>I originally wanted to go to UWaterloo, but coop is mandatory,
Yes, but only for engineering programs.
>and if you can't find a job (seems like a good chance this will happen at the moment) they don't let you just go back to school and study another term.
The residence I'm staying at has a lot of upper-year students, many of them in co-op. None of them know anyone who hasn't been able to find a job.
>they don't let you just go back to school and study another term.
Since co-op is mandatory, and there is only one co-op section for each engineering, they can't let you return to school because they won't be offering any of the courses that you need to take. In CS though, you can take a school term instead.