Regulations Amending the Canada Student Financial Assistance Regulations: SOR/2019-214

Canada Gazette, Part II, Volume 153, Number 13

Registration

SOR/2019-214 June 17, 2019

CANADA STUDENT FINANCIAL ASSISTANCE ACT

P.C. 2019-788 June 16, 2019

Her Excellency the Governor General in Council, on the recommendation of the Minister of Labour, pursuant to paragraphs 15(1)(a), (i) ^{footnote a}, (o) and (p) ^{footnote b} of the Canada Student Financial Assistance Act ^{footnote c} and on the recommendation of the Minister of Labour with the concurrence of the Minister of Finance, pursuant to paragraph 15(1.1)(a) ^{footnote d} of the Canada Student Financial Assistance Act ^{footnote c}, makes the annexed Regulations Amending the Canada Student Financial Assistance Regulations.

Regulations Amending the Canada Student Financial Assistance Regulations

Amendments

1 The definition severe permanent disability in subsection 2(1) of the Canada Student Financial Assistance Regulations ^{footnote 1} is replaced by the following:

severe permanent disability means a functional limitation caused by a physical or mental impairment that prevents a borrower from performing the daily activities necessary to participate in substantially gainful employment, as defined in section 68.1 of the Canada Pension Plan Regulations, and is expected to remain with the person for their expected life; (invalidité grave et permanente)

2 Paragraph 15(1)(k) of the Regulations is replaced by the following:

• (k) if the borrower has been granted repayment assistance under subparagraph 20(1)(b)(ii), the day on which the repayment assistance begins; or

3 Paragraph 16(1)(d) of the Regulations is replaced by the following:

• (d) the borrower has, in respect of direct loan agreements, risk-shared loan agreements and guaranteed student loan agreements held by the Minister, for which a judgment has not been obtained, fulfilled the terms of a repayment arrangement entered into with the Minister that is no more onerous to the borrower than six consecutive payments subsequent to a day that are made in accordance with those agreements, and
  • (i) has paid the interest accrued to that day, or
  • (ii) has directed, for the first time under this paragraph, paragraph 10(1)(d) of the Canada Student Loans Regulations or paragraph 7(1)(b) of the Apprentice Loans Regulations, the addition of the unpaid accrued interest to that day to the outstanding principal.

4 Subsection 18(1) of the Regulations is replaced by the following:

18 (1) For the purposes of section 13 of the Act, the outstanding aggregate amount of student loans may not exceed 34 billion dollars.

5 (1) Subparagraphs 19(1)(d)(i) and (ii) of the Regulations are replaced by the following:

• (i) in respect of student loans or guaranteed student loans made to the borrower as a full-time student, since the later of the day on which the borrower most recently ceased to be a full-time student under section 8 or, in the case of a borrower to whom only guaranteed student loans have been made, section 4.1 of the Canada Student Loans Regulations, and the day on which the restriction was removed under paragraph 16(1)(d), and
• (ii) in respect of student loans made to the borrower as a part-time student, since the later of the day on which the borrower most recently ceased to be a full-time student under section 8 or a part-time student under section 12.3, as the case may be, and the day on which the restriction was removed under paragraph 16(1)(d); and

(2) Subparagraph 19(3)(a)(ii) of the Regulations is replaced by the following:

• (ii) 120 months minus the number of months that have elapsed since the applicable day referred to in subparagraph (1)(d)(i) plus the number of months since that day during which the borrower benefited from any special interest-free periods under section 19 or 20 or section 17 or 18 of the Canada Student Loans Regulations, as they read immediately before the coming into force of this section, or repayment assistance under this section;

(3) Subparagraph 19(3)(b)(ii) of the Regulations is replaced by the following:

• (ii) 120 months minus the number of months that have elapsed since the applicable day referred to in subparagraph (1)(d)(ii), plus the number of months since that day during which the borrower benefited from any special interest-free periods under section 19 or 20 as they read immediately before the coming into force of this section, or repayment assistance under this section; and

(4) Paragraphs 19(4)(a) and (b) of the Regulations are replaced by the following:

• (a) in respect of any student loan or guaranteed student loan made to the borrower as a full-time student, since the applicable day referred to in subparagraph (1)(d)(i); and
• (b) in respect of any student loan made to the borrower as a part-time student, the applicable day referred to in subparagraph (1)(d)(ii).

