Canada Student Loans demand increased by $311M
OTTAWA (CUP) — According to a recent budget update report tabled in Parliament, the federal government requires millions of dollars to keep its Canada Student Loans Program afloat.
In supplementary estimates tabled Feb. 8, the federal government outlined it needs $149.5 million to write off more than 60,000 debts for unrecoverable student loans. In addition, the government is seeking an extra $311.2 million to meet the increased demand for national loans, a need that has also been amplified by a forecasted decline in repayments.
“It’s troubling,” said Dave Molenhuis, national chairperson for the Canadian Federation of Students. “It’s not entirely unanticipated, but it’s definitely concerning that we’re continuing to move in this direction of more and more money being required for a higher number of students borrowing larger dollar amounts — and of course more government write-offs of bad debts.”
These requests for additional funding for the CSLP come only months after the Conservative government extended its national student loan lending cap by $2 billion back in August, when the program was at risk of breaching its $15-billion limit.
“We knew back in the fall … that we would, in the not-too-distant future, run up against this ceiling again,” said Molenhuis, who noted that this is once again an ideal time for the government to consider changes to their CSLP legislation.
“We feel that not enough is being done to address this problem as evidenced by the fact that we have to make top-ups on the bad debts.”
A spokesperson from Human Resources and Skills Development explained that the 60,000 cases of bad debt only make up a small minority of borrowers — less than one per cent of the entire CSLP portfolio.
“The majority of Canada Student Loans borrowers repay their student loans on time,” read an email from the department. “Each year, only a small proportion of student loan accounts are deemed unrecoverable and are recommended for write-off.”
In terms of increased demand, the department explained that in 2009–10, the CSLP experienced a 10 per cent increase in students who borrowed over the previous year. HRSDC is also estimating there will be an additional eight per cent increase in 2010–11.
“The Canada Student Loans Program is a statutory program and provides funding to all qualifying students, regardless of the number who apply,” their email explained. “For planning purposes, the Canada Student Loans Program spending forecasts are updated throughout the year and reported to Parliament.”
Molenhuis explained the CFS is continuing to keep an eye on the issue.
“In the wake of these top-ups for Canada Student Loans Program, we’ll be discussing with the political parties the urgency in the whole affair of dealing with this mounting student debt problem,” he said.
Along with requests for additional funding needed in other departments, the government is seeking an extra $1.8 billion in total in the tabled documents. Supplementary estimates are presented to update Parliament on government spending when predicted expenditures outlined in the federal budget have changed. Additionally, Parliament must approve any new spending.
The federal budget for the upcoming fiscal year is expected to be presented next month.