Higher Education Strategy Associates

Category Archives: Canadian Federation of Students

May 12

Statistical Deceptions on Student Debt

Every couple of years, the Canadian Federation of Students (CFS) produces a “research paper” to provide a new “evidence-based” spin to back up its eternal demand for free tuition. Last month, they put out a new version, this one entitled The Political Economy of Student Debt in Canada. The theme this time is lightly-recycled Piketty: Canada’s main problems are inequality and rising indebtedness; if we eliminate tuition, that’ll strike a blow against both so wa-hey! The word “neoliberal” appears frequently.

This is all fine. It’s Lobbying 101 to link your own issues to those of the ruling government’s agenda in order to increase the likelihood that they’ll get picked up. Inequality is certainly a theme of this decade, as is the constant media drumbeat of ever-rising household debt (though for reasons that pass understanding they never match up statistics about rising debt with equivalent statistics about rising assets).

But there is a problem here. To make the analogy stick you’d have to be able to prove that student debt, like household debt, is rising rapidly when in fact it’s not. Data from the National Graduates Survey (NGS) suggest that student indebtedness has been more or less stable since 2000; the more recent/timely (but less accurate) Canadian Undergraduate Survey Consortium data (see here and here) actually suggests it has decreased a bit since 2000. And it is certainly the case that student loan burdens – that is, the percentage of after-tax income devoted to paying student debt – has decreased substantially over the last decade and a half, due mainly to falling taxes and lower interest rates. Average student loan debt – that is, the amount of debt owed by students at the time of graduation – may in fact perhaps the one type of personal debt which isn’t increasing.

So imagine my surprise when I saw this graph in the middle of the research paper, purporting to show that student debt has increase 40% in real terms since 1999:


Where on earth does this data come from? Well, it’s not the NGS and it’s not any survey of graduating students. Rather, it’s from the once-triennial, now quadrennial Survey of Financial Security (SFS), which measures student debt in an entirely different way.

Both NGS and the CUSC try to measure the average debt at the point of graduation. NGS does it by asking graduates two years after graduation how much debt they left school with; CUSC asks students a couple of months before they graduate how much debt they have. SFS is not a survey of graduates; it’s a survey of 20,000 or so Canadian households. And when it reports debt, it does so i) by measuring outstanding debt, not debt at the time of graduation and ii) be measuring household debt, not individual debt. So if your household contains multiple individuals with student debt (whether as roommates or in a family relationship), SFS will combine the debt of all individuals. The second factor will definitely tend to inflate the amount of debt reported; the first is more ambiguous because on the one hand it is including both borrowers who graduated recently and those who graduated many years ago (which one would think would lower the average figure because the latter have been in repayment for many years), but on the other will tend to exclude those who graduated with lower debt because they will often have paid it off and hence be excluded from the statistic (thus raising average debt somewhat).

Also, because it measures outstanding debt rather than debt at graduation, it will tend to lag trends in student aid. That is, even after student debt at graduation stops rising, outstanding student debt will continue to rise as earlier cohort of (less indebted) graduates repay their loans and later cohorts of (more indebted) graduates take their place in the ranks of “those with outstanding student debt”. So it’s not really a big surprise that outstanding household student debt rose in the 2000s, because that’s the natural corollary of rising student debt at graduation in the 1990s (which, unlike rising student debt in the 2000s was actually a thing).

The point here is not that the data used is “fake”: the data itself is real. But to make their point about “rising student debt” the CFS’ report writers have used a quite different definition of student debt than that used by literally every other PSE stakeholder, indeed different to any definition of student debt CFS has ever used. And they have done so without mentioning that they have used an alternative definition. This is not an innocent oversight. The person or persons who authored this document clearly know their way around Statistics Canada data; anyone with that level of knowledge also understands that if you say “student debt has risen 40% since 1999”, people will understand that to mean “individual debt at graduation”, not “outstanding household debt amongst the entire population”. It’s a deliberate deception to further a politically convenient narrative.

Student debt, as that term is commonly understood, has not risen by 40% in real dollars since 1999. On the contrary, student debt levels are broadly stable and repayment burdens are much reduced over the past decade and a half. Using torqued, cherry-picked statistics to try to convince the public that the reverse is happening is pretty poor form.


January 21

Karl Marx Talks Tuition with a Young Progressive Thing

Karl Marx: Jenny… Jenny… there’s a kid at the door… Jenny?  Oh all right, I’ll get it myself

<opens door>

Young Progressive Thing: Hi there, Mr. Marx!  I’m an idealistic Young Progressive Thing.  Want to sign this petition from the Canadian Federation of Students and the Carré Rouge types to make tuition free?