6 (1) Clauses 20(1)(b)(ii)(A) and (B) of the Regulations are replaced by the following:

(A) in respect of any student loan or guaranteed student loan made to the borrower as a full-time student, since the applicable day referred to in subparagraph 19(1)(d)(i), and

(B) in respect of any student loan made to the borrower as a part-time student, since the applicable day referred to in subparagraph 19(1)(d)(ii); and

(2) Subparagraphs 20(3)(a)(i) and (ii) of the Regulations are replaced by the following:

• (i) in the case of a borrower who has a permanent disability, 120 months minus the number of months that have elapsed since the applicable day referred to in subparagraph 19(1)(d)(i), and
• (ii) in any other case, 180 months minus the number of months that have elapsed since the applicable day referred to in subparagraph 19(1)(d)(i);

(3) Subparagraphs 20(3)(b)(i) and (ii) of the Regulations are replaced by the following:

• (i) in the case of a borrower who has a permanent disability, 120 months minus the number of months that have elapsed since the applicable day referred to in subparagraph 19(1)(d)(ii), and
• (ii) in any other case, 180 months minus the number of months that have elapsed since the applicable day referred to in subparagraph 19(1)(d)(ii); and

7 Subsection 34(3) of the Regulations is replaced by the following:

(3) The maximum amount of the grant shall be $20,000 for a loan year.

Coming into Force

8 (1) Subject to subsections (2) to (4), these Regulations come into force on the day on which they are registered.

(2) Sections 1 and 7 come into force on August 1, 2019.

(3) Sections 3, 5 and 6 come into force on January 1, 2020.

(4) Section 2 comes into force on August 1, 2020.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the regulations.)

Executive summary

Issues

The CSLP is governed by rules that are intended to ensure that student financial assistance is provided to students with demonstrated financial need, based on the principle that the costs of post-secondary education are a shared responsibility of students, their families, and governments. These rules are also intended to ensure responsible use of public funds. However, a certain number of outdated program rules and restrictions make the Program less flexible and less accessible for some:

• Students with expenses exceeding the cap on the Canada Student Grant for Services and Equipment for Students with Permanent Disabilities of $8,000 either cannot obtain the services and equipment they need or must cover the remaining cost.
• Borrowers can only receive the Severe Permanent Disability Benefit if they are medically assessed to be unable to attend post-secondary education, or be employed for their lifetime. This requirement is unnecessarily restrictive and is not aligned with similar programs such as the Canada Pension Plan Disability benefit, which covers people with employment that is not substantially gainful.
• CSLP borrowers who have used the Repayment Assistance Plan for Borrowers with a Permanent Disability and who left school more than five years ago are restricted from further student financial assistance and can only regain access when their loan is fully repaid. This can delay their ability to improve their circumstances through additional post-secondary education.
• Borrowers with a Canada Student Loan or Canada Apprentice Loan in default who wish to bring their loan back to good standing must repay all outstanding interest and make the equivalent of two monthly payments. Many borrowers are unable to pay the accrued interest. This prevents them from accessing debt management measures, receiving additional student financial assistance to return to post-secondary education if they wish to improve their skills and labour force participation, and contributes to the write-off of a portion of defaulted loans.
• Interest accrues on Canada Apprentice Loans during the six-month non-repayment period following the day a borrower leaves technical training or an apprenticeship. This is a financial burden given that it takes time for a borrower to find gainful employment following training.

