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Mel and Tyler

Mel Lefebvre and her partner, Tyler Bonnell, both face substantial student debt – but how much will the banks make off their student loans? Photo courtesy of Mel Lefebvre

Note: This article originally appeared on OpenFile Montreal, to which this blog post linked for the full text. Since September 2012 OpenFile’s website has been “on hiatus” and the news organization shut down due to financial insolvency. Therefore, the full text of article is now posted below.

Mel Lefebvre was on the way to starting her adult life.

After finishing her undergraduate degree in environmental studies, the Montreal native took up a graduate journalism program with an eye to writing in her field and starting to pay down her student debt. Then things took a twist.

She got pregnant. Or more precisely, she got pregnant with $23,000 in student debt.

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“It’s really worrisome on a personal level because I’m spending most of my paycheque paying back my debt,” said Lefebvre, who is expecting her baby next January.  “How am I supposed to make savings at the same time to make sure that I can pay the debt back, and be on maternity leave where I’m going to have a lesser income?”

“It’s scary.”

Though situations at graduation differ, Lefebvre’s debt portfolio is common among students who need financial assistance to pay for their post-secondary education: a student loan, a student line of credit and a credit card.

The most recent figures from the Quebec government’s student financial assistance agency, Aide financière aux etudes (AFE), show that in the 2009-2010 school year, students or former students were paying the interest on over $1.8 billion in loans.

Lefebvre got a loan of about $12,000 for her undergraduate studies, slightly less than the average undergraduate loan of $12,923 in 2010, the year she graduated. She also got a smaller $1,000 loan for her graduate program at Concordia University, plus $5,000 each on a line of credit and a credit card.

At 31-years-old, Lefebvre represents a growing cohort in the days of precarious employment: highly educated, highly indebted.

As with all government-backed student loans in Quebec, the interest on her $12,000 loan began accumulating a month after she completed her degree. After six months, she had to start repaying it.

Lefebvre’s lender, Royal Bank, estimates that at her current repayment rate, and at 3.5 per cent annual interest, she’ll have paid back the loan seven years from now, when her child is 6 years old.

Her $5,000 line of credit is likely to take even longer to pay back since she has a 4 per cent annual interest rate and no timetable, only paying “$50 now and then,” when she can.

Although Quebec’s banks are managing hundreds of millions of dollars in student loans each, it’s difficult to determine how much money they’re making from interest payments. Canadian banks aren’t required to publish that specific information, nor does the AFE collect it.

One indirect indicator is the amount of interest the government pays on student loans while students are still in school. The loans are only guaranteed by the government, not provided by them directly, a system in place since 1966. While students are still in school, the government pays the interest on their loans, provided by the banks.

In the low-interest climate of 2010, which persists today, Quebec paid $27 million in interest on $1.6 billion in loans. That’s a rate of return of about 1.7 per cent. Applied to the $1.8 billion in loans students were paying back in 2010, the rate would translate to about $30 million in interest for the banks.

Quebec’s top three lenders in 2010 were Desjardins ($957 million), Royal Bank ($247 million) and National Bank ($221 million), as reported by the AFE.

Desjardins was by far the biggest, holding nearly 60 per cent of the loans whose interest was being payed by the government in 2010. But the bank was unwilling to comment on how much they make from student loans. Royal Bank said that they wouldn’t release the figures for competitive reasons.

National Bank provided some insight by revealing that interest from student loans represents 0.008 per cent of their annual revenue. Applied to the total revenue for 2011 noted in their annual report (nearly $4.6 billion), student loan interest revenue stands at a measly $367,360. The figure could not be confirmed.

Personal finance expert and Globe and Mail columnist Rob Carrick has been researching and writing about student finances for years. Though the banks make some money from student loans, he doesn’t think they are a “profit centre” for the banks.

“They’re doing it because it’s needed and because it’s a way of establishing financial relationships with people that they can broaden out later on once people are through schooling, and start selling them products,” said Carrick.

As with tuition, student debt is higher outside Quebec. The national average weighs in at a bloated $27,000 for undergraduates.

But when it comes to student debt in Quebec, Carrick says the “banks aren’t the bad guys.”

So who is?

“You might argue that the real villain here is the job market,” said Carrick of the apparent dearth of “career-building first jobs.” The latest national youth unemployment rate of 14.3 per cent would seem to support his argument.

While students tattooed with red squares might argue the government is to blame, Lefebvre has focused on lightening her debt load, ridding herself of her high-interest credit card debt as quickly as possible. She also tackled her small graduate studies loan before the interest began to weigh on her.

But she still carries a $15,000 burden, working two part-time jobs and freelancing on the side, her partner still completing his doctorate with his own $10,000 debt on the way. In the meantime, the two prepare for their little bundle of joy to arrive free of charge, for now.

Student loans, student debt

Source: AFE 2009-2010 annual report




Number of undergraduate students with a student loan

46,844 (41%)

58% (source)

Number of graduate students with a student loan

12,020 (66.5%)

Total value of student loans held by Quebec banks

$1.6 billion

Total value of student loans in repayment mode

$1.8 billion

$15 billion (source)

Total interest paid by government on loans of students still in school

$27 million

Average undergraduate student loan debt


$27,000 (in 2009, source)

Average graduate student loan debt


Montreal youth unemployment rate

13% (source)

14.3% (source)

Founder of Montreal pots and pans protest surprised by success

Hundreds of people stood at the corner of Beaubien and Christophe-Colomb in Montreal banging on their pots and pans Wednesday night to protest Quebec’s Bill 78.