KM: (stares bemusedly).  Why on earth would I want to do that?

YPT: (startled). Well, it’s about helping the poor.  The workers.  You’re into that, aren’t you, Mr. Marx?

KM: You’re kidding, right?  Haven’t you read my critique of this?

YPT: Um… no.

KM: Where is it?  Must be here somewhere.  Ah, here we go.  Critique of the Gotha Programme, chapter iv: “If in some states… higher education institutions are also “free”, that only means in fact defraying the cost of education of the upper classes from the general tax receipts”.  Get with it, kid, this is a regressive subsidy.

YPT: But tuition itself is regressive!  Proportionately, it costs the poor more than the rich because their incomes are lower!

KM: But that’s true of all market-traded goods.  The poor pay proportionately more for housing than the rich.  Ditto beer, phones, milk, Pokemon cards: if that’s your argument for free tuition then you’re really saying we shouldn’t have a market economy.  Obviously, I’d personally  be cool with that, but last I checked you weren’t actually calling for it.

YPT: Well some of us at head office…

KM: <impatiently>. You’d never say it out loud in public because students would laugh at you.

YPT: OK, true.

KM: Exactly.  And without an historically unprecedented re-distribution of income, this makes no sense.

YPT: Hang on, wouldn’t a progressive income tax system counter your objection that free tuition mostly takes care of the rich?

KM: <blinks angrily> Where on earth did you get that talking point?

YPT:  Hugh McKenzie and a raft of Canadian Centre for Policy Alternatives publications.

KM: So, essentially, you’re saying that it’s OK to provide more services to the rich because they pay more taxes. (Gives YPT a suspicious look) Are you sure you’re a progressive?

YPT: (defiantly) Yes!

KM: Remember the bit about “To each according to his need”?  Explain to me how free tuition meets that test.

YPT: Well, all students are broke, so they all have need …

KM: Oh, for…  look, just because students all have low income, doesn’t mean they all have low access to wealth and money.  The “Bank of Mom and Dad” is a euphemism, but for many, many students it’s not the least bit fictional.  To pretend otherwise is to pretend that class magically stops replicating itself at age 18.

YPT: But not all parents will contribute the same amount…

KM: And that means we should make it free for everyone?  Just because I’m a Marxist doesn’t mean I believe in wasting resources.

YPT: <completely out of arguments> You’re just a neo-liberal reactionary!

KM: (shrugs).  Whatever helps you sleep at night, kid.

January 20

Canada’s Income-Contingent Loan System

I see that yet another group has called for Canada to have an income-contingent Loan Program to help students fund their higher education studies.  Great idea.  In fact, it’s so great that the country adopted an income-contingent system five years ago. It’s just that nobody noticed.

Many people think that income-contingency requires that loan repayments be a fixed percentage of individual income, or that loan recovery be handled through the tax system.  While it’s true that some of the world’s more prominent examples of income-contingency (e.g. Australia, UK) have those features, those aren’t necessary characteristics of an income-contingent system.  All “income-contingent” means is that repayments to some degree reflect a borrower’s ability to repay.

Canada has had some element of income-contingency ever since the “Interest Relief” program was introduced in 1984.  Something of a misnomer, Interest Relief allowed unemployed borrowers in re-payment to suspend principal repayments for up to 18 months, during which time government would pay the interest on the loan.  The program was expanded in 1994 to include borrowers who were employed but had high debt service ratios.  In the 1998 Budget, the time limit went up to 30 (or in some cases 54) months.  That budget also announced a system whereby borrowers who didn’t quite meet the test for full interest-relief could get a partial subsidy – unfortunately, this system was never implemented, because the government, and the banks who administered the program at the time, couldn’t figure out how to make it work properly.  But the idea came back again in the 2008 Budget, with the introduction of RAP, which was basically the 1998 plan with some knobs added on.

So, like Australia and the UK, we have a system where borrowers with low-income pay nothing, and a system which phases in loan repayments gradually as borrowers begin to earn more money.  The only major difference between Canada and Australia/UK is that we say if you’re above a certain income level, you should be paying off a loan quickly under a normal system of amortization, whereas they say the hell with it, and just take a proportion of your income because it’s simpler to manage that way.

Why don’t we call it income-contingency?  Basically, it’s because no one wants to embarrass the Canadian Federation of Students (CFS).  For years, they insisted income-contingency was the work of Satan because in making loans easier to pay it paved the way for higher tuition fees (yes, really).  Yet, as the details of RAP were developed, they decided they quite liked it.  Since it’s rare CFS actually backs a government program, it was generally agreed that pointing out to them that that RAP was in fact income-contingency (which they still in theory strenuously oppose) would create unnecessary problems.

