By Rebecca Tucker
Think you’d rather be dead than deal with debt? Think again.
A report issued last week reveals that the federal government continues to collect on student loans long after the borrower has died, often relying on grieving parents to repay debts.
“We have collection agencies calling the parents of deceased students, who are already grieving, demanding that they pay these debts,” said Julian Benedict, founder of the Coalition for Student Loan Fairness (CLSF).
Since 2002, the Canada Revenue Agency has pursued at least 100 dead borrowers and collected $14,645.53 from friends or family of deceased or permanently disabled students, Benedict said.
He added that the government doesn’t have the legal right to collect on the loans — it just goes ahead and does it anyway.
“What parents might not know is that they don’t have to pay back these debts,” Benedict said. “The government doesn’t have the right to collect, but the collection agency is willing to do anything to get [its] money.”
Ryerson, unfortunately, can’t do much for those who are being hounded by the agency since loans are beyond the school’s control.
“From Ryerson’s perspective, when a student passes away, we close all of their academic accounts,” said Carole Scrase, Ryerson’s manager of financial assistance.
Despite the pleas of parents, the feds aren’t acknowledging the problem. Benedict has been lobbying the government since April 2007 to forgive the loans, but he hasn’t had any of his calls returned.
However, an e-mail from Human Resources and Social Development Canada said that the issue is under immediate investigation and changes to the current system are imminent.
“The process will result in changes that will be announced in Budget 2008,” the e-mail said. The loans that the government is chasing are risk-shared loans doled out between 1995 and 2000.
Under the risk-shared system, the government and major banks jointly shared the risk of guaranteeing the loan. Starting in 2000, when the government began to finance student loans independently, debts carried by deceased students have been forgiven.
Between April 2003 and June 2007, $6.5 million in student loans were forgiven due to the death of the borrower.