In the Ben-Ishai, Schwartz and Werk study, they noted that they were told that at one bank the bank lends money to professional-school students on the basis of payoff expected on their degree rather than on the basis of their current income or that of their parents
According to the Just or Bust survey, law students in their third year had an average debt load of $71,444. More than one-third expected to have $50,000 of debt owed to financial institutions. Significantly, 13.5 per cent of those surveyed expected to have more than $90,001 in debt from a bank line of credit.
While the massive student loans market in the United States has stoked fears of a financial collapse, in 2010, Lawrence Engel, then vice-president of personal lending at TD Canada Trust, told Canadian Lawyer that professional student loans are an almost recession-proof’ product when trying to reassure potential law students they could still get one even after the subprime mortgage crisis threw markets into tumult.
Seven years later, the average balance of all personal loans and credit cards held at Scotiabank was about $100 billion, contributing to $15 billion in net interest income that the bank made in 2017. 6 per cent of the Canadian asset-backed-securities market. But we can say with certainty that law students are a revenue source for banks.
Law students also create revenue for federal and provincial government contractors. The Canada Student Loans Program is currently contracted to DH Corp. A Canadian company, in 2017, was purchased by an American investment firm and combined with a British fintech company to create Finastra – DH was kept intact for its Canadian business. The company made revenues off running the CSLP based on how many loans are taken out. When the number of student loan borrowers enrolled in the Canada Student Loan Program and/or provincial programs increases, resulting in higher workload, the fee paid by Canada to DH Corp. also increases, states payday loan Wilton the company’s 2015 annual report. That, of course, includes any federal government-funded loans or grants provided to law students. More than half of those surveyed in the Just or Bust report had at least $20,000 owing to government student loans.
All student debt, both private and government funded, currently makes up about two per cent of all debt in Canada, according to a report on the burden of post-secondary tuition that RBC released this year. While that is small overall, when you dig into that number, direr numbers emerge – student loan debt accounts for 27 per cent of all debt for people in the lowest-income brackets and, among Canadians under 35, one-quarter have student loans.
So why isn’t this a bigger issue in law schools? Perhaps it’s because, for a decent chunk of law students, money isn’t an issue.
We can’t say for sure how many of those are professional student lines of credit
One of the most significant findings of the Just or Bust survey is that 61 per cent of students surveyed entered law school with no prior debt and 30 per cent would leave with nothing owing to the government or banks. The implication here is that a not-insignificant number of students have no financial woes, at least when it comes to paying for law school.
Heather Donkers is the new president of the Law Students’ Society of Ontario. She says the results of the LSSO’s 2014 survey – which it plans on updating in 2018 – show clearly that Ontario law students see high tuition as an impediment to diversifying the student body and the legal profession. Overwhelmingly, students are recognizing that it’s not only a problem just in terms of actual debt repayment and actual practical concerns but also that it causes a huge issue for access to education and access to justice.