Canada’s growing student debt crisis

Elsa Ascencio was only 12 when she knew she wanted to be a lawyer.

That's how old she was when her father was hurt on the job, his back "shredded" while working as a labourer in a factory.

"It was devastating," she recalls. "One of the things my father used to do was carry us on his back. And suddenly, dad couldn't do that anymore."

A refugee from El Salvador, who'd fled death squads with his wife, he also couldn't speak English very well. He struggled to find a lawyer who spoke Spanish. Ascencio says everyone she knew in their community had some form of workplace injury that interfered with their ability to work.

"The reality is they had to use their body for labour."

Seeing first-hand how vulnerable factory workers were and experiencing the impact of that set her on her path. Ascencio says she didn't want to see another kid who loved getting piggybacks in the morning be deprived of that time with their dad.

"It was kind of a 'how dare you hurt my father' moment," she says.

"That expanded to other parts of my community. I knew the value of law in terms of opening doors for me. It's not another lawyer; it's another leader in the community."

However, getting through the law school door wasn't easy. She took a year off after her undergrad to work and save money. That only covered her tuition in first year, but persuaded the bank to give her a student line of credit. Ascencio's parents weren't in a position to help her, so she graduated from the University of Ottawa with $120,000 in debt.

She was called to the bar in June 2019 and has been freelancing with several labour and employment lawyers back home in Toronto since. She's had ten members of her community come to her for help.

"They trust me because I've fostered those relationships," Ascencio says. "I'm lucky I have files coming my way, but I need a solid stream of clients coming in."

She's only able to do the kind of work that drew her to law school because she's living with her parents in their apartment near Jane and Finch.

She knows it's all temporary. But to make any dent in her student loans, she'd need to charge $700 for a demand letter and $300 for giving advice. Those coming to her for help aren't in a position to pay that, and she's not in a financial position to offer them contingencies or deferred retainers.

"It's frustrating because I want to help them," Ascencio says. "But I need to be paid and then work."

It's the same reason she can't open her own practice, even though she has the layout of the office and its colour scheme already planned in her head. Taking a financial loss for several years before earning money is not something she can afford.

The Law Students' Society of Ontario heard stories just like this many times over as part of its "Just or Bust?" survey, released in early 2019, which asked students about their tuition, debt and financial aid experiences. The LSSO includes representatives from all seven law schools in the province and published a similar report in 2014 about the real impacts of financing a law degree.

What stood out for Heather Donkers, the LSSO's 2018-2019 president, is how people who are first-generation law students are graduating with some of the highest levels of debt.

"The people who are most wanting to help their communities are the same people who often can't afford law school or experience barriers. And it works at both ends," she says.

Tuition costs at Canadian law schools vary widely across the country -- between $7,000 and more than $35,000 per year outside of Quebec, where fees are a lot lower for the province’s residents. According to Statistics Canada, the average law school tuition is $12,388. With fees in Ontario topping out at the higher end at some schools, people either get in and can't go because they can't afford it. Or they're able to access loans and lines of credit and graduate more than $100,000 in debt.

All of which begs the question whether it is really still worth it. Not according to legal industry analyst Jordan Furlong. “I would argue legal tuition is now overpriced. But you could also argue that in 1993 it was vastly underpriced: $2300 was ridiculously cheap." He also wonders whether legal education, overall, is better today than when it was affordable. “I’m pretty sure it’s not,” he says. “It may bet better in some ways. But is it ten times better?

Answering that question depends in part on what aspiring lawyers wants to do with their education. Can they afford to work in the areas that inspired them to attend in the first place? Many students enter law armed with the desire to help vulnerable, low-income and marginalized members of their community— family, immigration, labour, and criminal law matters.

"I'm in that position right now," Donkers says. "I came to law school to do criminal law and nothing else. I was a victim of crime a couple of years back, and after going through the criminal justice system, I decided I wanted to be a lawyer. I never knew a lawyer before law school. I had no family connections in that respect."

She recently graduated with $195,000 in debt and wondered if she could even afford to article for the Crown, despite the fact it was her dream job.

