The Conservative government is writing off nearly $300-million in unrecoverable student loans this year, prompting calls for Ottawa to change its approach to higher education.
Encouraging young Canadians to improve their skills is a common theme of government advertising and political speeches. But the Canadian Federation of Students said the large number of defaults shows thousands of students trying to improve their skills fall through the cracks.
Supplementary spending estimates tabled in Parliament Thursday include a $294.6-million request from Employment and Social Development to write off 63,540 debts under the Canada Student Loans program.
The majority of the debts are related to borrowers who defaulted in repayment in 2008 or earlier.
With a federal budget on the horizon, Jessica McCormick, the national chairperson of the Canadian Federation of Students, said the large number of defaults highlights the need for more grants targeted at low-income families.
Ms. McCormick points to studies showing that many of the existing programs – including government tax credits and the Registered Education Savings Plan – tend to provide more benefits to students from higher-income families.
"The reality of somebody from the lowest income quartile being able to decide to put some money aside for their kid to go to college or university just isn't something that is actually realistic," she said.
The rising amount of unpaid debts comes in spite of the fact that interest rates have been near record lows for several years. However, the youth unemployment rate for January stood at 12.8 per cent, nearly double the national unemployment rate of 6.6 per cent.
The department says federal programs for students have brought default rates to an all-time low, reaching 13 per cent in 2011-12.
Spokesperson Marie-France Faucher said bankruptcy or severe financial hardship are among the reasons for writing off debt.
"The government writes off student debt only after all reasonable efforts to work with borrowers to make payments have been exhausted," she said in an e-mail.
The department does not report losses for each fiscal year. Rather, it sometimes books losses that cover a period greater than 12 months. Thursday's figures cover a 25-month period ending June, 2014. The department has previously reported in 2012-13 that 44,048 loans were forgiven worth $231.2-million. In the year before that, 36,657 loans were written off at a cost of $162.2-million.
The supplementary estimates released Thursday ask Parliament to approve $1.8-billion in new spending across the federal government. They represent the third and final instalment of additional spending requests for the current fiscal year that ends March 31.
Other major spending items in the estimates include $400-million for Treasury Board severance payments related to public service collective agreements; $196.3-million for Treasury Board to address a spike in long-term disability claims from Canadian Armed Forces members and $32.5-million to boost IT infrastructure at the National Research Council of Canada after a July, 2014, cyberattack.
The estimates also include an additional $3.5-million to the House of Commons for increased security and $900,000 for Senate security.
As expected, the estimates also include a National Defence request for additional funding. The department is asking for $138.1-million for the military mission in Iraq and its support for NATO-led efforts "to counter Russian aggression, particularly in Central and Eastern Europe."
Defence Minister Jason Kenney later released a more detailed breakdown of these expenses. He said $122.6-million is for the military operation in Iraq, including $8.8-million for personnel; $73.5-million for aircraft and ammunition costs; $2.2-million for meals, incidentals and ground transportation; $34.2-million for meals and accommodation "while in theatre;" and $3.3-million for other costs.
In addition, DND is requesting $17-million for Operation Reassurance in support of NATO.
Some House of Commons and Senate committees will hold hearings to hear from departmental officials on these spending requests before Parliament votes to approve the spending. However ,the votes are considered routine and would be expected to pass easily given the governing Conservatives have a majority of seats in the House of Commons.