Audit to test federal government on oversight of student-loans program

Work on the audit has been underway since May 2019

Canada’s auditor general is examining how the government manages billions of dollars in the Canada Student Loans program, and whether it’s helping students be smarter about their financial decisions, newly disclosed documents show.

The audit, expected by April, will look at how efficiently two departments involved in the program — Employment and Social Development Canada and the Canada Revenue Agency — have managed “risks to the public treasury” in doling out cash to students.

Another item in the audit will be the departments’ ”collection activities of student loans,” and a third line of inquiry will assess how well the Financial Consumer Agency of Canada has worked to improve students’ financial literacy.

While the auditor general’s report won’t be out for weeks, high-level details of the audit are in a briefing note obtained by The Canadian Press under the Access to Information Act.

The document prepared for the top civil servant at Employment and Social Development Canada notes that work on the audit has been underway since May 2019.

The auditor general’s office generally doesn’t comment on reviews until they become public and declined to discuss this one, calling it “premature” to do so.

Likewise, ESDC said in a statement it wasn’t “at liberty to disclose information pertaining to an ongoing audit,” while the Financial Consumer Agency of Canada listed its efforts, including resources offered to classroom teachers and financial-aid offices, when asked for any data on how well the agency has performed.

Outstanding federal student loans total about $17 billion, and the federal government regularly gives up on collecting some of them — because a person who owes the money files for bankruptcy, the debt passes a six-year legal limit on collections, or the debtor can’t be found.

Instruction in financial literacy need to happen long before students arrive at colleges and universities, but it’s not the sole solution for helping those in debt, said Trina James, national treasurer for the Canadian Federation of Students.

She said she hopes the next federal budget will shift spending to reduce education costs directly.

“When we’re looking at why a lot of students are defaulting on loans, it’s not because they’re not able to manage their money, it’s mainly because a lot of the costs associated to accessing post-secondary education continue to rise,” James said, citing the cost of textbooks and living expenses.

New rules kicked in Nov. 1, 2019, that the Liberals hope will ease some of that burden, including a six-month, interest-free grace period on repaying loans after graduation and a drop in interest rates. And as of Jan. 1, the government allows those in arrears to spread out interest payments, which ESDC said in a statement should reduce debt write-offs.

The department cautioned that “it is too early to assess the impact of these initiatives,” but noted officials collected $195.7 million from debtors last fiscal year compared to $192.2 million in the preceding 12 months.

Adam Brown, board chair for the Canadian Alliance of Student Associations (a rival to the Canadian Federation of Students in representing postsecondary students), said the program has improved in recent years to help students repay loans, but suggested a deeper look at other ideas like extending the interest-free grace period, ensuring students have solid finances before being asked to repay their loans, and targeted help to parents who are in school.

“Some of those things are going to make the program and make collections a little more complicated for the federal government, but at the end of the day, those are very, very worthwhile changes that are going to make repaying those loans in itself a lot easier for Canadians,” Brown said.

Jordan Press, The Canadian Press

Like us on Facebook and follow us on Twitter.

federal government

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Kelowna Rockets blow 4-goal lead in overtime loss to Calgary

Captain Nolan Foote made a brief return as Kelowna drops Family Day matinee 6-5

Soccer legend Bob Lenarduzzi to speak about dementia in Kelowna

Lenarduzzi will speak at the inaugural Breakfast to Remember on Mar. 10

Kelowna RCMP arrest alleged impaired driver

The driver is facing potential charges after power pole collision

West Kelowna Warriors host Trail Smoke Eaters

The Warriors are coming from a Saturday loss against the Vernon Vipers

UBCO announces new top boss for Okanagan campus

Lesley Cormack will start in the position this summer

Kelowna’s Family YMCA opens doors on Family Day

The entire day was free for the community

Canucks acquire forward Tyler Toffoli from Kings in push for playoffs

Vancouver sends Schaller, Madden, pick to L.A.

South Okanagan woman reflects on prestigious win at Westminster dog show

“Polly” the Scottish deerhound was crowned best in breed and reserve best hound.

RCMP report woman arrested after ramming police cruiser

Suspect wanted for crimes allegedly committed in Kelowna, Salmon Arm and 100 Mile House

New highway proposed between Alberta and B.C.

The route would connect Red Deer to Kamloops

Wet’suwet’en and B.C. government have been talking Aboriginal title for a year

Coastal GasLink says it has agreements with all 20 elected First Nations councils along the 670-kilometre route

Trudeau tightlipped on plan to end protests ‘quickly and peacefully’

The prime minister, who cancelled a two-day trip to Barbados this week to deal with the crisis at home

B.C. budget expected to stay the course as economic growth moderates

Finance minister said ICBC costs have affected budget

Canadian standards for coronavirus protection to be reviewed, health agency says

The protocols set out how health workers should protect themselves and their patients

Most Read