58 AUGUST 2018 C A N A D I A N L a w y e r 4STUDENTS
it used, but I had to take out a chunk of cash and the line of credit to
do that," he says. He ended up draining the line of credit for his avail-
able amount for the year. "You have to leave X amount of money to
cover off the interest payments that are occurring," he said. "And, so, I
wound up owing them several hundred dollars."
One major question is whether law students understand exactly
what they are signing up for when they get these lines of credit. In
2017, Stephanie Ben-Ishai, a professor of law at Osgoode Hall Law
School, Saul Schwartz, a professor at the School of Public Policy &
Administration at Carleton University, and Nancy Werk, an inde-
pendent consultant, decided to ask law and medical students if they
understood the terms of their line of credit contracts. eir study
followed an American study that asked first-year students who get
undergraduate student loans whether they understood how much
student debt they had. About half of those surveyed did not.
Ben-Ishai, Schwartz and Werk looked at a small sample size —
they interviewed 11 law students at Osgoode Hall Law School and 16
first-year medical students at the University of Ottawa to determine
whether they understood the terms of their lines of credit contracts.
What they found was that, "by and large," the law students they spoke
to were fully informed about their lines of credit and what they had
borrowed, a fact the researchers credited to the plain language used in
the line of credit contracts presented by the people they interviewed.
"In general, they talked about their lines of credit in a remarkably re-
laxed and matter-of-fact way — no high anxiety was apparent," the
study reads, a result, perhaps, of students knowing they would have to
borrow money if they wanted to graduate.
Ben-Ishai, Schwartz and Werk noted that law students were also
aware that their plans might not work out and that that would present
a challenge for them — some of the law students were described as
laughing when they talked about the amount of debt they owed.
While law students may be aware of what they are getting into, they
may not be aware of what life can throw at them in the meantime.
Tronin moved to Ottawa with her partner, who was also going to
school and had his own debts to pay off. ey rented an apartment for
$1,200 a month that they had to furnish — paying to move furniture
from Toronto to Ottawa was far more expensive than just buying new
furniture. Soon aer the move, her partner had to have two extensive
root canals, each costing more than $1,000. ey had no insurance,
so the dental work had to be paid for with the line of credit. And with
a demanding first-year schedule, there was no way Tronin could get a
part-time job to supplement their income. To make things work, she
even used credit cards to bridge financial gaps.
"We don't talk about students being poor or living in poverty or
having those barriers," Tronin says. "We just talk about [it] as if it's an
outside concept that we're going to deal with once we're out there."
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.
Banks certainly consider law students potentially good customers.
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."
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 Cana-
dian Lawyer that professional student loans are "an almost 'recession-
proof ' product" when trying to reassure potential law students they
could still get one even aer the subprime mortgage crisis threw mar-
kets 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.
Lines of credit are also traded on Canadian securities markets. In
March 2018, unsecured lines of credit accounted for 2.6 per cent of
the Canadian asset-backed-securities market. We can't say for sure
how many of those are professional student lines of credit. But we
can say with certainty that law students are a revenue source for
banks.
Law students also create revenue for federal and provincial gov-
ernment contractors. e Canada Student Loans Program is cur-
rently 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. e company made revenues off run-
ning the CSLP based on how many loans are taken out. "When
the number of student loan borrowers enrolled in the Canada Stu-
dent Loan Program and/or provincial programs increases, result-
ing in higher workload, the fee paid by Canada to DH Corp. also
increases," states the company's 2015 annual report. at, 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
"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."
HEATHER DONKERS, Law Students' Society of Ontario
