By Mary Chan
Starting May 1, Edulinx will administer government student loans with hopes of increasing the number of institutions in the lending business. The Canadian Imperial Bank of Commerce has set up the new student loan service bureau to handle administration of government student loans, though CIBC will still oversee its student loan portfolio.
"The lender (the bank) continues to own the loan portfolio," said the cibc Regional Relations Representative in Alberta Scott Timmings. "Edulinx just handles the day-to-day operations like student loan processing, and inquiries from student customers, from student loan administrators at educational institutions, from government on portfolio information."
According to the cibc, Edulinx also handles document processing and loan disbursement and collection.
"From a student perspective, nothing has changed," said Timmings, adding customers with student loans will not be affected by the new company.
Since administration is done through one central organization, cibc hopes Edulinx will encourage more banks and lending institutions to enter the student loan business.
"It makes the administration of student loans a lot easier because it’s
done through one central group," explained Students’ Union Vice-president External Nassr Awada. "It takes the pressure off the two current lenders [cibc and the Royal Bank]. The more players you have, the less risk there is on the players. You share the risk."
According to Awada, a student loan service bureau with many
banks participating will be helpful to students by allowing students
to consolidate their banking in one organization.
"This will be beneficial to students with a [student] loan with a bank they don’t bank with," he said. "They just have to deal with one bank."
Edulinx is 51 per cent owned by the cibc, and 49 per cent owned by American student loan service provider United Student Alliance Group. Despite the USA Group’s involvement, Edulinx only operates in Canada.
"It’s a Canadian company," said Timmings. "It only services government student loans in Canada. We selected USA Group [as a partner] based on their proven record as a student loan service bureau."
Awada does see one potential long-term benefit for students.
"It will be interesting to see where they go with this," he said. "Having more players will create more competition, and when you have more competition, it tends to keep the banks and providers on their toes."