conservative Party understands the importance of higher education to improving the condition and standard of living of our families. We know the important role of education in making the cultural fabric of our communities stronger, and our individual lives intellectually rich and fulfilling.
And the Conservative Party understands the critical contribution of a skilled and educated workforce to the innovation, productivity and competitiveness of our economy.
Encouraging higher education and personal skills development is seen by the Conservative Party as fundamental to a strong economy and a brighter future for all Canadians. Learning and higher education in particular, is a positive social good that particularly benefits the individuals involved, while at the same time enriching all of society.
This bill to address the issue of problem student debt is well-intentioned. While I share the objectives of making it easier for graduates to cope with student debts, I am not convinced that the proposal before us today is good policy
We believe that the current law, providing that any student debt survives a bankruptcy for 10 years after a student leaves school is too long. But 2 years, as proposed in this bill, is too short, and may well encourage unnecessary bankruptcy declarations to shed debt, before individuals have an opportunity to become fully contributing workforce members and citizens for whom bankruptcy brings other adverse consequences.
Responsibility is also a value we want to promote--and we should be encouraging individuals to honour their obligations to their fellow citizens, whether that be by paying their taxes or paying their student loans. That is why we feel a five year period is an appropriate middle ground.
For those who feel student debt should be treated the same as any commercial debt, we should remember that there is a difference.
The criteria for commercial lending is credit worthiness and availability of assets for security. Student loans, however, are awarded on the exact opposite criteria—a lack of financial assets and a lack of income. Student loans are more like a social program than a commercial loan.
That is why we cannot understand the way this Liberal government is operating the Canada Student Loans program as a profit-making centre today. When banks lend to their best customers, those borrowers pay prime rate. A typical loan to an average customer is prime plus 1%.
Yet this Liberal government is charging students prime plus 2.5% on floating rate loans, and a staggering prime plus 5% on fixed rate loans.
Is it any wonder students are having trouble coping with debt. When the compounding factor is considered, it is not long before young people, trying to establish themselves and start families, find themselves sinking towards bankruptcy.
Right now, at posted floating rates, the government is charging 6.75% on student debt, money the government has borrowed at an average of 3.8%—that is a pretty good margin. It shows how the Liberal government is using the Canada Student Loans program to make a profit, rather than to assist young Canadians in achieving an education and building brighter futures.
We in the Conservative Party have been calling on this government to stop this practice of gouging students with excessively high student loan interest rates, and to lower the rate to a more conventional prime plus 1%.
Lowering student loan interest rates is a much better solution to student debt than having more young graduates start their working lives by going into bankruptcy. That is why we prefer lower student loan interest rates to a policy of making it easier to default on debt and go bankrupt.
While we have been calling on the government to restore fairness to student loan interest rates, we continue to have only uncaring, insensitivity in the Liberal indifferent response. In fact, notwithstanding higher tuitions, and rising debt burdens, this Liberal government seems blissfully unaware of the challenges students face today.
In the Conservative Party, we do not want the financial costs of education to be a barrier to learning. Fear of mounting student debt and bankruptcy cannot be allowed to prevent young Canadians from pursuing their dreams. If the financial burden of education is discouraging students from achieving their best, and enjoying the benefits of higher education, then all of us, and all of Canada, will be poorer for it.
This legislation is well-intentioned, but flawed. And its greatest flaw is that the answer to student debt problems lies not in easier bankruptcy, but in more manageable debt loads, with lower, fairer student interest rates.
That is why we, in the Conservative Party, once again are calling on this government to lower student loan interest rates to prime plus 1%. That is what Conservatives believe. And that would be a change for the better.