"I took it because it's all I want to do, and I'm just hoping to find a way to make it work. But ultimately, it may be that I'm unable to stay in criminal law. I'm pretty much precluded from becoming a defense lawyer because most are sole practitioners," Donkers says.
 
"I don't have the capital to open a sole practice. And even if I did, I wouldn't be able to charge my clients the kind of rates I want to charge them. I would need to charge a rate that would allow me to live comfortably."

It isn't just that debt determining what type of law people practice. It's also a driving force behind where they ply their trade, with many new graduates seeking out high-paying positions at large firms in urban centres. Donkers says she knows many people who have ended up working in corporate litigation on Bay Street who despised that idea throughout law school. Among them are classmates from rural areas who hoped to return to their hometowns to practice, but now can't afford to.

"They're doing basically the complete opposite of what they intended to do, and that's sad," she says. "Everyone has their big dreams. That's not to say there's anything wrong with corporate law, but for a lot of people, that's not their goal. They've ended up there because they had no other choice."

Compounding the crush of debt is a shift across the legal profession that has firms increasingly relying on automation to handle more routine work.

Whether it's wading through boxes of documents for discovery or drafting contracts, there is now powerful software capable of handling it all — and at rates far faster than the new law graduate who'd traditionally be tasked with this kind of grunt work.

"So the amount of work that has traditionally kept articling students and young lawyers gainfully employed is starting to be siphoned out of law firms," says Furlong. He notes that one of the world's biggest legal technology success stories is Toronto-based Kira, which does automated contract analysis.

"Law firms being law firms, the likely outcome is that they will hire fewer entry-level associates."

That's particularly problematic for new lawyers when all signs point to a looming recession, which will also mean fewer entry-level jobs in law firms.
 
"I think it is a perfect storm into which today's law graduates are sailing," Furlong says. "It's not a brand new phenomenon by any means, but I do think it's a steadily worsening one."

Since the global financial crisis of 2008, he says, many lawyers have the same story to tell, whether their year of call is three or ten years ago.

"They came out heavily burdened with debt and recognized pretty quickly that they were going to have to work a number of years steadily and at a significant income to make a dent in that debt."

Vivene Salmon remembers it well. The new president of the Canadian Bar Association graduated in 2009. She says traditional legal education didn't adequately prepare her indebted cohort for a market in transition. With money in the drivers' seat, many had to park their passion and put off the interesting legal work that drew them to the profession.

They also had to put off marking some of life's milestones.

"I think that's problematic on a societal level in so many ways," she says. "You see a lot of your friends who didn't take the law path. They're married, they have a house, they have kids and are doing all these other things. They're living life. And here you are, struggling. It's very challenging and disheartening. And not a lot seems to have changed over the years."

In her role at the CBA, Salmon is trying to highlight these issues, mainly the patchwork of loan assistance across the country. For her, it's very much an issue of equity.

"If you have people who are first generation lawyers or lower income completely opting out of law school because of the challenges of paying for it, that's a loss of diversity in the legal profession which is sorely needed," she says. "It's a big issue in terms of racial diversity as well."

Donkers believes the ramifications of enormous debt loads on the profession will be profound. While it is much more diverse than it once was, she says when it comes to socio-economic status, there's been a regression.

"We're going backwards."

It will reach a point where young people won't see themselves in the profession because they're not represented within it.

"They'll just grow up knowing they're never going to be able to access that given the sticker shock that comes with a $37,000 price tag."

For Ascencio, she's one of very few in her graduating class who is determined to try and work in the field she's passionate about, but says striking the "goldilocks balance" between being too stubborn and being a sellout isn't easy.

She doesn't fault her peers who have embraced a more general approach to get by, but says suffering on Bay Street to pay down debt isn't an option. She struggles with mental illness and says her health — and being happy — is her priority.

'I don't understand why low-income folks have to be miserable for the beginning of their career," she says. "I just refuse."

She also carries a sense of obligation to her community and the people around her, shaped by her family's escape from civil war.

"I was raised with the belief that helping others was a way to survive in this world. For me, law is an extension of that," Ascencio says.

"I do have moments where I ask why I chose law. I don't have buyer's remorse. But I do have this underlying frustration that it shouldn't be this way."