In addition, to support the ongoing efforts to continue to make student financial assistance more affordable and accessible, it is important that the CSLP maintain legal authority to disburse student loans to qualifying students. The CSLP has a cap on the amount of outstanding Canada Student Loans set out in the CSFAR. The Office of the Chief Actuary currently forecasts that the Canada Student Loans portfolio limit could be reached in September 2020. Due to the sensitivity of the assumptions involved in this forecast, there is a risk that the portfolio limit could be reached sooner. When the limit is reached, the Government of Canada will no longer have legal authority to disburse additional Canada Student Loans to qualifying students.

Lastly, the ALR currently includes Canada Apprentice Loans in the federal portion of total student debt for the purposes of apportioning a borrower’s Repayment Assistance Plan affordable payment towards their total loan debt. This error results in the ALR not being aligned with the CSFAR.

Background

Canada Student Loans

The CSLP provides financial assistance to students in the form of grants and loans to supplement resources and help meet the costs of post-secondary education. Delivered in partnership with 10 provinces/territories, the CSLP provides up to 60% of a borrower’s calculated financial need in grants and loans, while participating provinces/territories cover the rest. After students leave school, the CSLP provides repayment assistance to those facing financial difficulty to ensure that their student debt remains manageable as they transition into the labour force.

The CSLP provides several enhanced supports for students with permanent disabilities. Introduced in 2009, the Canada Student Grant for Students with Permanent Disabilities, the Canada Student Grant for Services and Equipment for Students with Permanent Disabilities, Severe Permanent Disability Benefit and Repayment Assistance Plan for Borrowers with Permanent Disabilities aim to improve access to post-secondary education for persons with permanent disabilities and support them when they leave school and enter repayment.

The Canada Student Grant for Services and Equipment for Students with Permanent Disabilities is available to support students who require exceptional education-related services and equipment (for example, interpretation services for hearing-impaired students) each school year, as long as they remain eligible.

In addition, there are several repayment assistance measures available to borrowers experiencing difficulties in repayment. The Repayment Assistance Plan for Borrowers with a Permanent Disability and the Severe Permanent Disability Benefit aim to support students with permanent disabilities after they leave school and enter repayment. The Severe Permanent Disability Benefit cancels the student loans of borrowers who have a severe permanent disability that prevents them from participating in post-secondary studies and the labour force for the rest of their life. The Repayment Assistance Plan for Borrowers with Permanent Disabilities makes it easier for borrowers to manage their student loan debt by reducing their monthly payment, accounting for any disability-related expenses and ensuring that their loan is paid off in 10 years after leaving studies if they continue to have financial difficulty.

Further, borrowers who default on their student loan by being 270 days behind on their payments have the option to rehabilitate their loan by repaying all outstanding interest and making the equivalent of two monthly payments. Rehabilitation helps borrowers improve their circumstances by allowing them to repair their credit and regain eligibility for repayment assistance, or for further funding to go back to school.

Furthermore, to help ensure financial oversight of the Canada Student Loans portfolio, the CSLP has an established portfolio limit within the CSFAR. The portfolio limit sets the maximum aggregate principal amount of outstanding student loans, including all in-study, in-repayment, and in-default direct loans and a portion of risk-shared loans. Recent enhancements to the CSLP announced in Budgets 2016 and 2017 have meant that more Canadians are receiving student financial assistance than ever before. While most of the increase is in the form of non-repayable grants, the increase in loans is not insignificant. In addition, portfolio growth can be affected by economic conditions, borrower behaviour, post-secondary education enrollment, student loan uptake, student financial need, repayment patterns, and write-offs. The portfolio limit is not intended to prevent qualifying students from receiving financial aid, rather it is intended to be a fiscal oversight mechanism.

