Eligibility rules

For CSLP loans, the rules determining eligibility are set by the federal government in consultation with provincial governments, and are based on students’ assessed need (the difference between estimated resources and anticipated costs) rather than any potential “ability to repay.” In fact, part of the rationale for government intervention is that many students who might benefit from higher education lack earnings and assets—and consequently cannot demonstrate an “ability to repay.” Making loans to such young people fosters equality of opportunity.
However, the policy of lending without regard to ability to repay is likely the root cause of at least some defaulted loans. The large loans that represent “equal opportunity” to some are evidence of “lender irresponsibility” to others. Where a private lender might be driven out of business by a policy of lending large amounts of money to individuals who can show no ability to repay, a government may be able to pass on any resulting losses to its taxpayers.

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