A $6 million class action lawsuit filed by 450 people against Redeemer University College in Ancaster, Ontario, was settled this past January.
The lawsuit was filed after a forgivable loan program offered through the Redeemer Foundation was found to be in violation of Canadian tax law and the 450 donors and parents were ordered to pay back taxes with interest.
The program had allowed parents and relatives of students applying for loans to donate funds that would then be used to pay, or “forgive,” the loan.
According to Tim Wolfert, director of communications for Redeemer, the program was set up in consultation with the Canada Revenue Agency (CRA) and followed its guidelines. The problem arose when the rules changed in 2002.
“Since this first became an issue, we have always done what we believe was in the best interests of the affected donors,” Wolfert said. “That’s why we contested the original decision all the way to the Supreme Court of Canada. . . . We looked for a resolution that would allow those affected to have this resolved in a timely and judicious manner.”
The CRA, however, maintains that an earlier audit conducted in previous years found the Foundation to be noncompliant to their guidelines.
Under the terms of the settlement, donors will receive a 10 percent reimbursement of the money they donated. Donors are also given the option to return this money to the school as a donation.
One parent who wishes to remain anonymous said that the entire experience has been confusing and that she wishes someone had told her in the beginning to be wary of such programs as they are usually too good to be true.
“In the end I am still thankful that my child had the opportunity to attend this institution, and without this program we might not have made that choice at the time,” she said.
Wolfert said on behalf of the college that they are disappointed that the lawsuit was filed, maintaining that they always believed they were operating within the accepted rules of the CRA.
Wolfert also expressed thankfulness for the ongoing support of Redeemer’s donors and noted that many of the affected donors have decided to opt out of the legal action and not receive the settlement money.
“We are blessed to be part of such a supportive community,” he said.