Federal government may allow students to use travel points to repay loans
OTTAWA – Graduates who owe the federal government money on their student loans could soon have the chance to use travel reward points to help pay their debts.
The previous Conservative government gave the political go-ahead in February for Employment and Social Development Canada to work out a deal with Higher Ed Points, a private company that lets registered students put reward points like those collected through Aeroplan towards tuition and loan payments.
The program is in place in two provinces – Alberta and Ontario – but a move to the federal level would reach the hundreds of thousands more students as the majority of student assistance flows through the Canada Student Loans program.
The company told federal officials that up to 820,000 student loan recipients who still owe the government money could end up paying off part of their debt with Aeroplan points. For instance, 35,000 Aeroplan points would repay $250 of unpaid debt.
Officials viewed the number with some skepticism, based on the briefing note, telling then-employment minister Pierre Poilievre “there is little data available about how students are using Higher Ed Points for student loan repayment.”
It seemed like a win-win for the federal government: the government could collect on outstanding debts and do so at no extra cost to taxpayers, officials told Poilievre.
“From a government perspective, this provides a no-cost method of repayment and another source of debt reduction to help students pay down their student loans more quickly,” reads the briefing note, a copy of which The Canadian Press obtained through the Access to Information Act.
Suzanne Tyson, founder of Higher Ed Points, said the only thing standing in the way of a federal deal was having the company translate their website so it could be offered in both official languages. She said the French website should be ready no later than the first quarter of 2016.
Once that happens, the two sides would have to negotiate an agreement because there is no official deal in place and it would be up to the incoming Liberal minister in charge, whomever that may be, to approve an official agreement.
Employment and Social Development Canada would only say that there is no deal in place and it was exploring options with Higher Ed Points. The department didn’t say why it couldn’t sign a deal with the company.
The amount of student debt owing to the federal government has topped $16 billion, according to government documents, with millions written off every year for a number of reasons: a debtor may file for bankruptcy, the debt itself passes a six-year legal limit on collection, or the debtor can’t be found.
Two years ago, the federal government wrote off more than $300 million.
The previous Conservative government approved a plan to ramp up collection efforts, including allowing the Canada Revenue Agency, which is in charge of collection of about $2.4 billion in tough to collect student debts, to force borrowers to hand over banking or proof of employment documents.
A March 30 briefing note to Poilievre notes that anyone who didn’t do what the CRA asked could have it used against them in court.