Mactech Distance Education to close for 'business' reasons

A Cape Breton private career college that came under scrutiny after hundreds of former students failed to repay their student loans is now closing, according to the province.

The Department of Advanced Education says Mactech Distance Education quietly informed officials it made a "private business decision" and will be shutting down once the current cohort of students complete their courses. It has not accepted new students since September.

A spokesperson for Mactech, which employs three dozen people in a North Sydney industrial park, says the school will not comment on the situation. The school offered online courses to students across Canada.

A CBC News investigation in June found the college had one of the worst student loan repayment rates in the country.

The province, however, says it did not de-designate Mactech, a move that would have meant students there would no longer qualify for loans to fund their education. 

In fact, Nova Scotia still has $1.3 million in loans invested in 58 students currently attending Mactech — an average of $22,413 apiece. The last of those students is scheduled to finish in June 2016.

'More protection to students'

Advanced Education Minister Kelly Regan says the province had been closely monitoring Mactech and would likely have pulled student loan funding if things did not improve.

"We were in the process of reviewing what was going on with them and if the repayment rates had not improved, that's likely where we would have ended up," she said Thursday.

She also notes legislation governing private career colleges was amended this spring. Regulations will be ready in April and will "provide more protection to students," she said.

Mactech has been operating for at least 27 years and offered a series of online programs specializing in web design and computer business management that cost up to $10,000 each.

But a CBC News analysis of data obtained through freedom-of-information laws found that during a six-year period, 398 former Mactech students defaulted on their Nova Scotia loans — half of all those who had received such financial help to attend the school.

A high default rate means public money invested in students is less likely to be recouped. It is also considered a sign that former students have trouble finding work or don't make much income after graduation.

In an interview in June, a Mactech spokesperson acknowledged the poor student loan repayment record.

But the school said many of its students are jobless or work minimum wage when they enroll at the private college. Almost all are women, three-quarters have children, and the average age is 34 years.

It also said it had invested in career guidance to help students land jobs and help them repay their loans.

'Significant and ongoing financial risk'

Still, the federal government flagged concerns about Mactech three years ago. While the federal government dishes out millions in loans to students studying at hundreds of post-secondaries across the country, it's left to the provinces to decide which institutions qualify.

In a 2012 letter obtained by CBC News through access-to-information laws, the director general of the Canada Student Loans Program tells Nova Scotia the repayment rates at three Nova Scotia post-secondaries are so poor they "represent significant and ongoing financial risk to the government of Canada."

The names of the schools are redacted from the letter, however the federal government has said one of them is Mactech. It did not identify the two others.

Of the $48 million in loans it issued between 2004 and 2011 to students attending the three institutions, Canada Student Loans says it had been forced to send $35 million to collections by 2012.

The director general of the Canada Student Loans Program, Marc LeBrun, even warned Nova Scotia that the federal minister of human resources and skills development might step in and refuse student loans to institutions with poor track records.

On Thursday, a spokesperson for the department said the minister did not use that authority with Mactech.