By Mary Moszynski
Appeared on page A7
The N.B. government is working with Ottawa to develop a mechanism to collect student loan payments following the release of a report revealing the province is owed $35 million in defaulted payments.
The Grant Thornton report, commissioned on behalf of the Liberal government to paint a picture of the province’s finances, states as of Sept. 30, there was $35 million in default student loans.
Since then the province has lost about $840,000 per month in missed payments.
The financial report recommended the government develop an effective system for default student loan accounts as quickly as possible.
Ed Doherty, minister of post-secondary education, said a new collections system should be in place within a year.
“As the government, we’re responsible to administer the taxes that the public pay and we have to make sure that we develop a system for the collection of student loans that is transparent and tight and that meets the national standards,” he said.
The CIBC administered the province’s student loans until 2005 when the province integrated its loan program with the federal government’s program.
Now a Toronto-based company maintains the defaulted loans on the province’s behalf.
Edulinx phones graduating students, informing them when their loan payments begin and available debt relief measures. If a graduate misses a payment the company contacts them 30, 60, 90 and 180 days after the missed payment.
After 270 days, the province becomes responsible for the loan.
However, the province has no means in place to attempt to collect the missed payment.
“This has been an ongoing problem for a number of years,” said Doherty.
Although the province is bolstering its collections efforts, the minister stressed the problem is not unique to New Brunswick.
“I don’t know what the standards are for collection rates for banks but our, I don’t think, is out of line in terms of what the standards in fact are.”
Charles Cirtwill, acting president of the Atlantic Institute for Market Studies, said the province needs to examine its loan program.
“Do you know any other lender that doesn’t have a collections agency chasing you down until you give them their money?” Cirtwill said.
“Quite honestly, in the real world when you take a loan from a bank there’s a structure in place, you’re expected to meet your payments and you can expect to hear from a collections agency on a regular basis, if you don’t,” he added.
What the inefficient collections system doesn’t explain, however, is why students aren’t paying their loans.
Are students graduating unable to find well-paying jobs? Is the cost of education simply too high? Or are students, feeling entitled to the money, shirking from the responsibility of the loan payments?
“I think it’s a complex issue and it’s multi-factorial,” said Doherty. “Many times students are not taking responsibility, other times they just do not have the financial means to make the necessary payments.”
A representative from the New Brunswick Student Alliance couldn’t be reached for comment.
The Grant Thornton report, commissioned on behalf of the Liberal government to paint a picture of the province’s finances, states as of Sept. 30, there was $35 million in default student loans.
Since then the province has lost about $840,000 per month in missed payments.
The financial report recommended the government develop an effective system for default student loan accounts as quickly as possible.
Ed Doherty, minister of post-secondary education, said a new collections system should be in place within a year.
“As the government, we’re responsible to administer the taxes that the public pay and we have to make sure that we develop a system for the collection of student loans that is transparent and tight and that meets the national standards,” he said.
The CIBC administered the province’s student loans until 2005 when the province integrated its loan program with the federal government’s program.
Now a Toronto-based company maintains the defaulted loans on the province’s behalf.
Edulinx phones graduating students, informing them when their loan payments begin and available debt relief measures. If a graduate misses a payment the company contacts them 30, 60, 90 and 180 days after the missed payment.
After 270 days, the province becomes responsible for the loan.
However, the province has no means in place to attempt to collect the missed payment.
“This has been an ongoing problem for a number of years,” said Doherty.
Although the province is bolstering its collections efforts, the minister stressed the problem is not unique to New Brunswick.
“I don’t know what the standards are for collection rates for banks but our, I don’t think, is out of line in terms of what the standards in fact are.”
Charles Cirtwill, acting president of the Atlantic Institute for Market Studies, said the province needs to examine its loan program.
“Do you know any other lender that doesn’t have a collections agency chasing you down until you give them their money?” Cirtwill said.
“Quite honestly, in the real world when you take a loan from a bank there’s a structure in place, you’re expected to meet your payments and you can expect to hear from a collections agency on a regular basis, if you don’t,” he added.
What the inefficient collections system doesn’t explain, however, is why students aren’t paying their loans.
Are students graduating unable to find well-paying jobs? Is the cost of education simply too high? Or are students, feeling entitled to the money, shirking from the responsibility of the loan payments?
“I think it’s a complex issue and it’s multi-factorial,” said Doherty. “Many times students are not taking responsibility, other times they just do not have the financial means to make the necessary payments.”
A representative from the New Brunswick Student Alliance couldn’t be reached for comment.