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Garnishments For Student Loan Debt

Student loan default rates of 14% can lead to garnishment orders

We often hear stories in the news of excessive student debt and high student loan default rates. The good news is that often in Canada student debit is not a significant problem collectively. In Canada students can go into debt but the average debit of a Canadian student, upon completion of education, is just under $13,000. This data does not include students who borrow on their credit cards, take personal lines of credit, or, borrow from their parents to cover expenses. This solely includes data for official student loans supported by the Canada Student Loan Program.

Since the beginning of the recession,  debt numbers have remained fairly consistent while the student debt default rate has actually gone down. In 2010-2011 the default rate was about 14%.

In 2011-2012, the Canada Student Loans Program provided financial assistance to approximately 35% (or 447,000) of full-time students and 6,500 part-time students  (nearly double the numbers of 2009). The total assistance provided in 2011-2012 was $2.4 billion, while in 2009 it was $11.2 million.  In 2011-2012, 185,000 students had difficulty making loan repayments.

Garnishment of Wages for Student Debt

Given the reality that 185,000 individuals had difficulty making loan repayments in 2011-2012, the odds are that some of these defaults have resulted in a court order for repayment. As an employer this means the odds are some of these will result in garnishment orders arriving on the doorstep of your organization. When this occurs an employer will have to act to garnish the wages of their employee the same as with any other court ordered garnishment.

Because the garnishment will be a court ordered action employers will be tasked with responding to each order as it arrives. This means verifying, calculating and remitting payments for each order.  At the end of this article we have provided resources  for managing a garnishment order.

Canadian Student Loan Data Trends

Average Student Loan Upon Completion of Education By Location

 
By Province/Territory 2007-08 2008-09 2009-10 2010-11 2011-12
NFLD/Lab 12,991 13,166 12,775 12,451 11,976
Prince Edward Island 15,534 16,588 16,595 17,062 17,115
Nova Scotia 15,380 16,061 16,520 16,748 16,472
New Brunswick 13,301 13,206 13,920 13,225 13,010
Ontario 12,326 12,638 13,020 12,699 12,724
Manitoba 11,015 11,266 10,999 10,208 9,865
Saskatchewan 14,063 14,699 15,116 14,925 14,408
Alberta 12,825 13,369 13,450 12,322 12,315
British Columbia 13,775 14,336 14,033 13,680 13,674
Yukon 13,143 12,722 13,768 11,966 12,825
Canada Total 12,881 13,222 13,404 13,013 12,972

 

Average Student Loan Upon Completion of Education By Institution

 
Institution Type 2007-08 2008-09 2009-10 2010-11 2011-12
University 16,269 16,341 16,872 16,634 16,572
College 9,939 10,085 10,135 9,601 9,520
Private Institution 10,152 10,624 10,602 10,467 10,742

 

Canada Student Loan Three-Year Cohort Default Rates

 
2003-2004 2004-2005 2005-2006 2006-2007 2007-08 2008-09 2009-10 2010-11
28.0% 19.4% 16.6% 15.8% 14.7% 14.3% 14.9% 14.4%

(Data from the Employment and Social Development Canada Statistical Review: Canada Student Loans Program 2012-2013)

HRInsider Resources

Garnishment Rules Around the Provinces

Garnishment Orders: Act Fast and With Diligence