Canada Apprentice Loans

Canada Apprentice Loans were introduced on January 2, 2015, to make funding available to apprentices registered in a trade designated under the Red Seal program of the Canadian Council of Directors of Apprenticeship to help with the cost of technical training needed to complete their apprenticeship program. The CSLP is responsible for the administration of Canada Apprentice Loans under the Apprentice Loans Act (ALA) and the ALR. With Canada Apprentice Loans, eligible apprentices can get up to $4,000 in interest-free loans per period of technical training. The money can be used to help pay for tuition, tools, equipment and living expenses, to cover forgone wages or to help support families.

Canada Apprentice Loan borrowers also have access to measures established by the CSLP to support borrowers experiencing difficulties in repayment. The Severe Permanent Disability Benefit and the Repayment Assistance Plan for Borrowers with a Permanent Disability are both available to Canada Apprentice Loan borrowers.

Canada Apprentice Loans are meant to be excluded in the determination of the federal/provincial division of the affordable payment for the Repayment Assistance Plan. This ensures that the provincial share of the affordable payment is calculated in the same manner as described in the CSFAR and that the amount of the affordable payment being put towards the provincial student loan is not reduced.

Budget 2019

Budget 2019 announced measures to modernize the CSLP in the following ways:

1) Making Canada Student Loans more affordable

These measures will help more students better manage the mounting pressure of higher living costs and the changing nature of work, starting in 2019–2020, by

• making the six-month non-repayment period following studies interest-free for Canada Student Loans, through legislative changes to the CSFAA and CSLA, and for Canada Apprentice Loans, through regulatory changes to the ALR; and
• lowering the interest rate for Canada Student Loans and Canada Apprentice Loans, through an order in council
  • from prime plus 2.5% to prime for the variable rate; and
  • from prime plus 5% to prime plus 2% for the fixed rate.

2) Making Canada Student Loans more accessible

These measures will expand supports to better respond to the needs of vulnerable student and apprentice loan borrowers, including those facing challenging life or financial circumstances by

• increasing the cap on the Canada Student Grant for Services and Equipment for Students with Permanent Disabilities from $8,000 to $20,000 (starting in 2019–2020);
• expanding eligibility for the Severe Permanent Disability Benefit (starting in 2019–2020);
• increasing the eligibility for loan rehabilitation after a borrower defaults on their student and/or apprentice loan (starting in 2019–2020);
• making it easier for students with permanent disabilities to return to school after benefiting from the Repayment Assistance Plan for Borrowers with a Permanent Disability (starting in 2020–2021); and
• introducing interest- and payment-free medical and parental leave (starting in 2020–2021).

The first four measures are part of this regulatory package while the last, interest- and payment-free medical and parental leave, will be part of a second regulatory package that will be brought forward in the future.

Budget 2019 also announced increased compensation to provinces and territories — partners in the Canada Student Loans Program — by $20.0 million over five years, starting in 2019–2020, with $4.0 million per year ongoing. This increased funding will compensate provinces and territories for their costs stemming from Budget 2019’s proposed changes to improve the accessibility of student financial assistance.

Objective

The amendments to the CSFAR, the CSLR and the ALR will make student and apprentice loans more affordable and accessible for students and apprentices who need them, and particularly respond to the needs of vulnerable student and apprentice loan borrowers, including those facing challenging life or financial circumstances by

• better supporting high-need students with disabilities who require services and equipment exceeding the current $8,000 cap on the Canada Student Grant for Services and Equipment for Students with Permanent Disabilities (for example, hearing-impaired students requiring sign language interpretation services) by increasing the cap to $20,000;
• removing unnecessary restrictions on borrowers with severe permanent disabilities and better align with other federal disability benefits by ensuring that people with severe permanent disabilities who have, or are able to have, employment that is not substantially gainful and those who participate, or are able to participate, in post-secondary education can benefit from the Severe Permanent Disability Benefit loan forgiveness benefit;
• better supporting borrowers to access additional post-secondary education by allowing Repayment Assistance Plan for Borrowers with a Permanent Disability recipients who have been out of study for five years to receive further federal student financial assistance despite not having repaid their loans in full;
• supporting more borrowers who are in default to regain access to additional student financial assistance and help reduce write-offs of defaulted Canada Student Loans and Canada Apprentice Loans by allowing borrowers to add accrued interest to the principal of their loans (i.e. capitalize the interest);
• ensuring that Canada Apprentice Loan debt is more manageable and recognizing that it takes time to find gainful employment following training by making the six-month non-repayment period after leaving training or an apprenticeship interest-free;
• ensuring that the regulatory limit would not prevent Canadian students from continuing to receive the financial assistance for which they are eligible by increasing the Canada Student Loan portfolio limit from $24 billion to $34 billion; and
• ensuring that borrowers with Canada Apprentice Loans and Canada Student Loans have their affordable payment under the Repayment Assistance Plan apportioned between the two loans as it was originally intended by aligning the ALR with the CSFAR.

