The federal government rushed through a last-minute change in its student loan funding in order to make sure 50,000 post-secondary students would have enough money to go to school this fall. Legislation caps the amount Ottawa can have outstanding at any one time at $15 billion, and that limit was about to be breached this month, federal documents showed.
So Human Resources Minister Diane Finley quietly and quickly used an order-in-council on Aug. 20 to have the wording of that limit changed. “Had this amendment not been made, the economic and social implications for those who would have been unable to pursue post-secondary education as a result could have been quite significant,” the minister’s analysis statement says.
The change fiddles with the wording of the $15-billion lending limit so that it no longer includes risk-shared loans that the government used to disburse in the 1990s. So now, Ottawa has room to lend out an extra $2 billion as students head back to school next week. Federal officials figure they’ll only need about $300 million of that — enough to fund about 50,000 students, the government documents say.
But the documents also make it clear that the change is not a long-term fix for inadequate funding set aside to cover growing demand for student loans. New legislation may be necessary, the documents say.
The sudden increase in demand for student loans was not foreseen. In an actuarial analysis of the Canada Student Loans Program, tabled just two months ago, officials did not expect to bump up against the $15-billion cap until 2015. The actuaries’ report foresees a gradual rise in demand for loans, partly because tuitions are increasing, and partly because there are more students — especially in the wake of the recession.
But the report does not mention a sudden surge this summer. Nor does the order-in-council explain why federal officials saw outstanding loans spike from $12.3 billion on July 31, to more than $15 billion less than two months later.
Officials pointed to the recent recession prompting more people to return to school for training as part of the reason for the unanticipated rise in loans outstanding. Despite the last-minute reprieve for students, the Canadian Federation of Students is upset. Issuing more loans on an ad-hoc basis does nothing to resolve the growing financial burden placed on students, and is only a temporary fix, says David Molenhuis, the association’s national chair. “They’re trying to sweep the situation under the rug,” he said. “It’s telling that it was done at the absolutely last minute.”
He would rather see government make post-secondary education more affordable than increase students’ already huge debt loads. “It’s a situation that’s increasingly unsustainable. It’s bad policy begetting bad policy,” said Molenhuis.
A spokesman for Finley, however, says the raising of the loan cap is just one more thing the federal government is doing to foster a better-educated workforce. “As a result of the programs that our government has introduced, more students now have access and the flexibility they need to government programs so they can attend post-secondary education,” said spokesman Ryan Sparrow.
The Canadian Press