Federal Government To Write Off $178M Worth Of Student Loan Debt
The money is the result of 32,554 loans federal officials think it’ll never collect for three reasons:
- The debtor filed for bankruptcy
- The debt has gone past the six-year legal collection limit
- The debtor has not been found.
When the government wrote off debt last year, it was to the tune of $176 million in 33,967 loans.
After federal officials realized how much loans were being written off in previous years - $295 million in 2015 and $312 million in 2012 – they stepped up their efforts to collect the remaining balances on student loans.
The former Conservative government ordered officials to increase their collection efforts to reduce the number of write-offs it was displaying.
In the first budget, a new tool was presented to the Canada Revenue Agency – legal changes that let it use tax information to collect debts from the student loan program. The Employment and Social Development Canada oversees this effort. The CRA thought it would be able to use this last year, but the approval had been delayed due to the federal election.
The CRA provided documentation that shows the agency attained $208.8 million in unpaid loans, which is a 3% increase from 2015 to 2016.
The CRA agency is the one that collects defaulted loans, which it can do by withholding income tax refunds to pay the outstanding amount or send cases to the attorney general that could lead to wage garnishment or seizure of assets.