A national student lobby group has claimed that the Canadian government is abrogating its responsibilities to poor students and accused banks of dictating student-loan policies.
The Canadian Federation of Students said a new policy of credit screening will effectively freeze out low-income earners by turning individuals' bad credit histories into a deterrent to a university education.
The federal government early this month started refusing student loans to first-year applicants with a history of bad debt. The legislation applies to students over 22, who have let three or more debts of more than Can$1,000 (Pounds 420) go unpaid for more than 90 days.
The CFS said it is students with bad credit ratings that the Canada Student Loans Program was designed to assist. Credit checks deny them the opportunity to improve their lives. The CFS added that there was nothing to stop the government from lowering the threshold further.
Sharp increases in tuition fees have made loans necessary for a large majority of Canadian
students. The cost of a bachelor of arts degree in 1998 averaged Can$3,179 a year, up from Can$1,644 in 1990. Three-quarters of recipients have said they would be unable to take part in higher education without a loan.
CFS national chairman Michael Conlon said he believes the banks, which became responsible for administering the loans programme in 1995, are behind this new legislation and a policy review. That review, which has begun in a couple of provinces, calls for a revocation of CSLP designation to institutions that have recorded high numbers of students defaulting on loans.
He accused the banks of a conflict of interest for aggressively marketing private education plans and lines of credit for higher earners, while administering the CSLP loans. "They are losing out on private opportunities as long as the student-loans programme exists," Mr Conlon said.
The banks have expressed concern over the numbers of students defaulting on loans, but have denied influencing social policy, saying they deliver the programme for the government.
University College of Cape Breton president Jacquelyn Scott said she could not see the rationale behind the legislation. "I see only a short-term economic fix," she said.
At her Nova Scotia university, where half of all households fall below the poverty line, a study of single mothers found graduates leaving college with Can$40,000 in student debt.