For-profit company to convert Aeroplan points into student loan payments
Chances are, if you're paying off a student loan, spending more money on stuff or flights isn't how you plan to pay it back.
A company called Higher Ed Points Inc. has signed up the Ontario government to allow student loan borrowers to pay some of their debt back using Aeroplan miles.
Of course, there's a catch. The conversion rate is 35,000 points for $250 dollars. So borrowers would have to use 35,000 of their frequent flyer points to pay just $250 of their loans. To earn 35,000 Aeroplan points, you might have to spend as much as $35,000.
"On the one hand, it's positive to be able to see that some students would be able to benefit... on the other hand... the reality is that most students won't really be able to afford the miles to be able to benefit in a substantial way," Spencer Nestico-Semianiw, president of the Ontario Undergraduate Students' Alliance, tells As It Happens co-host Carol Off.
In addition to not being an ideal way to pay off loans — accruing credit card debt to pay off another loan — the conversion rate isn't great when compared to some of Aeroplan's point-conversion offers for flights and gift cards. This is especially the case if you've accrued a lot of points.
Look at how the student loan conversion compares with other deals:
For each $1000 of student loan debt, you'd need 140,000 points. With 105,000 points you can get a round-trip business class flight to Europe worth around $3,000.
Also, here are two comparable Aeroplan gift card offers as of June 19:
- American Express $500 gift card (67,000 points or about 33,500 points for each $250)
- Home Hardware $500 gift card (57,000 points, 28,500 points for each $250)
Higher Ed Points Inc. was founded in 2013 by Suzanne Tyson, a former executive at Air Miles. The for-profit corporation acts as a middleman between Aeroplan and educational and government institutions.
Nestico-Semianiw says he hopes the government doesn't now take a back seat to funding post-secondary education or re-evaluating the system. Finally, he adds: "I wouldn't look at getting an Aeroplan card and using that as a proper solution to [deal with debt]."