Government runs credit checks to "protect" students from student loans

Credit check? No, thanks, say student leaders.

Beginning Aug. 1, the federal government will run credit checks on student loan applicants. Student leaders claim the program will be a barrier to post-secondary education.

"This would deÞnitely make a lot of people think twice," said University of Calgary Students’ Union Vice-president External Nassr Awada.

The Alberta Learning Ministry will not implement the new guidelines by Aug. 1 for the upcoming school year, though other provinces have already started the program. Under the new guidelines, students aged 22 or over applying for a Þrst-time loan will be screened.

"Just like any grant or loan given by any government department, agency or program, the Government of Canada wants to make sure that Canadian tax dollars are being used responsibly," said Human Resources and Development Canada spokesperson Gino Trifiro. "It is also intended to protect a student who applies for a student loan but is in such a situation that giving him a loan would put him in a more difficult Þnancial situation."

An applicant is considered high risk if, in the previous three years, they were three months overdue on three separate loans or debts. Each loan must have been over $1,000, and the applicant must have had control over the circumstances that led to the overdue payment. If a student is declined, they can appeal.

According to Trifiro, the federal government lost $395 million between 1990 and 1996 due to student bankruptcy.

"It’s a lot of money," said Trifiro. "Because a student decided, ‘I have a $20,000 debt and I don’t want to repay it,’ it hurts everyone."

For the Canadian Alliance of Student Associations, a federal lobby group, the new guideline is merely for show.

"It’s reacting to a mistaken public perception about student defaults on loans," said casa Communications Coordinator Kieran Green. "There’s this public perception that a massive amount of students are defaulting on their loans, and the government reacts by saying, ‘Oh, we’re going to take these measures to cut back,’ but there’s no problem. They’re trying to fix something that’s not broken."

Awada said the program is a waste of money, adding 80 per cent of graduates still pay their loans on time and in full.

"I can’t understand why the government would set up a program like this and put all their money and effort into this to rescue one and a half per cent of the applicants from taking out a loan," he said.

Trifiro disagreed, stressing the guidelines are aimed to prevent students from declaring bankruptcy.

"It’s quite hypothetical to say we’re going catch X number of students," he said. "We don’t want to catch students. We just want to make sure the money is used responsibly."

No matter how many students are declined, said Trifiro, the program is still necessary.

"It’s worth it to protect the integrity of the program," he said. "It’s just like any other loan that you would like to apply for. If you’re in a good, even fair, financial situation, you’ll most likely get the loan."

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