The Cadre -

National News 13

16 March 1999

Ottawa considers loan de-designation

By ERINFITZPATRICK _

OTTAWA (CUP) — Stu- dents enrolled in college and university programs that bear a high loan default rate may become ineligible for Canada Student Loans under a policy proposal be- ing bandied around Ottawa.

Human Resources and Development Canada last December released a discussion paper on the pro- posal -- commonly known as de-designation — at a na- tional stakeholders confer- ence on student assistance.

Under de-designa- tion, programs would be- come ineligible for student loans if they have loan de- fault levels above the na- tional average. That is, if an unusually high number of students graduating from a certain program didn’t pay back their student loans, fu- ture students registering for the program wouldn't be able to get loans at all.

The idea is that gov- ernment should stop spend- ing money on programs that don’t prepare students for the job market, says Tho- mas Townsend, director general of learning and lit- eracy with Human Re- sources and Development Canada.

“If the quality of the post-secondary education you're receiving doesn’t re- late to the labour market . . . If those programs aren't good, current, of high qual- ity, then people incur the debts and don’t get the ben- efits of that education,” Townsend said.

“Nobody wants to deny students access, but the government's got a lot of money riding on [the de- fault] question and we need to look at what the best why to solve it is... Default rates can show us which pro- grams might need improve- ment.”

But Townsend adds de-designation is only one option the federal govern- ment is considering as a way to tackle the loan default problem, and there’s no guarantee it will become policy.

Still, some students, like Ashkon Hashemi, of the Canadian Federation of Students, say Ottawa is wrong to associate quality of education with labour market results.

“There are many rea- sons why we should allow a choice of programs, and getting a job is only one of them,” Hashemi said. “There is merit in getting an education. De-designation says that university is only about getting a job, and turns post-secondary educa- tion into a kind of crass job- training project.”

Hashemi also says de-designation doesn’t ad- dress the real problem of why students default on their loans in the first place.

“| have a huge prob- lem with using default rates to gage a program's effec- tiveness,” he said. “First and foremost, defaults are an in- dication of the huge debt loads students face. These

[debts] can't be paid back’

even with a job. Default is a symptom of the larger

debt problem. We should be dealing with the cause and not the symptoms.”

Student groups aren't the only ones worried about how de-designation could change the face of post-sec- ondary education.

Robert Best, of the Association of Universities and Colleges Canada, says he fears de-designation will turn public education into a conservative, cautious en- terprise

“One possible out- come [of de-designation] is that public institutions would fear taking risks with non-traditional students be- cause of a fear that these stu- dents might have higher de- fault levels,” Best said. “So government has to be very careful that they don’t put incentives in place for insti- tutions to become very con- servative about those things.”

The de-designation

debate is only one part of ongoing negotiations be- tween Ottawa, the provin- cial governments and banks to come up with a new risk- sharing agreement on stu- dent loans.

Policies similar to de-designation already ex- ist in Alberta, and are set to begin in Ontario this Sep- tember. In Alberta only pri- vate hairstyling and truck driving schools have been affected so far.

(Code $599-2)

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