4 UPEI News Royal Bank pulls out of student loans

*Continued from page3 complicated and hard to administer, which was one reason it was turned over to the banks in the first place.

“The banks know more about lending and managing accounts than any government employee,” he added. But he was quick to point out that the government controls who receives student loans.

Some bankers are concerned about the high debt loads students face.

“We're asociety that isconsumer driven... . [putting

students in debt] starts to slow the economy,” com- mented one official.

John McRae, Metro Credit Union administrative assistant, suggested that fi- nancial institutions are in- volved in student loans to build a future customer base. Both the Credit Union and the CIBC renewed their contract with the PEI gov- ernment.

The Royal Bank, which had profits of 1.82

billion dollars last year, did not see the double in premiums offered by the government as adequate. Some students have questioned the Royal’s decision to stop providing student loans.

“It’s like they’re tod ing away the investment from something that’s so important ... Ifthey are making record profits vy year, how much are the ly losing?” asked Erin Fagan, a second year English student.

The Cadre

Kirby asserted that default rates were much higher than expected. But when asked for default fig- ures, he indicated that he could not discuss these de-

“[It’s] proprietary in- formation,” ety replied. Kirby was also un- able to provide specific information on how default rates are collected. Although a student loan is declared in default after two missed

¢ 12 January 1999

payments, it is not known if the default figures include students who have begun repayment after defaulting, or ifthe figures are restricted to loans that are never

repaid.

- Several groups have estimated the national number of students who never repay their loans to be eight percent.

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