Commentary: The trouble with student loans

Needs-based rights are creating a new idea of what it means to be advantaged


Students often have to empty their pockets before they receive a student loan. (Photo: Bianca Müller)

There's a new privileged class brewing in Nova Scotia. It's comprised of students and twenty-somethings trying to scrape together enough money to get an education and live day-to-day. They are unemployed or underemployed, and struggling to find opportunities to get a start in their careers.

What privilege sets them apart? They're simply not in debt (yet) and may have started their retirement savings.

Traditionally, students who are considered 'have-nots' have access to student assistance. Other students are excluded from financial help because of the province's over-optimistic view of what it means to be a 'have.'  

Before you can get any financial assistance, you must empty your pockets.

Nova Scotia Student Assistance allows a $2000 exemption from all RRSPs per year. This means that if you have say, $10,000 saved for your future, you're expected to spend $8000 of those dollars on your education and living expenses. There is no exemption for alternatively structured investments. Appeals are possible, but have their own limitations.

Why not spend your savings?

Financial professionals will tell you that the earlier you start saving, the better. This allows interest to compound, meaning that money you save at age 20 is worth much more to your retirement-aged self than savings you re-build at age 30, or even worse, savings you try to start once you've settled with children and serious bills to pay.

Aside from the catastrophic effect that drawing thousands of dollars out of your retirement fund (or not starting one with the money you saved teaching English) will have to its growth potential, just allowing it to compound until you finish school and paying your loan back is leaps and bounds better than slashing and burning to pay your tuition.

Bank loans are a weak alternative. They accrue interest while you attend classes, require a co-signer and provide no interest relief programs.

Scholarships aren't traditionally about need, yet many of them are offered to very specific demographics. This leaves status quo type students to fight over limited funds, which will only go to the best and most aggressive students.

A university education is certainly no guarantee of lifetime financial security, and the government hasn't shown it can support students if they fail. Why would a government that struggles to keep its youth in the home workforce ostracize those who have taken steps to safeguard their futures?

The social stigma of not being in poverty

Nova Scotians are being played off each other. Many people accept the stigma of being 'privileged' or 'advantaged' because altruistic notions about our relation to those in 'need' have been allowed to run rampant.

This is the propaganda of our generation at work: people trying not to complain because they don't want to sound greedy, advantaged, or naïve about their circumstances. It used to be that the picture of privilege summered in Europe and carried Daddy's credit card. Today's privileged youth have a parent to lean on when things get hard. Isn't that supposed to be normal?

Let me be clear. I am not saying that students in serious need should receive less. On the contrary, I believe they should have access to more. However, needs-based rights don't necessarily assist in our equality by allowing funds to trickle down into the lower classes. They can stifle our rights by keeping some students begging for 'just enough,' and by encouraging others to make poor financial decisions or prove their low financial status in order to qualify to receive loans.

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