147-Debt Matters Podcast: Student Debt in Canada With Mary Ann Mariott

 Wayne Kelly: Welcome to the Debt Matters podcast. I’m Wayne Kelly. Today we’re gonna talk all about student debt, and joining me I’ve got Marianne Marriot from Alan Marshall and Associates. Thank you very much for being here. 

Mary Ann Mariott: My pleasure, Wayne. Thanks for having me. Always excited to talk about these topics and see what we can do to help people understand them better.

Wayne Kelly: That’s it. A lot of people don’t. It’s one of those things they don’t pay attention to until they really need it, and then they don’t know where to even start. So this is where you come in. Can we start off a little bit about your story and your journey? 

Mary Ann Mariott: My story is I just happened into this industry. I don’t think anybody goes to school and says, I want to be a bankruptcy trustee.

In fact, I didn’t even know what that was, and applied for a job in it for an insolvency receptionist, and I had to look up insolvency in the dictionary and I thought, that doesn’t sound like very much fun. It sounded depressing and hard. But I applied for the job, got it. And basically loved what I was doing.

Worked my way up through the ranks, and now I am sitting in the trustee position and every day I get to help people navigate difficult financial situations and help them find solutions. And I still love it. To this day, after 30 years of the industry, 

Wayne Kelly: you had this whole preconceived, this doesn’t seem like fun, but yet there’s a passion there because when people don’t know where to turn, and you know now the emotional toll that happens to people.

You gotta sometimes walk home saying, oh yeah, it was a great day today. 

Mary Ann Mariott: Yeah. And people say It must be really draining doing what you do, and it actually isn’t because people come in Yes. With very difficult situations, very upset, very embarrassed. But the end of our conversation, they walk away with some guidance and some hope.

And more often than not, what we hear is, I feel so much better leaving than I did when I walked through those doors. 

Wayne Kelly: There is a whole emotional component to debt. Uh uh we have a kind of a health crisis going on when it comes to mental’s health these days. Is significant debts playing into that for a lot of Canadians, do you think?

Mary Ann Mariott: One of the things that I’ve noticed in general is that money, finances, it’s the last taboo subject. We talk about politics now. We talk about sex now. We don’t talk about money, debt, and finances. And so because people keep that bottled up, don’t talk about it, there’s a lot of shame around it. There’s a lot of frustration, there’s a lot of guilt, and because you’re not talking about it and getting it out there looking for solutions, it’s impacting your mental health.

Wayne Kelly: So when it comes to student debts, how big of a problem is this? What are the numbers? 

Mary Ann Mariott: I love me. My numbers, I don’t really, so I have the stats right here because I’m not much of a statistics girl, but I thought, you know what, let’s just take a look at the stats. Student loans and there were a couple things that stood out without going through a whole bunch of numbers the size of it.

So the total federal student name aid dispersed $6.6 billion. We’re not talking about a small number of government bills here. And the average loan balance at graduation, which surprised me, I thought this would be higher, is 15,000. So that kind of made me feel a little bit better, ’cause I thought that would be a lot more.

The default rate, this would’ve been back to 2021. ’cause their stats are dated 7%, three year default rate. So again, that doesn’t seem like a big rate, but when you start looking at the numbers, it’s a lot of people. And then when we bring that into the insolvency world, one in six insolvencies in Canada involve student loan debt.

That’s a big number, right? It, it’s a big percentage of insolvencies. And, and 30% of student debt insolvencies are filed by individuals 18 to 30, which I don’t think is really surprising. Again, you can see at that stage in your life, you’re starting out, you wanting to buy a home, build a family, and then you’ve got this other big debt burden that’s attached to that.

Wayne Kelly: Just today I saw a stat regarding rents in, I think it was just, maybe it was just in BC now. I’m not sure how far across the cut went. The stat said that average rents was $2,400 for a one bedroom in bc. Wow. And you think about that 18 to 30-year-old trying to pay that. That’s more than most people one paycheck every six weeks.

Absolutely. And that’s just, it’s not just the student debt that hits them, it’s all these other things. Like that. 

Mary Ann Mariott: Let’s look at another spinoff. What are these students doing who can’t afford to pay their student loans and renting, living at home? So now we add debt onto those who are supposed to be living alone and maybe enjoying their time with their kids gone, but kids aren’t going.

So there’s another side stress level that’s happening as a result as well. 

Wayne Kelly: So when it comes to solutions, first off, I guess you need to say that people aren’t alone. I mean, you said the numbers there. Only that 15,000 because I think it’s about probably 75 to 80 grand to get a four year degree. And so only having $15,000 of student debt we’re actually doing pretty good.

But when you look at it at 6.6 billion, I think you said number wise, that’s a lot of people that are holding out to debt. 

Mary Ann Mariott: I am not an expert at the percentages why they’re there, the numbers, I would assume that there’s a lot of even smaller ones that are bringing the average down. And I would hopefully assume, although I know this isn’t true in a lot of cases, those who are have the bigger student loan debt, you know, are hopefully having opportunities with more income that affords them to be able to manage that.

Maybe less so than someone who just got a, their first degree. And let’s face it, that’s just a minimal requirement these days. 

Wayne Kelly: I thought that student loan debt was not something that was ever forgivable. You had to pay it pretty much for the rest of your natural life at a very small amount of money. 

Mary Ann Mariott: So it is, it’s always been a part of the Bankruptcy and Inso act.

I say always, as long as I can recall in reading some of the earlier versions, but it’s changed a bit over the years. So I know when I started in the industry, you had to be at a school for seven years in order for you in order to include the student loan debt. They changed that for a period of time to 10 years.

