The owner of a local privately-run college whose students have been denied access to financial assistance due to a high default rate is accusing the provincial government of sloughing off its responsibilities.
"You're looking at a bank who's handing out loans and then penalizing the salesmen for the [bad] loans," Academy of Learning - Prince George owner Chris Dunford said Thursday.
In July 2010, the Academy of Learning and Loxx School of Hair Design were both issued a two-year ban from the program the default rates by their students exceeded 28 per cent for four successive years.
The B.C. Ministry of Advanced Education took the same action against Sprott-Shaw Community College at the end of last month, raising to three the total Prince George private post-secondary institutions whose student cannot get loans from the StudentAidBC program.
By making such moves, Dunford said the provincial government is effectively forcing schools to suffer the consequences for bad loans that have been issued by Victoria.
"We can't do credit checks, it's illegal for us to do the credit checks," he said. "They're the ones who do the credit checks."
Moreover, he said small schools are more exposed to high default rates because they have fewer students than public post-secondary institutions. The default rate at Academy for Learning range from 50.3 per cent to 63 per cent from 2005 to 2009, according to Ministry of Advanced Education numbers.
However, Dunford said only about 20 per cent of his students relied on the loans to pay for their education and he encourages them to seek other sources first that charged less interest, like a student line of credit.
The province's student loan program charges prime plus 2.5 per cent for floating rate loans and prime plus five per cent for fixed rate loans, according to the ministry.
The prime rate currently stands at three per cent, for a total rates of 5.5 and eight per cent, but Dunford said when he looked last year, the total interest was as high as 12.9 per cent
"Even if you consider five to eight per cent, as opposed to a student line of credit, which would be anywhere between three to five per cent, they're still coming in quite higher," Dunford said.
Dunford said the ban "cost me a few bucks" but the school remains busy with about 67 students currently enrolled in any of a number of courses and programs, such as office administration, business management, home inspection and information technology.
"All my classes are full, right now," Dunford said and added the school works on a continuous enrollment basis so students can start courses when they want to rather than waiting for a semester to begin.
Dunford is not yet sure if he'll seek renewed access once the two years is up.
"Even the student loan program itself says 'we should be a last resource for a student to come to," Dunford said.
In a statement, Advanced Education Minister Naomi Yamamoto said the idea behind the current arrangement is meant to ensure a "shared goal" between the schools and the government: "To ensure students have the support necessary to both complete their desired program and be successful in their career goals over the long term."
In an interview Wednesday, Sprott-Shaw executive vice president Maggie Harvey limited her comments about the arrangement to saying the company is willing to live with the situation.
Loxx School of Hair Design owner Cathleen Sindaco did not return a request for comment Thursday.
