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

These Kids Were Made For Singin’ and That’s Just What They’ll Do!

HJ Cody prepares for its fall musical “Peace, Love and Music: A 1960s Music Revue”

Sylvan Lakers heading to North American Indigenous Games

A coach and four players will be taking the trip to Halifax, N.S. in July to compete in lacrosse

Sylvan Lake welcomes two new doctors

Dr’s Biana Manchik and Andrew Schwartz are the two new doctors practicing at Sylvan Medical Center

Second catholic elementary school years away for Sylvan Lake

A request has been put in for two portables for École Our Lady of the Rosary’s population growth

Sylvan Lake Wranglers lead series with two overtime wins

The Wranglers are playing the Red Deer Vipers in the division semi-finals of the HJHL

VIDEO: Province’s top court sides with Alberta on federal carbon tax

Today’s decision is the first to side with a province against the federal government

Trudeau revisits blackface embarrassment during Black History Month

Photos and a video of Trudeau wearing makeup to darken his skin surfaced during last fall’s election campaign

Father and two children, from Southern Alberta, killed in fatal crash in B.C.

The single vehicle crash occured near Kamloops on Highway 5A

Teck CEO says Frontier withdrawal a result of tensions over climate, reconciliation

Don Lindsay speaks at mining conference, a day after announcing suspension of oilsands project

Harvey Weinstein found guilty of sex crimes in landmark #MeToo trial

The cases against the Hollywood mogul started the #MeToo movement

CRA puts focus on paper returns as tax-filing season opens

The federal tax collector expects to handle about two million paper returns this calendar year out of roughly 26 million filings

Teck withdraws application for Frontier mine, citing discourse over climate change

The Vancouver-based company said it will take a $1.13-billion writedown on the Frontier project in Alberta

Violent ends to past Indigenous protests haunt Trudeau government

Trudeau adopted a more assertive tone Friday, insisting the barricade must come down

Blockades remain in place as Wet’suwet’en hereditary chiefs returning to B.C.

Hereditary Chief Woos said they are ready to engage in nation-to-nation talks with the B.C.

Most Read