Students at private colleges are twice as likely to miss student-loan payments as their counterparts at public colleges and universities, costing taxpayers more than $227-million in a recent three-year period, according to a Globe and Mail investigation.
Career colleges, which account for the majority of private postsecondary institutions in Canada, are a booming business. They are fuelled by the promise of quick training and boast ads that all but guarantee a job on graduation. But a disproportionate number of students are leaving these schools with crushing debt, saddling taxpayers with the cost and calling into question the value of that education.
More than 150,000 students each year attend career colleges, which tend to offer short courses geared toward fields such as aesthetics, accounting or design. Figures compiled by The Globe revealed that those students made up just 17 per cent of the recipients of federal student aid, yet accounted for more than 30 per cent of the value of delinquent loans.
It's like you have just wasted time for four years. Hope Goodine, former private-college student
High tuition fees and an inability to secure well-paying jobs after graduation - combined with what some former students and teachers identify as lax teaching and entrance standards - resulted in 40 per cent of career-college students missing loan payments between 2006 and 2008, compared with 20 per cent of students at public colleges and universities. Average tuition at a career college is $14,000, a recent study found.
"At the very least, this tells you something about the quality of the investment," said Arthur Sweetman, a Queen's University professor who researches the economics of education. "People are paying substantial tuition and living costs and they are expecting to get a big bang out the other end, and they are not."
Ontario is the only province to have cracked down on the problem by imposing financial penalties on schools with low repayment rates. Other provinces have adopted a patchwork of systems at various stages of development, despite an agreement with the federal government seven years ago to address the problem. Newfoundland and Prince Edward Island have yet to adopt any plans.
Meanwhile, students like Hope Goodine are left with education costs they cannot pay.
Ms. Goodine, 25, puts her student debts at between $40,000 and $50,000 - the result of four years at the Moncton and Fredericton campuses of CompuCollege, now called Eastern College. She took a two-year diploma in accounting and payroll with the college and a two-year "refresher" course when she could not find a job in her field. Now she's collecting employment insurance and is on debt relief for her student aid.
Since graduating, Ms. Goodine has worked as an administrative assistant and a clerk at a Giant Tiger store, jobs that did not require her to use her training and didn't offer enough money to cover her loan payments. She applied for jobs as an accounts payable clerk, but said employers didn't give her credit for her diploma. "They don't recognize it as having studied in an actual program," she said. "It's like you have just wasted time for four years."
It could be that there is a program that is socially beneficial and needed, but the salary levels do not permit the students to pay back their loan. Anne Burns, executive director of the National Association of Career Colleges
An official with the college did not respond to requests for an interview.
Instructors and students at career colleges have also privately complained of slack entrance standards; one teacher, who asked not to be identified, recalled a student in her accounting program who had difficulty reading.
The federal government quietly posted the loan repayment records of all schools on its CanLearn website last year. The statistics, for 2004 and 2006 to 2008, were released "to help students and families better plan for their postsecondary education," said a spokesman for Human Resources and Skills Development Canada, but no announcement was made about the information.
The annual rates show a clear pattern. While some private schools, such as the Canadian Memorial Chiropractic College in Toronto, have loan repayment rates that surpass most public institutions, the trend across the country shows a gap between the abilities of students from private and public institutions to repay government aid. The numbers also reveal recurring problems at several career colleges, with some, such as the Academy of Learning in North Vancouver and the Centre for Distance Education in Nova Scotia, showing more than two-thirds of students missing payments year after year.
Leaders at career colleges say loan repayment numbers should not be viewed in isolation. They argue other factors, such as regional employment rates, affect students' ability to repay debt, and that while repayment numbers are low at some schools, the total amounts involved are less than in the public system.
Anne Burns, executive director of the National Association of Career Colleges, defended the programs, saying the greatest improvements in repayment rates have been at private career colleges. Some students who cannot repay their debt may be filling important jobs, such as personal support workers, she said, with the cost to taxpayers of their unpaid loans equivalent to the funding given to public institutions.
"It could be that there is a program that is socially beneficial and needed, but the salary levels do not permit the students to pay back their loans," she said.
A survey done by the federal government and the Canada Millennium Scholarship Foundation last year found 79 per cent of career-college graduates had full-time or part-time work, with an average income of only $26,727. One-quarter had debt between $10,000 and $20,000 and 9 per cent had even more.
Prof. Sweetman said more needs to be done to raise awareness of default rates at individual schools, to protect students. "These are people who think they are making an investment in their education, and the fact is they are actually incurring debt," he said.