Description

The regulatory amendments include

• amending subsection 34(3) of the CSFAR to increase the cap on the Canada Student Grant for Services and Equipment for Students with Permanent Disabilities from $8,000 to $20,000, effective August 1, 2019;
• amending the definition of “severe permanent disability” under subsection 2(1) of the CSFAR, subsection 1(1) of the ALR, and section 25 of the CSLR to allow those capable of participating in post-secondary education or those capable of having employment, so long as it is not substantially gainful, to benefit from loan forgiveness, effective August 1, 2019;
• amending paragraph 15(1)(k) of the CSFAR and paragraph 6(2)(i) of the ALR to remove the restriction for recipients of the Repayment Assistance Plan for Borrowers with a Permanent Disability so that recipients can access further federal student financial assistance without having repaid their loans in full, effective August 1, 2020;
• amending several sections of the CSFAR, the ALR and the CSLR to give borrowers in default the option to add accrued interest to the principal of their loan, effective January 1, 2020;
• amending several sections of the ALR so that no interest accrues on Canada Apprentice Loans during the six-month non-repayment period following the conclusion or withdrawal from the apprenticeship program, effective November 1, 2019;
• amending subsections 18(1) of the CSFAR to increase the total maximum amount of outstanding Canada Student Loans from $24 billion to $34 billion, effective upon the date of registration; and
• amending paragraph 11(3)(b) of the ALR by deleting the words “apprentice loans” in the definition of “federal portion,” effective upon the date of registration.

Regulatory development

Consultation

The CSLP regularly engages with stakeholders and partners, including student groups, borrowers, and provinces and territories, through the Intergovernmental Consultative Committee on Student Financial Assistance (ICCSFA) and the National Advisory Group on Student Financial Assistance (NAGSFA). The CSLP discussed policy ideas related to making student and apprentice loans more affordable and accessible with stakeholders and all were supportive.

Following the release of Budget 2019, the Canadian Alliance of Student Associations, the Canadian Federation of Students, and Universities Canada all expressed support for the CSLP measures announced in Budget 2019 and praised the Government for reducing the cost of borrowing. Student stakeholders were particularly pleased with the interest rate reduction and the new interest-free grace period.

Provinces and territories are also expected to be generally supportive of Budget 2019 measures, as they reduce financial burden on borrowers and improve CSLP operations without a major impact on provincial/territorial operations. The majority of costs resulting from these measures will be to the Government of Canada rather than to provinces and territories. However, provinces and territories will be compensated for their costs stemming from Budget 2019’s proposed changes. The CSLP will continue to consult with provincial and territorial partners and student stakeholders on plans to implement the regulatory amendments.

The regulatory amendment to increase the portfolio limit does not directly impact CSLP stakeholders and partners, as it simply ensures continued legal authority for the CSLP to disburse Canada Student Loans, rather than making changes to student financial assistance policies or program design. There are no implications for determining eligibility for financial assistance or the level of assistance that students receive.

The regulatory amendment to correct the minor drafting error in the ALR will have no impact on stakeholders.

