Vol. 146, No. 9 — April 25, 2012
SOR/2012-78 April 10, 2012
CANADA STUDENT FINANCIAL ASSISTANCE ACT
Regulations Amending the Canada Student Financial Assistance Regulations
P.C. 2012-390 April 5, 2012
His Excellency the Governor General in Council, on the recommendation of the Minister of Human Resources and Skills Development, pursuant to section 15 (see footnote a) of the Canada Student Financial Assistance Act (see footnote b), hereby makes the annexed Regulations Amending the Canada Student Financial Assistance Regulations.
REGULATIONS AMENDING THE CANADA STUDENT
FINANCIAL ASSISTANCE REGULATIONS
1. Section 14.3 of the Canada Student Financial Assistance Regulations (see footnote 1) is replaced by the following:
14.3 A certificate of eligibility is to be denied to a qualifying student
- (a) who
- (i) is 22 years of age or more when applying for the first time for financial assistance,
- (ii) in the 36 months before making the application, has had at least three instances when an instalment on three or more loans or other debts each of which is higher than $1,000 was more than 90 days overdue, and
- (iii) had control over the circumstances that led to the overdue instalments; or
- (i) is 22 years of age or more when applying for the first time for financial assistance,
- (b) who is qualified for enrolment or is enrolled as a parttime student and who has an annual family income that is more than the applicable income threshold set out in Table 2 of Schedule 3.
2. Paragraph 38(1)(d) of the Regulations is replaced by the following:
- (d) has an annual family income that is no more than the applicable income threshold set out in Table 1 of Schedule 3.
3. Subsection 38.2(1) of the Regulations is amended by striking out “and” at the end of paragraph (d) by adding “and” at the end of paragraph (e) and by adding the following after paragraph (e):
- (f) has an annual family income that is no more than the applicable income threshold set out in Table 1 of Schedule 3.
COMING INTO FORCE
4. These Regulations come into force on August 1, 2012.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
1. Executive summary
Issue: Prior to these Regulations, the income thresholds used to determine eligibility for a Canada Student Loan (CSL) and a Canada Student Grant (CSG) to part-time students had not been adjusted since 1995. As a result, the real value of the income thresholds had decreased and part-time students with financial need were being assessed as ineligible for student financial assistance. Consequently, the financial needs of post-secondary students studying on a part-time basis (current and potential) were not being met as many did not qualify for part-time loans and grants to supplement their resources and, as a result, were not as well positioned to upgrade their skills and education qualifications. In addition, the eligibility thresholds used for part-time assistance were not consistent with other measures of low- and middle-income used by the Canada Student Loans Program (CSLP).
Description: These Regulations amend the Canada Student Financial Assistance Regulations (CSFAR) in order to prescribe income thresholds for the purpose of determining eligibility for CSLs and CSGs to part-time students. Specifically, the CSFAR were amended to
- prescribe that the income thresholds set in Table 1 of Schedule 3 of the CSFAR be used to determine a part-time student’s eligibility for a CSG;
- clarify that the income thresholds set in Table 1 of Schedule 3 of the CSFAR be used to determine a part-time student’s eligibility for grants for persons with dependents; and
- prescribe that the income thresholds set in Table 2 of Schedule 3 of the CSFAR be used to determine a part-time student’s eligibility for a CSL.
Cost-benefit statement: The regulatory amendments are expected to cost the Government $0.9 million (present value) in year one (2012–13) and the total estimated present value 10-year cost resulting from this amendment (up through the year 2021–22) is $22.5 million. These regulatory amendments will also benefit students through increased accessibility for student financial assistance. It is projected that over 2 500 additional part-time students will be eligible for a CSL in year one, rising to just under 8 000 in year five and on-going, and nearly 500 additional part-time students will receive a CSG in year one, rising to about 1 500 in year five and ongoing.
Business and consumer impacts: These regulatory amendments have no impact in regard to any administrative burden to competition or to consumers.
Domestic and international coordination and cooperation: There are no domestic and international coordination and cooperation impacts related to these regulatory amendments.
