Management of Canadas public student loans program has gone from one set of private hands to another. In the wake of a costly and unsuccessful attempt to have several of Canadas chartered banks finance the program, Human Resources Development Canada has contracted with two private companies Edulinx and BDP Business Data Services Ltd. to service loans to students at public and private institutions respectively.
The 1995 deal with the big banks paid the institutions a 5 per cent risk premium to finance and collect student loans a premium that cost taxpayers more than $300 million over the deals five-year life. When the agreement expired, the government wanted to negotiate another five-year deal. But the banks wanted even more money and the government appeared to acquiesce, reportedly offering premiums of 7 per cent for public institutions and 23 per cent for private institutions.
The proposed new deal included a possible $100 million in additional payments for the 1995-2000 period. However, even that wasnt enough to reach agreement. The banks stopped running the CSLP on February 28, 2001. Canada student loans are once again financed by the federal government. But theyre still being managed privately.
The two companies took over the loans in March 2001, winning three-year service contracts valued at $91.6 million for public institutions, and $45.7 million for private institutions. According to the government, the companies will administer loan payments, manage accounts, oversee the consolidation and repayment of loans and manage student debt.
Policy decisions such as eligibility and interest rates are HRDCs territory. But its a definite foot in the door for private interests. Edulinxs two shareholders are the CIBC and the American student loan corporation USA Group. BDP is a division of the for-profit service provider FirstService Corporation.
BDPs portfolio also includes a five-year contract to run British Columbias student loans. The province contracted out administration of its loans program in October 2000.
The 1995 deal with the big banks paid the institutions a 5 per cent risk premium to finance and collect student loans a premium that cost taxpayers more than $300 million over the deals five-year life. When the agreement expired, the government wanted to negotiate another five-year deal. But the banks wanted even more money and the government appeared to acquiesce, reportedly offering premiums of 7 per cent for public institutions and 23 per cent for private institutions.
The proposed new deal included a possible $100 million in additional payments for the 1995-2000 period. However, even that wasnt enough to reach agreement. The banks stopped running the CSLP on February 28, 2001. Canada student loans are once again financed by the federal government. But theyre still being managed privately.
The two companies took over the loans in March 2001, winning three-year service contracts valued at $91.6 million for public institutions, and $45.7 million for private institutions. According to the government, the companies will administer loan payments, manage accounts, oversee the consolidation and repayment of loans and manage student debt.
Policy decisions such as eligibility and interest rates are HRDCs territory. But its a definite foot in the door for private interests. Edulinxs two shareholders are the CIBC and the American student loan corporation USA Group. BDP is a division of the for-profit service provider FirstService Corporation.
BDPs portfolio also includes a five-year contract to run British Columbias student loans. The province contracted out administration of its loans program in October 2000.