Student loan access questioned

The federal New Democratic Party warns of a crisis looming in the student loan process, but Students’ Union Vice-president External Duncan Wojtaszek says the crisis will be found in increasing student debts instead.

On Monday, NDP Member of Parliament and Critic for Post-Secondary Education Libby Davies criticized the Human Resources and Development Department for not having a service provider in place to put up funds for federal student loans after Canada’s banks pulled out of the process earlier this year. The banks walked out of the process in early Spring, claiming too many students defaulted on their loans.

Davies, who serves on the HRDC Standing Committee, learned on June 13 that the federal Liberals have not yet chosen a new service provider to administer the $1 billion per year program, and a new agreement is still "months away."

"Shuffling the responsibility for loans from one financial institution to another will not solve the current crisis," said Davies.

According to Thomas Townsend, HRDC’s Director General of Learning and Literacy, a temporary deal is being finalized with financial institutions who are currently involved in the federal student loan program. These institutions will provide students with the funds for their approved federal loans.

"The loans program will be there, the loans will be available, and they will be processed in a way that students have been familiar with over the past several years," said Townsend.

Davies also decried the cuts to education by the Liberals during their term in office, asking HRDC Minister Jane Stewart take responsibility for its role in "creating the crisis."

"The crisis we face today is a direct result of the massive cutbacks to post-secondary education imposed by the Liberal government," said Davies. "They caused exorbitant increases in tuition fees and devastating student debt loads."

Stewart could not be reached for comment.

Wojtaszek agreed with Davies that federal slashing means tough times for some students, but felt that the lack of an interim service provider in the student loan process was a minor inconvenience at worst.

"Libby Davies brings a very, very important point to the forefront," said Wojtaszek. "How much money is there for students? How much can they receive? Government underfunding is what produces high tuition levels which leads to high debt levels. The link there cannot be emphasized enough."

Wojtaszek did express some concern as to which firm will become the permanent provider of loans after July 31. He suggested that this was the reason for the delay in naming a successor.

"The government wants to be very careful in who they choose. They are consulting with students, universities and banks. There are many companies who want to do this, but they don’t have the infrastructure set in place to leap into this tomorrow. We’re hoping for a service provider that is student friendly."

Wojtaszek predicts that students will know the name of the new provider sometime in the next academic year.

"[The Federal government is] going to continue looking for a service provider [and have one] by November-ish, to start in Winter of 2001."

With additional reporting by Rob South

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