Loan program changes hands

Effective February 28, students who have a government loan will skip their usual visit to the local bank and deal directly with government service bureaus that are currently being developed by the Ministry of Human Resources and Development (HRDC), the federal ministry that operates the national loans program.

Earlier this summer, Canadian banks involved with the program, which include the Royal Bank, Bank of Nova Scotia, CIBC, National Bank of Canada and les Caisses Populaires du Manitoba, announced that they would be pulling out of the five-year-old Risk Shared Agreement, leaving the federal government without a source of financing for student loans. While it is uncertain whether the 36-year-old loan program is on the verge of an overhaul or a transfer of old problems, for now, HRDC says the application process and criteria for eligibility will remain the same.

There was debate between the larger banks as to why the agreement was not renewed.

While CIBC spokesperson Susan McDougall told The Journal that it was the government who chose not to renew the agreement, sources at the Bank of Nova Scotia say the program was not continued because the percentage of losses from defaulted loans covered by the government was not high enough.

Royal Bank spokesperson Jeff Keay said the bank was actually interested in continuing to supply the funds for student loans as long as other banks were also involved.

“We think you need to have three financial institutions involved,” he explained. “Because there are not three banks willing to participate in the program, [we] will not be continuing with the program.”

When asked by The Journal why the banks were originally called up by the government to administer student loans, Gino Trifiro, communication advisor for Canada Student Loans, explained that it was with the hope of providing students with financial experts in the management of their government loan.

“The Risk Shared Agreement was a great opportunity for taxpayers to save money... and to provide to students the expertise of financial institutions in managing loans. [It was hoped that] students would get a better deal, have direct access to expert service from specialized companies, and their expertise would cost less for Canadian tax payers.” With the banks officially out of the deal, the program will now be administered by Service Providers, bureaus to be set up by the department of human resources and development.

Trifiro says the departure of the banks will improve the quality of service students receive.

“We’re essentially cutting the middle man,” he said. “What happened was the government signed with the banks who signed with service bureaus. For example, you might pick up your loan from CIBC but you deal with their service bureau. With this new system we’re cutting the middle man and providing to Canadian students a more precise and up to their needs service.”

Critics of the Canada Student Loans program, such as the Canadian Association of Student Alliances and Vancouver East MP Libby Davies, say this transitional period is an optimal time to evaluate the program as a whole.

“If they are just going to change from the banks to the Service Providers and they don’t make any changes to the program it will be a huge blow to students,” says Davies.

Davies, who recently presented a motion to the federal government outlining what she believes to be necessary changes to the student loan program, wants the underlying issues of credit checks, default rates and debt reduction addressed.

“Now is the time to review this program and to recognize that it is a social program; that is what is was intended for. It was intended to make post-secondary education accessible to students, not to deny students,” she said.

Canada Student Loans statistics state that since the program’s inception in 1964, it has given subsidized loans to more than 2.7-million full time students. The Canadian Association of Student Alliances reports that the average debt load upon graduation is $19,000.

Queen’s students with government loans noted the issue was not about the transfer of the program back in the hands of civil servants, but an issue of receiving quality service and information from those administering the program — whoever that may be.

Another concern is the problems encountered when trying to contact student loan representatives.

Jeremy Richardson, Comm ’02, noted how difficult it has been get an appointment with a loan officer this year.

“The fact that I can’t speak to someone about [my loan] until September 18, that I can’t make an appointment until then, is a big hassle... Apparently they’re busy because they’re dealing with loan disbursements, there’s no loan officers available.”

Trifiro, however, noted the government’s emphasis on the needs of students.

“The objective of the government is to make sure Canada Student Loans is a positive experience for all students. It is our intention with service providers to make sure that this happens.”

—With files from the Brock Press

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