The Canada Student Loans Program (CSLP) began offering repayable student loans to part-time students in 1983 and non-repayable grants to part-time students in 1995. Eligibility for CSLs and CSGs to part-time students is determined based on income level. Prior to these amendments, the income thresholds used to determine eligibility for the CSG to part-time students (which started at $14,100 for a family size of one) were published in Part Ⅰ of the Canada Gazette and those used to determine eligibility for CSLs to part-time students (which started at $26,100 for a family size of one) resided in CSLP policy. These thresholds varied by family size only and did not account for province or territory.
Eligibility for Canada Student Grants to full-time students from low- and middle-income families is also determined by a student’s income. Eligibility for these grants, however, is linked to Table 1: Low-Income Thresholds, and Table 2: Middle-Income Thresholds included under Schedule 3 of the CSFAR. These tables are adjusted to account for inflation on an annual basis through the regulatory process.
Prior to these Regulations, the income thresholds used to determine eligibility for part-time CSLs were set in policy, while those used to determine eligibility for CSGs to part-time students were published in Part Ⅰ of the Canada Gazette. Neither of these thresholds had been adjusted since 1995 and did not account for the effects of inflation over this time period. As a result, assistance to part-time borrowers had become more restrictive, and student loan uptake by part-time students decreased significantly from 2000–01 to 2008–09. While the income thresholds used to determine a part-time student’s eligibility for student financial assistance had not been updated in over 16 years, the income thresholds used to determine a full-time student’s eligibility for a CSG were designed to be adjusted for inflation each year through the regulatory process.
The Government of Canada has recently introduced measures to assist part-time students; in particular, in 2009, the ceiling on outstanding CSLs for part-time students was increased from $4,000 to $10,000, and in 2012, the accrual of in-study interest on part-time loans was eliminated. While these are important steps toward helping Canadians pursue post-secondary education on a part-time basis, the effect of these enhancements is expected to plateau over the next year or so. Without an increase to the eligibility thresholds, eligibility for student financial assistance to part-time students would have continued to decline. This is counter to the policy intent of the CSLP, which is to increase access to post-secondary education through the provision of loans and grants to eligible students with a demonstrated financial need.
In addition, the eligibility thresholds used were not consistent with other low- and middle-income measures used by the CSLP to establish eligibility for assistance (namely, those used to establish eligibility for the full-time CSGs for students from low- and middle-income families). In addition, having the income thresholds for CSGs to part-time students set out in Part Ⅰ of the Canada Gazette, the income thresholds for CSLs to part-time students set in policy, and the income thresholds for CSGs to full-time students set out in regulations created inconsistency across the different student financial assistance measures. Moreover, as the income thresholds used for part-time students were not included in the CSFAR, they were less visible than those used for income-based assistance to full-time students, making the criteria for determining eligibility for assistance to part-time students less transparent.
The objective was to ensure that the income eligibility requirements of the CSLP part-time student financial assistance measures more accurately reflect post-secondary education costs and the financial need of students across Canada.
A second objective was to increase consistency across the eligibility requirements for student financial assistance measures by linking eligibility for CSLs and CSGs to part-time students to the same regulatory income thresholds used to determine eligibility for CSGs to full-time students from low- and middle-income families. Linking eligibility to regulatory income thresholds will also have the effect of making eligibility criteria for student financial assistance to part-time students more transparent, particularly in the case of CSLs to part-time students.
These objectives are consistent with the Government of Canada’s 2011 Budget Plan, which committed to increasing income eligibility thresholds for CSLs to part-time students and increasing the income eligibility thresholds used to determine CSGs to part-time students by aligning them with those used to determine CSGs to full-time students from low-income families. With these investments, low- and middle-income part-time students will be better positioned to upgrade their skills and education qualifications.