Modern treaty obligations and Indigenous engagement and consultation

The proposed regulatory amendments do not have any differential impacts on Indigenous people or implications for modern treaties, as per government obligations in relation to rights protected by section 35 of the Constitution Act, 1982, modern treaties, and international human rights obligations.

Instrument choice

Most of the Budget 2019 announcements to make student financial assistance more affordable and accessible relate directly to measures that are currently set out in regulations. Similarly, the Canada Student Loans portfolio limit and the apportionment of Repayment Assistance Plan affordable payments are set out in the CSFAR and the ALR, respectively. Therefore, in order to implement these Budget 2019 announcements, increase the portfolio limit, and address the drafting error in the ALR, regulatory amendments are required. No non-regulatory options were considered.

Regulatory analysis

Costs and benefits

A cost-benefit analysis was conducted to assess the incremental impacts of implementing these regulatory amendments (amended regulations scenario) versus not making regulatory amendments to implement Budget 2019 measures and maintaining the existing $24 billion Canada Student Loan portfolio limit (baseline scenario). This analysis estimated total costs to the Government of Canada of implementing these regulations at $1.75 billion (present value) and total monetized benefits at $2.17 billion over 10 years (present value). This results in a net monetized benefit of $415 million over 10 years (present value), with considerable additional qualitative benefits as described in the cost-benefit statement below.

The stakeholders most directly affected by these regulatory amendments are student borrowers and the Government of Canada. Businesses, employers, employees, provincial and territorial partners in the CSLP and Canadian society more generally are also affected indirectly.

All monetized costs and benefits were estimated on an annual basis over a 10-year period, from the 2019–2020 loan year to the 2028–2029 loan year. The 2019–2020 loan year is the first year in which the amended regulations would come into force, and 10 years is the span for cost-benefit analyses that allows for the impacts of regulatory amendments to fully materialize.

Key data sources for this cost-benefit analysis include CSLP administrative data and actuarial forecasts provided by the Office of the Chief Actuary based on demographic information, economic conditions, and the policy parameters of the CSLP.

While it is projected that the regulatory amendment to increase the portfolio limit would provide legal authority for the CSLP to continue disbursing student loans for the next 10 years, changes to any of the assumptions underlying the analysis would impact this time frame (e.g. changes that result in greater uptake of Canada Student Loans or higher Canada Student Loan amounts).

Monetized costs

The estimated total cost to the Government of Canada of implementing these regulations is $1.75 billion over 10 years (present value). Incremental costs were determined by comparing the difference between the net costs under the baseline scenario and the net costs under the amended regulations scenario, where net costs are defined as the difference between revenues and program expenses.

Monetized benefits

The main monetized benefit of these regulations is the higher potential future earnings for student borrowers who would not pursue post-secondary education without these regulatory amendments, estimated at $2.01 billion over 10 years (present value). This was assessed by projecting the estimated net income gains of these borrowers over 10 years. Additional monetized benefits such as direct cash transfers to student borrowers via additional grants, reduced interest payments, and increased access to loan forgiveness and repayment assistance are also included in the analysis. This yields a total monetized benefit of $2.17 billion over 10 years (present value).

Quantitative and qualitative benefits

Results from the CSLP’s 2017-18 Client Satisfaction Survey suggest that the majority of students would find a way to complete their post-secondary education studies without access to Canada Student Loans funding should the portfolio limit be reached. However, the strategies that students would employ to do so would entail some educational, social, and monetary costs, such as working more while in school, relying on more costly sources of funding or credit, reducing course loads or delaying studies. Those who delay their post-secondary education would delay its benefits, including lower rates of unemployment, healthier and longer lives, and better outcomes for their children in the form of cognitive development, health, and potential future earnings. In addition, the positive externalities of post-secondary education, such as businesses benefiting from a more skilled and productive workforce, would be reduced or delayed.

Should the CSLP be unable to implement regulatory changes stemming from Budget 2019 or lose its authority to disburse Canada Student Loans, the impact would be most acute for low-income borrowers (who rely more heavily on government student financial assistance), students with disabilities, student borrowers experiencing financial difficulties, and students who have to live away from home to go to school and consequently face higher costs.

