Mactech called 'significant financial risk' by federal government in 2012
Nova Scotia's advanced education department says it is working with Mactech to improve its record
So many former students of Mactech Distance Education were defaulting on their loans that three years ago the Canadian government pegged the Cape Breton-based career college a "significant financial risk" to federal coffers.
Nova Scotia has come under pressure from the federal government to improve student loan repayment rates at poorly-performing post-secondary institutions in the province.
The province is in charge of designating Nova Scotia universities, career colleges and community colleges that offer degrees, diplomas and certificates. A designation means students who attend are eligible for Nova Scotia and federal students loans.
In 2012, the Canada Student Loans Program warned the Nova Scotia Department of Advanced Education that too few students from Mactech Distance Education were repaying what they had borrowed.
"The letter highlighted that the repayment performance of Mactech represents a significant financial risk to the Government of Canada, and asked that immediate action be taken to address these concerns, as the province has legal responsibility for designation," a spokesperson for Employment and Social Development Canada told CBC News in an email.
The federal department says the province pledged to develop an improvement plan with Mactech and to also draw up formal recommendations to deal with poorly-performing schools.
The college, which is headquartered in an industrial park in North Sydney, offers a series of online programs specializing in web design and computer business management that cost up to $10,000.
Repayment rate of 46 per cent
The rate at which former Mactech students repay their loans has improved since 2012. However, with a federal loan repayment rate of just 46 per cent, it remains one of the worst performing schools in the country.
A CBC New analysis of Nova Scotia student loan data found that nearly half of former Mactech students defaulted on their loans over a six-year period. Between January 2008 and December 2013, 398 former Mactech students went into default, owing the Nova Scotia government $2.3 million.
Falling behind on payments has serious implications: it damages a student's credit rating, making it difficult to borrow in subsequent years. It also means provincial and federal governments are less likely to recoup public funds spent on loans.
Default rates are also one indicator of whether graduates are getting work, or if they are making enough income to pay back their loans.
The Nova Scotia Department of Advanced Education says it is working with Mactech to improve its record. This week, Minister Kelly Regan said her department has requested a fresh set of information from the school about what it is doing to market to employers and help graduates find jobs.
"We're in the process of looking at that designation right now," she said.
Mactech now spending more on career services
Mactech says it has instituted a series of new programs. It says it now spends $300,000 a year on career services to help graduates find jobs. It has also increased the work it does to guide students through debt repayment.
The school says most of its students are women, have children and are often unemployed or making little income before they enrol. A spokesperson says many are trying to pull themselves out of a cycle of poverty.
Private career colleges also argue it's unfair to compare their student loans rates with those of universities and community colleges. Many of the students who attend career colleges don't make much money going in, can't rely on their parents for support and often juggle several financial obligations.