These Regulations replaced the previous non-regulatory eligibility thresholds for student financial assistance to part-time students by amending the CSFAR to prescribe income thresholds for the purpose of determining eligibility for CSLs and CSGs to part-time students. Specifically, these Regulations
- amend paragraph 38(1)(d) of the CSFAR to replace the stipulation that a part-time student’s eligibility for a CSG be determined by the income thresholds set in the Income Threshold Table published in Part Ⅰ of the Canada Gazette to prescribe that, in order to receive a CSG, a part-time student must have an annual family income no more than the income thresholds set out in Table 1 (Low-Income Thresholds) of Schedule 3 of the CSFAR;
- amend section 38.2 of the CSFAR to clarify eligibility criteria for grants for part-time students with dependents by adding that eligibility for these grants is determined by income thresholds set out in Table 1 (Low-Income Thresholds) of Schedule 3; and
- amend section 14.3 of the CSFAR such that qualified part-time students who have an annual income no more than the income thresholds set out in Table 2 (Middle-Income Thresholds) of Schedule 3 of the CSFAR are eligible for a CSL, thereby replacing the previous practice of setting eligibility thresholds for CSLs to part-time students in policy.
Pursuant to these changes, part-time students with incomes under the Middle-Income Thresholds qualify for a CSL, whereas those with incomes under the Low-Income Thresholds also qualify for a CSG. In addition, by aligning eligibility with the income thresholds in Schedule 3, income eligibility requirements will vary by province or territory moving forward (the previous non-regulatory thresholds did not account for jurisdiction), thereby accounting for variances in average income and cost of living factors across the country. Furthermore, as Schedule 3 income thresholds are updated on an annual basis for inflation through the regulatory process, income eligibility assistance to part-time students will consistently be adjusted for inflation. The income thresholds contained in Schedule 3 are also used to determine eligibility for the CSG for Students from Low-Income Families and the CSG for Students from Middle-Income Families to full-time students. Consequently, these regulatory amendments also have the effect of linking eligibility for part-time assistance to the same thresholds used to determine eligibility for income-based grants to full-time students.
6. Regulatory and non-regulatory options considered
Not intervening to increase the eligibility thresholds for CSLs and CSGs to part-time post-secondary students was not an option as many part-time learners with financial need would have continued to be assessed as ineligible for student financial assistance in the form of part-time loans and grants.
Increasing the existing thresholds for CSGs and CSLs to part-time students (i.e. those set out in Part Ⅰ of the Canada Gazette and in CSLP policy respectively) to account for inflation would have addressed the immediate concern that students with financial need are being denied assistance due to out-dated income eligibility thresholds. This approach, however, would not have addressed the issues of consistency and transparency, as income thresholds for federal student financial assistance would have continued to be set out in Part Ⅰ of the Canada Gazette, as well as by policy and regulations.
Intervening via a regulatory amendment to link eligibility for part-time CSLs and CSGs to income thresholds found in Schedule 3 of the CSFAR was seen as the optimal way to achieve the objectives outlined earlier. It ensures that the financial needs of part-time students would be met by increasing income eligibility thresholds; it facilitates the updating of these thresholds to account for inflation through the regulatory process; and it increases consistency and transparency by linking eligibility thresholds for part-time students with key thresholds used for full-time students.
7. Benefits and costs
The incremental impacts presented below reflect the difference between the outcomes of continuing to use the previous income thresholds to determine eligibility for CSLs and CSGs to part-time students (baseline scenario) and the outcomes of using the Low- and Middle-Income thresholds included in Schedule 3 of the CSFAR (regulatory scenario) over a period of 10 years beginning with year 2012–13. The parties affected by these Regulations are the Government of Canada, student borrowers, businesses and Canadian society.
A greater number of CSLs and CSGs will be provided to eligible part-time post-secondary students as a result of these regulatory amendments and, consequently, the Government of Canada will experience a greater cost. To derive these costs, an analysis and estimation of increased uptake of CSLs and CSGs was completed. It was assumed that the increases in the uptake of CSLs and CSGs resulting from the new thresholds would occur incrementally over the first several years until reaching a plateau in the 5th year (fiscal 2016–17) and would then remain constant from the 5th through the 10th year (fiscal 2021–22).
