January 20, 2004  
Volume 97, Issue 60  

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NEWS

Nfld gov’t tackles $220 million student debt

By Marshall Bellamy
Gazette Staff

The Newfoundland government has taken on the province’s student debt from the Canadian Imperial Bank of Commerce, causing some to wonder whether the added expense will put a strain on the province’s finances.

“You need to keep tuition down,” said Thom Duggan, VP-external for the Memorial University of Newfoundland Students’ Union, noting he is hoping the $220 million taken over by the government will not force them to raise tuition.

According to Duggan, Newfoundland has the lowest tuition in the country after Quebec, and if the tuition increases, he said, then migration from the island may rise as more university graduates leave for work out of province in order to pay off their student debt. “We have a problem, whereby we have a problem keeping people here,” he said.

“The government is not anticipating any increase in tuition,” said Lynn Salter, director of communication for the province’s Department of Youth Services and Post-Secondary Education, adding she was unable to comment on whether the addition of the student debt to the budget would strain the government’s finances.

Newfoundland’s tuition decreased by approximately 25 per cent over the last three years when the Liberals were in power, Duggan explained, citing that Newfoundland’s tuition is about $1,300 a year.

He said his real worry is that when the newly elected Conservative government came into power last year, they promised to balance the books and included the new student debt load in the province’s deficit.

The loans owed by the students are not debt, Duggan said. “They are more like accounts receivable.”

Rob McLeod, spokesperson for CIBC, pointed out that the bank had a contract with the Newfoundland government to service and administer the loans. The contract expired last year, he added.

CIBC has also been moving away from underwriting student loans and prefers more direct lending, McLeod said, noting if this move was not taken, there would be two separate systems for student loans rather than one. “The province will better serve the loans with one funder — there are probably savings to the province in terms of customer service,” he said.

“It’s a small, baby step forward, but we’re still afraid of the 10 steps backward,” Duggan said.

 

 

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