In what could be a novel way to address what some consider to be a crisis of student debt, Canadians may soon be able to pay off their education loans using travel reward points.
By some estimates, college and university graduates in Canada are saddled with around $27,000 in debt once they walk away with degrees or diplomas in hand.
In February, according to a memo obtained by the Canadian Press, the Conservative government gave the federal department called Employment and Social Development Canada the green light to strike a deal with Higher Ed Points (HEP), which works with Aeroplan, one of the most popular travel rewards programs in the country.
While a spokesperson for the government said "at this time, there is no official partnership" with the points company, it acknowledged it is "exploring opportunities" with HEP.
HEP spokesperson Suzanne Tyson said the company must translate its website so it's also available in French and wait for the deal to be approved by the newly-elected Liberal government before the program is applied to federal loans. It is already available in Alberta and Ontario for provincial loans.
"There have been thousands of dollars offset already by those who've used the program," said Tyson. "Our next objective is to create more awareness that this exists as an option — we know awareness is somewhat low."
But the plan is already being dismissed as laughable by student activists who consider it to be an "absurd" ploy to deflect attention from a serious issue. There is only one redemption amount — 35,000 Aeroplan points for a $250 credit, and accumulating those rewards depends on various factors.
"I highly doubt that the more than 200,000 graduates who were unable to make any payments on their student loans last year would have spent the tens of thousands of dollars necessary to access the $250 deal," said Bilan Arte, national chairperson of the Canadian Federation of Students.
Students in Canada can apply for financial assistance from the federal government, and also from their provincial government.
In 2012-2013, the federal government gave out $2.6 billion in loans to full-time students, and $16.6 million to part-time students. Full-time students had gone up by 5.7 percent from the previous year, and the number of part-time students receiving loans went up by almost 48 percent — a rise the government attributes to "recent program enhancements, including eliminating the interest on part-time loans while in-study."
In the 2012/2013 academic year, almost 209,000 students were getting help from the federal government to clear their debts, either by delaying payments on scaling them back.
Tyson said that while students and even new grads are unlikely to have Aeroplan points, family members who want to help out probably will. She noted that 85 percent of Canadians participate in loyalty programs and Aeroplan alone has 5 million members.
Still, the Canadian Federation of Students says the initiative is "one more example of the previous federal government's refusal to address the debt crisis" and it's looking to the new Liberal government to enact some of its campaign promises.
"To stop the burden of student loans, government must restore 15 years of funding cuts, not offer absurd and impractical discounts," she said.
The Liberals' student debt platform included increasing the maximum Canada Student Grant for low-income students to $3,000 for full-time students and to $1,800 for part-time students, increasing the income thresholds for eligibility to give more students access to the grant, and ensuring no graduate has to start to start repaying loans until their income is at least 25,000 annually.
Follow Tamara Khandaker on Twitter: @anima_tk