The sources of incremental uptake also had to be considered, including individuals not currently in part-time studies, and those who are enrolled in part-time studies but who are not already receiving CSLs or CSGs. Due to data limitations, only increased demand resulting from those currently enrolled in part-time post-secondary studies was considered. Next, using a combination of part-time enrolment data from Statistics Canada, coupled with assumptions based on the Access and Support to Education and Training Survey (ASETS), the eligible population was estimated to determine projected uptake. The net costs to the Government of Canada of disbursing CSLs to part-time students were then estimated by comparing the expenses and revenues. Taking this net cost of disbursing CSLs into consideration, as well as the estimated annual projected uptake levels, the costs to Government of increasing the eligibility thresholds for CSLs to part-time students were estimated. As CSGs are non-repayable, there are no borrowing costs associated with them. Therefore, the costs to Government of disbursing CSGs under the regulatory scenario are the amount disbursed in grants plus any applicable alternative payments provided to non-participating jurisdictions. The costs of disbursing CSLs and CSGs to part-time students under the regulatory scenario were then compared to the costs of continuing to disburse financial assistance to part-time students under the old thresholds.
These regulatory amendments are projected to cost the Government $0.9 million in year 1 and $1.9 million by year 10 (present value). The total estimated 10-year cost resulting from these Regulations (up through the year 2021–22) is $22.5 million in combined costs for CSGs and CSLs.
It is projected that over 2 500 additional part-time students will be eligible for CSLs in year one, rising to nearly 8 000 in year five and ongoing. Furthermore, nearly 500 additional part-time students will receive CSGs in year one, rising to approximately 1 500 in year five and ongoing. The benefits to businesses indicated in the table below only reflect the additional part-time student uptake with respect to CSLs and not CSGs. It is assumed that all of the CSG recipients will also receive a CSL.
In terms of qualitative benefits, individuals who otherwise would have pursued part-time post-secondary education regardless of receiving a loan or a grant will experience certain benefits from receiving financial assistance. Additional funding through a CSG or CSL may allow these individuals to pursue the educational program of their choice, instead of pursuing what is most affordable. These students will be less reliant on more costly forms of private credit and they will have more liquidity.
Individuals who would not be able to pursue post-secondary education without a CSL or a CSG will also experience certain benefits. A review of available literature suggests that those who attend post-secondary education experience lower rates of unemployment and shorter unemployment periods. They also live healthier, longer lives and pass benefits on to their children in the form of better cognitive development, health and future potential earnings.
Attending post-secondary education creates positive externalities, as benefits accrue to others beyond the individual who actually pursues post-secondary studies. Businesses benefit from having a more skilled and productive workforce. Studies have also shown that greater post-secondary participation can lead to greater innovation and economic growth, increased civic engagement in the form of higher volunteerism and charitable contributions, and lower income inequality.
The results of this analysis are presented in the cost-benefit statement below. A detailed copy of the cost-benefit analysis completed in the development of these Regulations can be obtained by contacting Atiq Rahman, Director, Operational Policy and Research, Canada Student Loans Program, at the address below.
Costs, Benefits and Distribution
First Year (2012–13)
10th Year (2021–22)
A. Quantified impacts (in 2012–13 dollars)
Costs — CSL and CSG disbursement (For CSLs, the cost of disbursing students loans is the expenses related to disbursing the loan minus the revenues gained via interest on CSLs in repayment. For CSGs, the cost is simply the cost of disbursing the grant.)
Government of Canada (CSLP)
B. Qualitative impacts
Benefits to individuals
— Able to afford and choose their preferred program of study;
— Lower debt levels amongst those accessing CSLs and CSGs to part-time students than those part-time students accessing private sources of financial assistance;
— More liquidity for part-time students who would otherwise fund their part-time studies through personal resources.
— Future potential earnings;
— Lower rates of unemployment and shorter unemployment spells due to post-secondary credentials;
— Greater health and longevity;
— Intergenerational effects (improved health, educational attainment and future earnings of children).