Then they changed it back to seven. Obviously there was an issue in there where the 10 years was too long. Somebody looked at that reconsidered considered and they changed it back to seven. So basically, if you are out of school, have not returned to school for more than seven years. You can include it, which you know really is fair and reasonable.

It’s giving students a reasonable timeframe to see if they can make use of their education. And it’s setting a time to say, if you haven’t in this period of time, there’s probably a likelihood that there’s a reason that you haven’t or won’t be able to 

Wayne Kelly: do. You see it as just student loan debt that often causes people to go into bankruptcy or insolvency, or this is just another piece added on top of the other debts.

Mary Ann Mariott: It’s another piece added on top, especially if it’s in that qualifying seven year period. I have had a number of, what I’ll say, younger individuals, can I say that range age debts come in and it’s primarily student loan debt, but they’re within that seven years, it’s very new for them, and so they can’t avail themselves to the bankruptcy act, so proposals or bankruptcies.

So I would say for most it’s just a debt on top of a whole other pile of debt. Oftentimes that debt was incurred to also help them survive in school while they’re gaining their education.

Wayne Kelly: What options are available to somebody in that situation where they’re, the debt is starting to get outta control? What can they defer? Student loan payments? What are the options? 

Mary Ann Mariott: We do certainly recommend that people explore that if it is just student loan or is doing something with the student loan will appease the entire debt situation.

And so repayment assistance program is the most common one, RAP, um, and basically the government, there’s that in interest allowance. So basically they will look at your situation. And they will either lower the payments if that’s something that’s required, or you can pay interest only payments, or you won’t pay any payments for a period of time.

So there’s various levels, depending on the situation, a person’s in and what makes the most sense for them. With the interest relief, you do have to apply every six months. You have to show that you need that every six months. Whereas some of the other programs, they’re, they don’t have that requirement.

Wayne Kelly: Is that something that you would be required to see an LIT about, or is that something that the individual can take care of on their own? 

Mary Ann Mariott: We would take care of on their own. So again, definitely if someone’s in to see us and their student loan is less than seven years, we always ask if they’ve taken advantage of any of student loans programs.

If they haven’t, we send them back there to have a conversation in addition to just the general kind of blanket ones for everyone. There’s also disability repayment, plan assistance. So if you have a disability, and there’s plans for very specific professions, so healthcare workers, for example, would be one.

And and I think teachers right now, so do change their programs every once in a while, but if you do fall into a specific category. There might be something there as well, so I think it’s always a good idea if you’re struggling with your student loan debt, to make a phone call and just ask what programs are available.

Start there. Hopefully that would be enough maybe to help someone. If it’s not, then obviously we’ll look at the entire picture and how to help with everything. 

Wayne Kelly: If somebody is in this situation where it’s already passed the seven years, is consumer proposal or bankruptcy an option to get rid of the student debt?

Mary Ann Mariott: Yes it is. So as long as you’re outta to school, seven years and you have not returned, that’s really key. They just had a big major case that went to Supreme Court because there was some discrepancies in that. The different provinces were treating it differently. But there’s been a decision recently that basically says if you go back, if you’re out to school for six years and you go back, the clock resets.

So you have to be at a school seven years and not have gone back regardless of whether you’ve received any new student loan debt, if you went back. And those can be included in a proposal. The creditors get to vote in a proposal. Student loans sometimes votes, often doesn’t, but if enough of the other creditors vote for the offer, then they’re bound by it.

So that can be an advantage. And then in a bankruptcy, debt is included automatically unless the creditor argues it shouldn’t be. And there has to be a really good reason for that. So if it’s over the seven years, there’s no argument with that, and that can be included, released in a bankruptcy as well. I might mention there’s also a five year rule, and so if you are in a bankruptcy, and I do believe in a proposal too, it’s a little bit of a gray area and your student loan hits the five year mark, by the time you’re done, you can make an application to have it included.

So I’ll just mention that it is this other piece that sometimes gets overlooked, but there is a five-year rule that you can take advantage of, but the courts have to agree with you and your argument as to why you should be released from it. 

Wayne Kelly: There’s a lot of different rules to be following here when it comes to the debt.

I’m sure a lot of Canadians just think, I have to have this debt over me forever, and maybe some of the credit cards or consumer debt can be taken care of. So it’s great that you clarify. Is there anything else we need to know regarding student loan debt? 

Mary Ann Mariott: It’s a five year rule is the least known one. The only other couple things I might just throw in there is that if you’re in front of the courts trying to be released from your scene loan, it’s really important to show that you, there’s been good, safe efforts made to pay, and so reaching out, seeing if you can use any of the repayment assistance programs.

If you’ve tried to, uh, negotiate a payment with student loans that looks good on an individual. So I think that’s always such an important first step. Even if it’s not successful, it can show good faith and that can work in your favor if you’re trying to do an application at some point to be released from it for other reasons, other than it’s not for seven years.

Wayne Kelly: Right. And if people want more information, they can contact you for a free consultation at, we can help ca and that’s. Free consultation really is free. 

Mary Ann Mariott: We are here to help and we will help you review your, we’ll, help review your options, the pros, the cons, and the costs, so you walk away informed and hopefully ready to make the decision that’s best for you.

Wayne Kelly: And oftentimes that’s enough. That’s what people want is to they that they don’t know what their options are and they just sit there stressing and worrying. So it’s wonderful that you can be there to help out. Marianne, thank you very much for the time today. 

Mary Ann Mariott: Thank you, Wayne. My pleasure. 

Wayne Kelly: And if you want more information, and once again, you can check out the website, we can help.ca or you can check out debtmatters.ca.