November 25, 2003  
Volume 97, Issue 48  

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Loan agreement may mean students at some schools won't get funded

By Jonathan Yazer
Gazette Staff

A recent agreement reached between the federal and provincial governments will prevent Canadian students from obtaining government loans if they attend institutions in the so-called “red zone.”

The agreement will divide post-secondary schools into zones based on their graduates’ average repayment rates on government student loans. A school enters the red zone if its average repayment rate is 17 percentage points or more below the national average.

Schools in the red zone for a prolonged amount of time are considered a significant risk to Canadian taxpayers, who guarantee student loans and pay for them if they go bad. According to the agreement, government loans will be denied to students registered at schools that have been in the red zone for more than three years.

Dave Cogliati, director-general of the Canada Student Loans Program, said the federal government has spent $5.5 billion on student loans since September 2000. “The designation policy is a balancing act between taxpayer protection and assuring access to post-secondary education, which is in everyone’s best interest,” he said.

“This will affect a large number of private schools with a [small] number of students,” predicted Ian Boyko, chairman of the Canadian Federation of Students. He explained that although nearly one-third of post-secondary schools fall into the red zone, none are public institutions.

Glen Tigert, director of Student Financial Services and Student Records, said Western students are immune to the changes. “Based on [the Ontario Student Assistance Program], this won’t impact Western at all,” he said.

“[It is] strange to base ‘institutional performance’ measures on the behaviour of former students six months after they leave an institution,” said Judy Dyck, director of awards and financial aid at the University of Winnipeg and President of the Canadian Association of Financial Aid Administrators Boyko concurred, indicating the agreement is unfair and misguided. “[This policy] holds future students accountable for the debt of past students,” he explained. “This doesn’t address the root causes of student loan default — a poor student job market and high student debt.”

Cogliati said the policy will improve the quality of education in Canada, making it more likely graduates receive employment. “This isn’t about punishing students. This is about institutions with poor track records,” he said. “It’s also about giving students an informed choice.”



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