Canadian student aid fund hampered

A fund set up to ease student debt in Canada has been hampered by the powerful provincial and territorial governments, according to a report.

The Canadian Millennium Scholarship Foundation (CMSF), set up in 1998 by the federal government with a C$2.5 billion (£1.1 billion) endowment, sought to enhance the provincially run student loan system to ease the growing student debt problem. It was to hand out C$3,000 grants to 100,000 low and middle-income students every year for ten years.

The provincial premiers denounced the programme as a unilateral initiative by a federal government. "Canada is the most decentralised country of any federation," said Antonia Maioni, director of the McGill Institute for the Study of Canada, who sees the difficulties faced by the foundation as part of the "perennial federal-provincial conundrum".

The CMSF signed agreements with all provinces and territories, offering them control over who received grants and, for most, significant savings on their own loans programmes. The first bursaries were sent out in 2000.

But a report from the Institute of Intergovernmental Relations at Queen's University cites the hasty partnership agreements as one of the programme's weaknesses.

The report found that the provinces saved C$185 million and reinvested C$231.6 million, but it adds: "One might suspect that this spending would have occurred in the absence of the CMSF."

The report reveals that only 54.2 per cent of the support was spent on student financial spending, with the rest going into college and university operating budgets. Nova Scotia seems not to have spent a single dollar on student financial assistance.

CMSF executive director Norman Riddell maintained that the partnerships resulted in the provinces spending $100 million a year more than they would have, allowing the foundation to put C$131 million a year back into the system in needs-based assistance.

The report says the money from the foundation may have been better spent targeting those who are in need of finance but do not meet current provincial criteria. But it adds: "It is not clear that such an agreement would have necessarily been forthcoming."