The results of this analysis are presented in the cost-benefit statement below.

Cost-benefit statement

		First Year: 2019–2020	Second Year: 2020–2021	Fifth Year: 2023–2024	Final Year: 2028–2029	Total (Present Value)table 1 note 1	Annualized Average
A. Quantified impacts (in millions of CAD, 2019 constant dollars)
Benefits	Borrowers who could not pursue studies without this amendment: future potential earningstable 1 note 2	$0	$0	$81	$606	$2,050	$292
	Student borrowers: transfers in cash	$7	$13	$13	$10	$117	$17
	Total monetized benefits	$7	$13	$94	$616	$2,167	$309
Costs	Federal government: cash cost of regulatory amendments	$9	$76	$207	$393	$1,752	$249
Net monetized benefits						$415	$59
B. Quantified impacts in non-$ (number of skilled workers)
Positive impacts	Business: additional skilled workers avaliabletable 1 note 3	0	0	14 798	17 259	115 135table 1 note 4	N/A
C. Qualitative benefits
For borrowers who would not pursue post-secondary education without these amendments: Lower rates of unemployment and shorter unemployment spells due to post-secondary credentials Greater health and longevity Intergenerational effects (improved health, education and future earnings of children) For borrowers who otherwise would delay post-secondary education without these amendments: Earlier realization of benefits of post-secondary education (higher potential earnings and lower rates of unemployment/shorter periods of unemployment) Reduced interest costs, as borrowers would not rely solely on more expensive private sources of credit Can take advantage of CSLP measures to assist borrowers with loan repayment For borrowers who otherwise would continue their post-secondary education regardless: Better academic achievement due to reduced need for employment during studies Reduced interest costs as borrowers would not rely solely on more expensive private sources of credit Can take advantage of CSLP measures to assist borrowers with loan repayment For borrowers with disabilities: Students with disabilities who have more support (such as services and equipment) have higher rates of success, with higher grade point averages and graduation rates Fewer obstacles gaining employment and less income inequalities For provincial and territorial governments: No negative impact on provincial/territorial loan operations because Canada Student Loans disbursements will continue as usual For businesses: Greater productivity and access to higher educated labour force Additional benefits for Canadian society: Increased innovation and economic growth Greater civic engagement (volunteerism and charitable contributions) Reduced income inequality
Table 1 Notes Table 1 Note 1 7% discount rate. Return to table 1 note 1 referrer Table 1 Note 2 Tuition costs, loan interest costs, and the borrowers’ lower future earnings in the baseline scenario (i.e. without post-secondary credentials) have been deducted from potential future earnings. Return to table 1 note 2 referrer Table 1 Note 3 Number of borrowers who would not receive Canada Student Loans without this amendment and who would eventually complete their post-secondary education. Return to table 1 note 3 referrer Table 1 Note 4 Total number of borrowers affected over the 10-year period (not present value). Return to table 1 note 4 referrer

Small business lens

The small business lens does not apply to these regulatory amendments, as there are no costs that will impact small businesses.

“One-for-One” Rule

The “One-for-One” Rule does not apply, as there is no change in administrative burden and no administrative costs that will impact businesses.

Regulatory cooperation and alignment

These regulatory amendments are not related to any commitment under a formal regulatory cooperation forum. The Intergovernmental Consultative Committee on Student Financial Assistance (ICCSFA) is a federal/provincial body for student financial assistance in Canada, but this organization does not focus on regulatory cooperation.

Strategic environmental assessment

In accordance with The Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required for these regulatory amendments.

Gender-based analysis plus (GBA+)

The CSLP provides student financial assistance to help low and middle-income Canadians access and afford post-secondary education. The CSLP has undergone a number of significant recent enhancements to increase student financial assistance and expand access.