“It’s a casserole frenzy here,” said François-Olivier Chené, the movement’s Montreal founder, speaking over the clamour as the crowd continued to gather near 9 p.m. – well past the 15-minute window suggested for the cookware protests.

The boisterous protests are a reaction to the Quebec government’s highly-contested Bill 78 that puts strict limits on public assembly and imposes stiff fines on protesters, among other measures aimed at putting a lid on over three months of student protests.

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Santiago, Chile. Student march May 16, 2012 - High school and university students march, demanding free, public, secular and quality education. Photo: Luis Fernando Arellano

Quebec student protests echo movement abroad, as noose tightens

Note: This article originally appeared on OpenFile Montreal, to which this blog post linked for the full text. Since September 2012 OpenFile’s website has been “on hiatus” and the news organization shut down due to financial insolvency. Therefore, the full text of article is now posted below.

By day, then by night, they came out en masse to protest the cost of education. Months of protests only ended in increasingly violent episodes by the police baton, if not by the student’s stone, peppering a political landscape dominated by the student movement.

No, this isn’t Quebec. It’s the streets of Chile and the massive student uprising that has overtaken the country for close to a year now.

“The mobilization has been quite similar, but of course the tension at protests in Quebec has been toned down compared to Chile,” said José del Pozo, a Chilean native and professor of Latin American history at the Université du Québec à Montréal (UQÀM). “Social conditions and historical and cultural factors in Chile mean that there is a greater degree of aggression towards the carabineros.”

And of course, in Quebec, there are no water cannons.

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Still, in both places, marches brightened by costumes, sticky slogans and a festive air have given way to tear gas, broken glass and projectiles, as tens of thousands of students have flooded the streets in the biggest upheaval seen in decades.

This week the parallels multiplied as legislation to stymie protests was introduced Thursday and Quebec’s education minister, Line Beauchamp, resigned. Chile has pushed forward a proposed law that would impose severe penalties for public assembly and has already seen two education ministers expire in the heat of boiling student tensions, with corresponding cabinet shake-ups.

The pressure, however, hasn’t knocked Quebec’s three main student groups off balance. In Chile, “they had to build the unity of the movement to be able to go into the streets united and strong against the government,” said Marianne Breton Fontaine, a student at UQÀM who also believes unity has been “decisive” in Quebec because of the sheer number and diversity of student associations.

Breton Fontaine, a member of the Communist Youth League, had followed the Chilean crisis, but got to meet a central player when Camilo Ballesteros, one of the movement’s three original leaders, came to Montreal as part of a cross-country tour.

Ballesteros spoke to a group of over 100 students and members of the public at UQÀM about the origins of the Chilean movement and what they seek. “We demand free, accessible and quality education,” he told Breton Fontaine in an interview.

CLASSE, called the most radical of the student groups in Quebec, has also proposed moving towards free post-secondary schooling.

Ballesteros conceded that free university in Chile is not immediately possible, but that students want broader change in how public money is managed, insisting that Chile’s natural resource revenue must more widely benefit society.

Though, as Del Pozo argued, both movements’ demands are mainly economic, Chileans are facing tuition fees that shackle families with debt.

“In Chile tuition fees are triple what they are in Quebec and that’s in absolute terms,” stressed Del Pozo. Part of the problem is the privatization of Chile’s education system brought about by reforms introduced during the Pinochet dictatorship in 1981. Students argue this has made education a lucrative business. And with Chile’s gross domestic product (GDP) per person pegged as the lowest of the OECD countries, high tuition is salt in a large wound.

UQÀM masters student Simon Morin has written about the Chilean conflict in his political science studies. “We can’t understand what’s happening in Quebec without also looking elsewhere,” he said.

Nearly 40 per cent of Quebec students are approaching week 15 on strike, while the Chilean movement marks a year this month with new marches of over 50,000 demonstrators in the capital Santiago.

Like Jean Charest in Quebec, Chile’s President Sebastian Piñera has held a hard line. Concessions made to students this week and in April failed to inspire Chile’s students.

Public support, however, has not been comparable. Chile’s students have consistently held the support of a large majority of Chileans, whereas support in Quebec opinion polls has dropped after hovering near 50 per cent at the outset.

Public disturbances and clashes with police have not helped. Ballesteros has publicly denounced disturbances which seem to favour the student movement. Gabriel Nadeau Dubois, spokesperson for CLASSE, has seemed unwilling to do so.

And where has it all led in Chile? President Piñera’s approval rating hit record lows and stands at 24 per cent as of April with an election coming in 2013 and education the hottest issue among Chileans.

If their latest public plea is any indication, Quebec students want to negotiate. “Students want to participate in defining the solution, the conditions of the return to class and the management of university funds,” said Morin.

“In short, they want to participate in the society in which they hold a stake and the situation is very similar in Chile.”

Photo: Luis Fernando Arellano — Student march May 16, 2012, Santiago, Chile – High school and university students march, demanding free, public, secular and quality education.