Future of Nova Scotia student loans in question
By Mark Brown
Students in Nova Scotia are being kept in the dark as to the future of their provincial student loan program, as the province and the Royal Bank of Canada approach their 11th hour of negotiations.
If the Nova Scotia government is unable to reach a deal with the Royal Bank by Dec. 31, the provincial student loan system could collapse. Last year, the Canadian Imperial Bank of Commerce chose not renew its contract with Nova Scotia, leaving the Royal Bank the sole provider of student loans in the province.
"Without question, students will have access to student loans," said Donna MacDonald, communications officer for the department of education and culture in Halifax. Currently, the province is focusing its efforts on negotiations, she said.
While MacDonald did not want to speculate on a possible scenario, she said the government has been working on a contingent plan. MacDonald also refused to comment on anything which might be on the negotiating table.
The Nova Scotia student loan program is made up 40 per cent of the money students receive in loans, while the remaining 60 per cent comes from the federal government, she explained.
The Royal Bank is also optimistic they will be able to reach a deal with the province. "Certainly we hope a contract will be reached before the [current] contract expires," said Sean Kirby, a spokesperson for the Royal Bank.
Kirby also said he felt it was not appropriate to discuss the negotiations at this time. He added the Royal Bank has a number of concerns with the student loan program, adding those concerns are not directed specifically at one province.
"It is a big and complex problem that everyone is working on," he said. Kirby added the student loan program is being harmonized, which should make for a more positive experience for students.
Hoops Harrison, national director of the Canadian Alliance of Student Associations, was not as confident about the outcome of the negotiations. "[Royal Bank] are putting the Nova Scotia government under the gun. If they don't accept the terms from the Royal Bank, then they could pull out and leave the students out in the cold."
Even if a deal is reached, the province will likely see a loan system which is different from the current one. The banks want to stop giving loans to students at certain institutions which have higher default rates from the program, meaning Royal only wants to loan to students who are a good risk, Harrison explained.
He added Royal is also pushing for higher risk premiums, the money the government pays to the banks to provide student loans.
Harrison said he was also concerned the Royal Bank was exaggerating the information. "I am certain they will come to an agreement, but I am certain it will not be in the best interest of the province or the students."
The contracts between the Royal Bank and the provinces of New Brunswick and Prince Edward Island also expire at the end of the month, however, Royal Bank is not the only bank providing student loans in those provinces.