The deputy director of the education branch of Indigenous Affairs says the department cannot fund a residence for First Nations students attending high school in Thunder Bay, Ont.

On Wednesday, Jonathan Allen told an inquest into the deaths of seven First Nations students in the city that it is against government policy for Indigenous Affairs and Northern Development Canada to invest in buildings off-reserve.

A proposed student living centre would provide "a safe, home-away-from-home environment for students from northern communities traveling to Thunder Bay to receive their high school education," according to the Nishnawbe Aski Nation

"Funding is primarily intended for on-reserve to the benefit of the collective community," Allen said in explaining why there is no federal money for the project.

His testimony came as First Nations students crowded into the courtroom where the inquest is being held.

Latoya Pemmican said the deaths of students from her high school has lingering emotional impact. Six students from Dennis Franklin Cromarty First Nations high school died between 2000 and 2011.

'Murder Bay'

"When you hear that a student has died, it's hard," Pemmican said. "Like that could have easily been you and it's scary.

"Before I came out [to the city] for school, my friends would ask me, 'why are you going to Murder Bay?'" she added.

Pemmican and her classmates joined five young people who walked about 1,000 kilometres on the winter road from Sachigo Lake First Nation to Thunder Bay to raise money for a proposed First Nations student residence.

Darlene Barkman, one of the walkers, said it's not clear how much money was raised but all the efforts are so that more First Nations teens can attend high school and be safe.

"Knowing that future students will get the opportunity to go, that's good enough for me," said Darlene Barkman, a 2011 graduate of Dennis Franklin Cromarty school.

Allen told the inquest there are "multiple service options" for First Nations teens living in remote communities who don't feel safe or are unable to secure a boarding home to attend high school in Thunder Bay or Sioux Lookout.

Several other witnesses have said the only other options are an internet-based high school or classes delivered over the radio to First Nations students living at home.

with files from Nick Sherman and Martine Laberge

Watch live streaming video from the First Nation student deaths inquest here.

Follow CBC Thunder Bay reporter Jody Porter as she tweets from the inquest.