'This is a major priority for us, to look at our loans files'

Sheila Fraser, the Auditor General of Canada, found in a recent audit that Government of Nunavut's financial assistance program for post-secondary students does at least one thing right: it now delivers cheques to students in a "timely manner."

But she found that the Financial Assistance for Nunavut Students, or "FANS" program, suffers from numerous other administrative problems, such as:

• The GN does little to collect student loans after students finish post-secondary programs: about $4 million in loans, distributed among about 550 students, are outstanding, with more than half of that, about $2 million, in the bad debt category.
• The GN applied the wrong interest rate to most of its student loans, which means some students receiving loans may have been over-charged.
• The Department of Education has not set clear objectives for the FANs program: "It is therefore unable to demonstrate how successful the program is, or even how success would even be measured."
• Because there are no clear objectives, the Department of Education, because cannot provide MLAs with enough accurate information about how well the program is working.
• FANS staff do not always follow the Student Financial Assistance Act, partly because they use a GN guide book that contains rules different than rules contained in GN regulations. This leads to different students being treated in different ways.
• The Department of Education does not provide FANS staff with enough guidance to help them make consistent decisions about student assistance applications.
• The Department of Education may be giving money to people who are not post-secondary students, because it's not clear who is eligible and who isn't.

Kathy Okpik, the deputy minister of education, admitted that until now, the education department has done little to collect outstanding student loans.

She told the legislative assembly's operations committee last week that after the GN took over the student loan system in 2001 from the Northwest Territories, her staff focused mostly on "removing barriers to access" for Nunavut students.

That work paid off. The auditor general's office found that grant and loan applications are now processed on time and that cheques are issued in "a timely manner," eliminating a longstanding source of student complaints.

Okpik said that when students do complain about late cheques, it's almost always because they submit late applications – sometimes only five days before classes start.

To fix the collections problem, Okpik said the education department is now reviewing every single student loan file, with the help of a contracted charter accountant and staff from the finance and justice departments.

"This is a major priority for us, to look at our loans files," Okpik said.

After the correct interest rate is applied and the correct monthly payments worked out, she said the department will send out collection letters in one to three months.

During the 2005-06 fiscal year, the FANS program gave out $5.6 million in grants and $470,000 in loans.

Some of the $4 million worth of outstanding loans date back before Nunavut was created in 1999, and were inherited from the NWT.

Beneficiaries normally get grants to pay tuition and living costs while they're at college or university. But if they need more money, they can apply for special "needs assessed loans" that give them up to $135 a week on top of their grants.

Non-beneficiaries may be eligible for grants too, but only according to a formula that's based on how long they've lived in Nunavut. And non-beneficiaries are more likely to qualify only for loans – but those loans are forgiven if they agree to work in Nunavut for a specified period of time.

For every three months that a non-beneficiary works in Nunavut, their loan is forgiven by $750.

Okpik also said the GN will straighten out its eligibility rules to clarify the status of applicants who don't have Grade 12 and who aren't enrolled in programs that are consider "post-secondary," such as jewelry-making and metal-work.

And she said the GN will work out clear objectives and targets for the program, so that MLAs and the public can measure the program's success.

These and other corrective measures are all part of a workplan developed after the education department re­ceived a draft version of the FANS audit this past February.