Student loan default recalled & credit rating corrected

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I am one of the lucky few that has survived the potential financial devastation of a Canada Student Loan default. The loan default happened because of a succession of bureaucratic errors that occurred due to the mishandling of a late certificate of enrollment form. I am happy and so relieved to say that the loan has been recalled and is no longer in default. Even better- my destroyed credit rating has been returned back to normal!

While this is remarkable, the fact remains that I should never have been subjected to the harassment I encountered, nor paid thousands of dollars on loan interest out of pocket. So much time, money and effort was wasted because of the deeply dysfunctional communication and administrative procedures between the Canada Student loans, Royal Bank student loans and the outsourced companies managing student debt. My situation should never have happened (as I am a full time student in my last year of completing my PhD) but the fact is, this should never happen to anyone. I know there are many of you out there who might be in a similar situation, so I am posting my story so that it might help someone else.

Before I give you a break down of some details I want to stress that I couldn’t have found my way out of this without the support from John LeBlanc at the CFW. There was a point where I was so stressed out by the letters and phone calls I received I just didn’t think I could cope. For weeks and months I spent hours of wasted time on the phone, each time getting conflicting information. I lost sleep over my devastated credit rating, getting sick and soon realized I was in over my head. I looked for support through my university and the financial office, but they wouldn’t or couldn’t help. When I received a letter that I had to repay my entire student loan before the Canada Student Loans would consider reinstating my interest free status – I thought my academic career was over. I notified my department director stating that I might have to withdraw from the program and take a leave of absence due to the financial pressure. I researched lawyers and consulted with many of them, but they all said they couldn’t be of assistance because either they didn’t know enough about the law in the area or their fees were to costly for my meager student income. Finally, one young intern lawyer from a firm I contacted, feeling sorry for me, did some extra research on his own time and then referred me to John. Immediately, John was able to give me tangible answers and counseling as how to maneuver my way through the maze of confusion and spiraling debt to correct the situation and have my interest free student status reinstated and the loan recalled. He was realistic saying that it was rare for such a situation to correct itself and return to “normal”. Despite the odds, John went beyond the call of duty by personally pleading my case with key players in the industry at the level of government and with case officers. It worked.

A year ago my student loan went into default. It all started from the fact that I was away doing field research in Australia and couldn’t get access to the Canada Student loan certificate of enrollment form before or during my trip. I tried to do so before I left, but the Student Loans officers at my university couldn’t process them due to the fact that I hadn’t been registered for the upcoming semesters. I phoned the financial services at my university from Australia and requested they mail me the necessary forms. I only received the provincial forms. I tried to reach the offices by phone—but with the time difference between Canada and Australia (24 hours), the long wait to get through to an officer, it was next to impossible to reach anyone. I thought perhaps (stupidly) that the protocols for forms had changed and that I didn’t need it as the office hadn’t included it. When I returned to Canada, I realized the error when I read a letter from CSL stating that the certificate was late. By then I was on my way to Europe to attend a conference. I contacted the financial awards officer about the situation and she sent me the forms, which I signed and returned to her. She made three attempts to fax the forms to Canada Student Loans, and each time they returned them noting errors and then lack of clarity of the fax. This delayed the delivery of the certificate by about two or three months. It is during this process that the loans went into default. The officer was confused as to why the certificate was not being accepted by fax. This was a normal process that she had done many times before, and she could not get through anyone at student loans to sort the situation. I had to network between the university loans officer and the student loans officer—a position that is neither my job nor any other student’s job! It is clear to me that CSL needs to create new systems of exchange with university officers, and give them more authority to act on behalf of students.

Getting dizzy yet? Well, things get fuzzier. By the time the CSL accepted the certificate, the Royal Bank Student loans had released the defaulted loan to Revenue Canada. The CSL said that they could not reinstate my student status until the Royal Bank reversed the loan. They gave me a number and name to call, which was incorrect, and for weeks I made phone calls and spoke with debt officers who knew nothing of my situation (despite the enormous file that had created) and I had to repeat every detail of the situation over and over each time as I was passed from one extension number to another.

And then there was the abuse I endured. One agent from the Royal Bank was so particularly abusive to me over the phone, I was shocked. He yelled at me and insisted that I pay back by student loan immediately and demanded my address. He did not believe me when I stated my address and proceeded to yell that I was not listening. When I told him that he had misunderstood that fact that I was living temporarily outside of the province where I was a full time student, he again misheard me and insisted that I was making a mistake with my address. Either he did not understand that graduate students do not have to live in the same province they study in, or he was himself confused about the geographic regions in Canada. I politely told him to have a good weekend and hung up the phone. The management and training of agents working at student loans call centres is at issue here, and I realized, in the moment of my own frustration and feelings of victim hood, that there needs to be more checks and balances on the quality of phone interactions. Student loan holders should be considered as customers, not social deviants and subjected to punitive and aggressive behaviour.

On the other hand, I did deal with competent agents who did try to help me out. Towards the end of the long saga and after John’s personal involvement and persistence, I had one loans officer from the Royal Bank treat me with respect and follow through with the steps that had to be taken. Once the Royal bank loans officer managed to recall the loan from Revenue Canada (This is about the a years worth of time) then I received word from an officer at the CSL that they were able to reinstate my interest free status and clear all outstanding debt. After that was done, then Revenue Canada adjusted outstanding interest and debt. Finally, all three organizations (in conjunction with outsourced subcontractors) managed to reverse the defaults (10!) noted on my credit rating through Equifax Canada.

There is a light at the end the tunnel. I can once again apply to rent an apartment without having a co-signer, I can apply for home insurance and get a reasonable premium, I can finally- after more than a year, feel in control of my finances. I try not to dwell on the humiliation, shame and devastation that this process caused me. I also don’t want to stay angry. It has taken me many months to write this because I just felt too drained by the whole process. However, now, with some time and distance, I can see some positive results. The fact is this ordeal made me work even harder to find tenure track employment at a university. I didn’t let the absurdity of the student loans situation get me down and I channeled the anger into a productive manner by applying for full time work. I am happy to say that I did get a job offer and will be starting my new role as professor this fall. As an educator, I will make it a priority to assist students in every way I can in these matters. As far as I am concerned this is political issue that must be dealt with at the level of both government and university policy. Students should not face crippling debt, harassment from debt collectors, nor become victims of the systemic failure of student loan programs in Canada.