So there you go.  We have a reasonable student loan repayment system, which the main players like but no one else understands.  It’d be nice if we could find a way to communicate this to the country so we could stop with the inane demands for income-contingency, but c’est la vie.

October 23

The Best CFS Chair Ever

I see Brad Lavigne has a new book out about his years as Jack Layton’s campaign strategist.  Time perhaps to mention his other big accomplishment: namely, being the best Chairperson the Canadian Federation of Students (CFS) ever had.

The mid-1990s were an ugly time in Canadian PSE.  Federal and provincial governments were broke, and cutting back everywhere.  Partly as a result of this, the student movement polarized – a more left-wing leadership took over the organization and purged the moderates, who returned the favour by leaving CFS, and joining up with a previously-unaligned group of schools to create the more moderate Canadian Alliance of Student Associations (CASA) (full disclosure – I was CASA’s first National Director).  In 1996, Lavigne became CFS chair.  He was seen as one of the hardliners, but when Lavigne got to Ottawa, it was clear that he didn’t want to just rant and rage at the government.  He wanted some wins for students, and he was prepared to compromise to get them.

And so with this intention Lavigne took CFS into a seven-member coalition to improve student aid, which included not only their nemeses at CASA, but also the University Presidents represented by AUCC.  The coalition kept clear of the divisive issues like tuition, and focused solely on issues of student debt, which everyone agreed was bad.  It held together on a common platform for over a year, which reassured the federal government that it would get approval, not opprobrium, for agreeing to invest in this file (less than 3 years on from an infamous macaroni-throwing event, involving then-HRDC Minister Lloyd Axworthy, this kind of re-assurance was still necessary).

The result was the 1998 budget, the single biggest investment in student aid ever made in Canada.  It expanded interest relief considerably, making life easier for hundreds of thousands of borrowers.  It created a set of grants for students with dependents (a key CFS aim at the time), the Canada Education Savings Grants.  And it injected – what would become – $3.6 Billion worth of grants into the student aid system through the creation of the Canada Millennium Scholarship Foundation. Had Lavigne not brought CFS to the table, it’s quite possible none of it would have happened.

Unfortunately, his own members turned on him, thinking he’d gone too far in terms of co-operation.  In the end, he was made to criticize the deal he’d done so much to facilitate – on the lunatic grounds that it was all unacceptable if the 1995 transfer cuts weren’t restored.  As a result, CFS never took ownership of what was clearly its greatest-ever success, and Lavigne’s work was never recognized for what it was: a real act of statesmanship.

CFS – heck, the whole country – could use more student leaders like him.

April 01

A Persistent Problem with Truth

When it comes to the subjects of debt and tuition fees, the Canadian Federation of Students (CFS) is the least trustworthy source on earth.  They lie.  Constantly.

To see the latest collection, just look at this press release, which averages roughly one lie per paragraph.  For instance:

“Since 2006, tuition fees have increased as much as 71 per cent in Ontario”.  The words “as much as” are doing a lot of work here.  For the vast majority of programs, the 5% annual increase has meant an increase of about 47%. And for full-time students benefitting from the 30% rebate, it’s only 17% – which is less than inflation.

“Average student debt after a four-year degree is $37,000 for debt from public and private sources”.  No, that’s the average for the small proportion (12% or so) of students who have debt from both public and private sources.  Across all students with debt, it’s in the $26,000 range.  Across all students, it’s about $16,000.

“The Ontario Liberals committed to reducing tuition fees by 30 per cent in the last election…”. No, they committed, quite specifically, to a rebate of 30% for full-time undergraduate students from families earning under $160,000.

“… their Ontario Tuition Grant has reached fewer than one-quarter of students in the province”.  As I pointed out, here, this is only true if you include 300,000 college part-timers taking less than one course per year, 60% of whom are having their education paid for by their employers.  Which, since no one thinks they need a tuition break, is pretty dubious.

“… untold number of youth being shut out of accessing a college or university education every year”.  Ontario has the highest rate of combined access to university and college of any province.  If tuition has an effect, the one place it isn’t showing up is in access rates.

These aren’t honest mistakes made by idealistic youth who aren’t good with statistics.  The CFS has many professional staff who are paid to know this stuff, some of whom have been around for decades.  They know perfectly well what the real data says; they just think that that lies are acceptable so long as they’re deployed in service of their cause.

And really, why wouldn’t they think that?  Ministers still meet with them.  Journalists and opposition parties, thinking them a reliable source, regurgitate their lies uncritically all the time.  Usually, when interest groups take this kind of liberty with the truth, they lose credibility and, hence, access to power.  For some reason, CFS never face any consequences for telling lies.

But maybe, for the sake of restoring honesty to debate, it should.