Some N.S. private college students missing loan payments at high rates

Expert says some career colleges may be training students in communities where there are too few jobs.

News from http://www.cbc.ca/news/canada/nova-scotia/some-n-s-private-college-students-missing-loan-payments-at-high-rates-1.3116207 

Former students at some Nova Scotia private career colleges fell behind on their student loans at far higher rates than other post-secondaries, unable or unwilling to pay back millions of dollars that were borrowed for education.

Provincial loan data shows that 6,774 Nova Scotia students defaulted over a six-year period. An analysis by CBC News found more than 27 per cent had attended provincial private colleges, even though those institutions reap a far smaller proportion of the total student loans issued by government.

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Part of the problem may be that some career colleges are training people for jobs in communities where unemployment is high and work is hard to find, according to one expert in regional innovation.

"When you see high default rates, it's telling you that there's something really wrong," says Ken Coates, a professor at the University of Saskatchewan.

"And what can be wrong is either the quality of the program, the ability, talent and motivation of the students, or the job market on the outside.

"In places like the Maritimes, the number one challenge that you have usually isn't the institution so much as the job markets. Cape Breton and some of the rural areas of Nova Scotia, very serious problems with having decent, high paying jobs available for people who graduate from programs."

Coates says too little is known about career colleges in Canada. Some recruit heavily with dubious promises, but others are "extraordinarily" successful at turning out well-trained students who find good jobs.

Over a six year period analysed by CBC News, Nova Scotia students who attended universities, community colleges and private institutions both here and out of province defaulted on $33.6 million.

By the end of December 2013, the province had only managed to collect $10.5 million of the money owed.

The highest number of students in arrears (1,200) went to the Nova Scotia Community College. The college, however, also has more students taking out loans than any other post-secondary in the province.

By and large, students who attended Nova Scotia universities have good repayment rates.

So too do those who went to some private colleges. Few students default, for instance, at the Commercial Safety College in Debert or at Medavie HealthEd, a paramedic school.

But others, including Mactech Distance Education, have struggled with significantly high numbers of students who fail to repay money they borrowed for their education.

The head of the National Association of Career Colleges says it's unfair to compare private colleges to universities.

Serge Buy says those who enrol at career colleges are typically older: they can't rely on parents to help fund their education and must juggle other financial obligations while trying to upgrade their education.

Repayment rates 'misleading'

"The repayment rate is one item, and I think it is a misleading item that is used by some to evaluate the performance of career colleges," Buy says.

Rather than comparing student loan data, provinces like Nova Scotia should instead gather post-graduation employment statistics for all post-secondaries and make the numbers public, he says.

The province is considering that as it begins discussing new regulations after passing fresh amendments this spring to its private college legislation. The aim, it says, is improved accountability.

The province however does not distinguish between post-secondaries when they grant student loans, so long as the school is designated. It means that students with similar personal and financial circumstances have the same chance of qualifying for a loan to attend Dalhousie University as they do a private college with a high default rate.

'Extremely easy' to qualify for loans

Ryan Graves says it was "extremely easy" to qualify for $28,000 in loans when he signed up for web and graphic design courses at Sydney-headquartered Centre for Distance Education.

He would check assignments online, consult textbooks and while there were instructors available, Graves says most of his studies were self-directed. He made the "president's list" but felt his portfolio was basic and ended up dropping out of his second year, dissatisfied with his education.

"They act like it's preparing you for a job," says Graves, who has been unemployed and is on a repayment assistance program to help with his student loans. "To me it seemed like they were always relying on the naivety of the student."

The head of CD-ED, however, says the vast majority of students do find work. Lori MacMullin says the school's research shows 83 per cent of CD-ED graduates find jobs in their field of study.
Still, federal student loan data show that last year just 59 per cent of students were paying on time, well below the national average of 87 per cent.

But MacMullin notes that's a large improvement over previous years and feels the school is "moving in the right direction."

She says CD-ED works with students to make sure they understand their loan obligations, however private colleges aren't allowed to know who is at risk of going into default.

"Perhaps if we had more control over that, we could make a difference and we certainly would be willing to do so," she says.