— Forgo delaying benefits of post-secondary education (higher potential higher earnings and lower rates of unemployment/shorter unemployment spells);
— Will not be required to rely solely on private sources of credit;
— Will not forgo benefiting from suite of CSLP measures designed to assist borrowers experiencing difficulty with repayment.
For a number of years, stakeholder groups such as the Canadian Alliance of Student Associations (CASA), and provincial/ territorial governments have been calling on the federal government to update the income thresholds for part-time students. Through the National Advisory Group on Student Financial Assistance (NAGSFA), student and educational stakeholder groups, including CASA, have indicated that they are supportive of this change, as it will allow more students to be eligible for part-time federal student financial assistance.
With respect to updating the thresholds, the partnering provinces and territory that participate with the CSLP, as well as student and educational stakeholder groups, were consulted during the development and implementation of the Canada Student Grant Program in 2008 and 2009. At that time, they were made aware of the CSLP’s intention to update the income thresholds on an annual basis due to inflation. Overall, these partners and stakeholder groups are supportive of the CSLP using a proxy such as the Consumer Price Index to keep the income thresholds up to date.
In recent years, the Government of Canada has taken several steps to address the needs of part-time learners. In 2009, the ceiling on individual student loan balance for part-time borrowers was increased from $4,000 to $10,000. As of January 1, 2012, interest no longer accumulates on CSLs to part-time students while the borrower is in-study. Despite these improvements to part-time student financial assistance, the income thresholds for determining eligibility for CSLs and CSGs to part-time students had not been adjusted over 16 years, meaning that the program had become more and more restrictive with each successive year due to inflation. As a result, some potential part-time learners (e.g. middle income) were not able to pursue part-time post-secondary education studies due to lack of resources. To address the issue, the Government of Canada’s 2011 Budget Plan committed to helping part-time post-secondary students by increasing eligibility thresholds for loans and grants to part-time students and harmonizing them with the thresholds used in calculating need for full-time students.
Pursuant to this commitment, regulations were developed to link income eligibility for CSLs and CSGs to part-time students to the same income thresholds used to assess eligibility for low- and middle-income CSGs to full-time students. As a result, more low- and middle-income part-time students will qualify for student financial assistance. For example, under the previous thresholds, a single part-time student required an annual income below $14,100 to be eligible for a CSG and $26,100 to be eligible for a CSL. As a result of these Regulations, these eligibility income thresholds have increased to roughly $20,000 (depending on province or territory of residence) for CSGs, and to approximately $32,000 to $45,000 (depending on province or territory of residence) for CSLs, based on Tables 1 and 2 of Schedule 3 of the CSFAR.
These Regulations are therefore an important step towards increasing the uptake of financial assistance to part-time students and will make post-secondary education more accessible and affordable for a number of part-time students across Canada, particularly those students with financial need whose incomes are higher than the previous thresholds.
10. Implementation and enforcement
There are expected to be no significant challenges in terms of implementation, enforcement and service standards. The partnering provinces and territory, and the federal service provider, administer student financial assistance on behalf of the CSLP. Implementation will be negotiated with these parties to ensure that these improvements are available to students in time for the 2012–13 academic year. Following implementation, the thresholds will be applied automatically to new applications.
With respect to updating the thresholds, in anticipation of these changes, most of these parties have already built a capacity into their systems for updating the income thresholds on an annual basis.
11. Performance measurement and evaluation
To ensure effective management and accountability to Canadians, all outstanding student loans, including risk-shared and direct loans, will continue to be monitored to ensure effective program performance and integrity. The resulting data will continue to be included in the CSLP’s Actuarial Report and Annual Report, both of which are tabled in Parliament as per the Canada Student Financial Assistance Act. These reports can also be accessed online by the general public, through the CSLP Web site.
Operational Policy and Research
Canada Student Loans Program
Human Resources and Skills Development Canada
200 Montcalm Street, Tower II, 1st Floor
S.C. 2011, c. 24, s. 155
S.C. 1994, c. 28