Budget 2019 is proposing to continue the process of modernizing and improving federal student financial assistance by removing CSLP rules that negatively impact vulnerable students and create barriers for borrowers having difficulty repaying their Canada Student Loans from improving their situation.

The proposed measures are expected to have significant benefits from the perspectives of gender and diversity. The CSLP aims to help alleviate financial barriers to post-secondary education for low- and middle-income students, and is therefore available equally to everyone, regardless of gender, who has a demonstrated financial need. As women outpace men in post-secondary education participation (56%), women also represent a greater share (59%) of CSLP clients. As a result, CSLP enhancements generally benefit proportionately more women. Furthermore, women experience higher rates of return from post-secondary education: approximately 9% for female Canadians compared to approximately 6% for male Canadians according to one study. ^{footnote 5} Therefore, if implementing these regulatory amendments results in a woman receiving a Canada Student Loan who otherwise would not, and this in turn results in her being able to pursue/continue her studies, she could experience greater benefits than a man in a similar situation.

In addition, Budget 2019 introduces measures to provide additional support to persons with disabilities by helping to address some of their unique barriers to accessing, affording, and persisting in post-secondary education. It also helps address the debt burden of borrowers with a permanent disability, who represent some of the CSLP’s most vulnerable borrowers and are often those with the highest costs.

Implementation, compliance and enforcement, and service standards

Implementation

The regulatory amendments have varied coming-into-force dates. However, they will all require cooperation with the third-party service provider who runs the National Student Loans Service Centre and with participating jurisdictions for timely implementation. In addition, stakeholders will be notified of the changes through regular ICCSFA and NAGSFA meetings to explain how they will support making student financial assistance more affordable and accessible.

The regulatory amendments come into force on

• August 1, 2019, in time for the beginning of the 2019–2020 loan year, for the increase to the Canada Student Grant for Services and Equipment for Students with Permanent Disabilities and for the expansion of eligibility for the Severe Permanent Disability Benefit;
• November 1, 2019, for the introduction of the interest-free six-month non-repayment period for Canada Apprentice Loans;
• August 1, 2020, for the removal of Repayment Assistance Plan for Borrowers with a Permanent Disability restrictions; and
• January 1, 2020, for the option for borrowers in default to add all of the accrued interest to the principal of their loan;
• upon the date of registration for the increase to the portfolio limit and new definition of “federal portion” for the apportioning of affordable payments under the Repayment Assistance Plan for borrowers with Canada Apprentice Loans.

Compliance and enforcement

To support effective management and accountability to Canadians, federal student financial assistance programs and the total amount of outstanding student loans will continue to be monitored to ensure effective program performance and integrity. The CSFAA requires that the Minister of Employment and Social Development table an actuarial report produced by the Office of the Chief Actuary at least once every three years. This report provides an estimate of program costs and revenues, a 25-year forecast of future program costs and revenues, and an explanation of the methodology and actuarial and economic assumptions used to produce all of the figures presented in the report. The CSFAA also requires that the Minister table in Parliament an annual report on the CSLP, which provides detailed statistics on the program (including the value of the portfolio), and outlines key objectives, initiatives, and accomplishments achieved over a given academic year.

The effects of increasing the Canada Student Grant for Services and Equipment for Students with Permanent Disabilities, expanding eligibility for the Severe Permanent Disability Benefit, changing the six-month non-repayment period to be interest-free, creating an option for borrowers in default to add all of the accrued interest to the principal of their loan and removing Repayment Assistance Plan for Borrowers with a Permanent Disability restrictions will be incorporated into existing performance measurement and evaluation mechanisms.

Service standards

There are no service standards applicable to these regulatory amendments.

Contact

Milena Gulia
Director
Policy and Research
Canada Student Loans Program
Employment and Social Development Canada
200 Montcalm Street, Tower II, 1st Floor
Gatineau, Québec
K1A 0J9
Email: milena.gulia@hrsdc-rhdcc.gc.ca