Auditor calls for stronger recovery efforts in unpaid student loans

The auditor general has called for the federal government to step up its recovery of outstanding student loans to keep taxpayers from being left on the hook after discovering that $2.4 billion in such loans were in default last year.

The finding is in one of several reports tabled in Parliament on Wednesday, which included a scathing assessment of the military’s resupply system and concerns around how the Canadian Commercial Corp. considered human rights in deals with foreign countries.

That Crown corporation was responsible for inking the $14billion deal in 2014 to sell Canadian-made armoured vehicles to Saudi Arabia, which has since become a lightning rod of controversy due to Saudi Arabia’s poor human-rights record.

The auditor’s review of the federal government’s studentloan programs cited a number of problems with measures intended to help those unable to repay what they borrowed, starting with a failure to assess whether those asking for loan relief actually qualified.

There were also concerns that students were not being properly informed of their financial obligations when it came to repaying their loans, and that recent changes had made it easier for those receiving the government’s loan-relief program to qualify for non-payment.

Eighty-seven per cent of recent borrowers who were participating in the government’s repayment assistance plan were not making repayments on $2.9 billion in loans, according to the auditor’s report.

The auditor also found shortfalls in the government’s approach to recovering outstanding loans, with the Canada Revenue Agency, which is responsible for such efforts, not having the same powers to go after default student loans as it does for unpaid income tax.

The result is that the CRA has been able to recover only about $200 million in default loans per year, which means most of the $2.4 billion that was in default at the end of July 2018 is likely gone. The auditor nonetheless urged the government to take a tougher stance by better assessing whether borrowers should be given relief and using other measures such as notifying credit bureaus of loans in default to encourage repayment.

Employment Minister Carla Qualtrough, who is responsible for managing loan-relief programs, saidthe government is working to implement the auditor’s recommendations while also working to make post-secondary education is accessible.