Regulations Amending the Canada Student Financial Assistance Regulations: SOR/2020-144
Canada Gazette, Part II, Volume 154, Number 14
Registration
SOR/2020-144 June 26, 2020
CANADA STUDENT FINANCIAL ASSISTANCE ACT
P.C. 2020-489 June 25, 2020
Her Excellency the Governor General in Council, on the recommendation of the Minister of Employment and Social Development, pursuant to subsection 15(1) footnote a of the Canada Student Financial Assistance Act footnote b, makes the annexed Regulations Amending the Canada Student Financial Assistance Regulations.
Regulations Amending the Canada Student Financial Assistance Regulations
Amendments
1 The Canada Student Financial Assistance Regulations footnote 1 are amended by adding the following after section 10:
10.1 Despite section 10, for the loan year commencing on August 1, 2020 the amount for any province is $350 per week.
2 Section 19 of the Regulations is amended by adding the following after subsection (4):
(5) The monthly affordable payment set out in a repayment assistance plan of a borrower who was receiving repayment assistance under this section on March 31, 2020 is, for the period described in subsection (6), deemed to be $0 if
- (a) the borrower’s monthly affordable payment calculated under subsection (2) was greater than $0; and
- (b) the borrower was not in arrears of any payments under the plan on March 31, 2020.
(6) The period is equal to the number of months remaining on the borrower’s repayment assistance plan as of March 31, 2020 and it begins on October 1, 2020.
3 Section 38 of the Regulations is amended by adding the following after subsection (3):
(4) Despite subsection (3), the grant for the loan year commencing on August 1, 2020 shall not exceed the lesser of
- (a) the amount the student needs as determined under subsection 12(2) of the Act,
- (b) $3,600, and
- (c) the amount determined by the following formula:
- A − (B × C)
- where
- A is $3,600,
- B is the result obtained by subtracting the applicable annual income threshold for their family size in accordance with Table 7 of Schedule 4 from the student’s family income, and
- C is the annual phase-out rate set out in column 3 of Table 7 of Schedule 4.
4 Section 38.1 of the Regulations is amended by adding the following after subsection (2):
(3) Despite subsection (2), the grant for the loan year commencing on August 1, 2020 is, for each dependant for each month of study, the lesser of $400 and the amount determined by the following formula:
- A − (B × C)
- where
- A is $400;
- B is the result obtained by subtracting the applicable annual income threshold for their family size in accordance with Table 8 of Schedule 4 from the student’s family income; and
- C is the monthly phase-out rate set out in column 3 of Table 8 of Schedule 4.
5 (1) Paragraph 38.2(1)(c) of the Regulations is replaced by the following:
- (c) needs an amount as determined under subsection 12(2) of the Act in excess of the maximum amount payable to the student under subsection 38(3) or (4);
(2) Section 38.2 of the Regulations is amended by adding the following after subsection (2):
(3) Despite subsection (2), the grant for the loan year commencing on August 1, 2020 is the lesser of
- (a) the amount the qualifying student needs as determined under subsection 12(2) of the Act;
- (b) in the case of an eligible student who has
- (i) one or two dependants, the amount determined by the following formula, to a maximum of $80 per week of study:
- (A − (B × C)) × D
- where
- A is $80,
- B is the result obtained by subtracting the applicable annual income threshold for their family size in accordance with Table 9 of Schedule 4 from the student’s family income,
- C is the weekly phase-out rate set out in column 3 of Table 9 of Schedule 4, and
- D is the number of weeks of study, and
- (ii) three or more dependants, the amount determined by the following formula, to a maximum of $120 per week of study:
- (A − (B × C)) × D
- where
- A is $120,
- B is the result obtained by subtracting the applicable annual income threshold for their family size in accordance with Table 10 of Schedule 4 from the student’s family income,
- C is the weekly phase-out rate set out in column 3 of Table 10 of Schedule 4, and
- D is the number of weeks of study; and
- (c) $3,840.
6 Section 40.01 of the Regulations is amended by adding the following after subsection (3):
(4) Despite subsection (3), the grant for the loan year commencing on August 1, 2020 shall be $4,000.
7 Subsection 40.02(3) of the Regulations is replaced by the following:
(2.1) Despite subsection (2), for the loan year commencing on August 1, 2020, the maximum amount of the grant for each month of study shall be the lesser of $750 and the amount determined by the following formula:
- A − (B × C)
- where
- A is $750;
- B is the result obtained by subtracting the applicable annual income threshold for their family size in accordance with Table 11 of Schedule 4 from the student’s family income; and
- C is the monthly phase-out rate set out in column 3 of Table 11 of Schedule 4.
(3) In addition to the grant given in accordance with subsection (2) or (2.1), a student is entitled to receive financial assistance in the amount of $200 for each month of study if at least 10 years have passed between leaving secondary school and the confirmed period.
8 Schedule 4 to the Regulations is amended by replacing the references after the heading “ SCHEDULE 4” with the following:
(Paragraphs 14.3(b) and 38(1)(d), (3)(c) and (4)(c), subsections 38.1(2) and (3), paragraphs 38.2(2)(b) and (3)(b)
and subsections 40.02(2) and (2.1) and 40.021(1))
9 Schedule 4 to the Regulations is amended by adding the following after Table 6:
TABLE 7
| Column 1 |
Column 2 |
Column 3 |
|---|---|---|
1 |
$31,868 |
0.11423856820994500 |
2 |
$45,068 |
0.08255933952528380 |
3 |
$55,196 |
0.07103954534690980 |
4 |
$63,735 |
0.06815987276823750 |
5 |
$71,258 |
0.06528006963207430 |
6 |
$78,060 |
0.06240033280177490 |
7 or more |
$84,313 |
0.06047980646461930 |
TABLE 8
| Column 1 |
Column 2 |
Column 3 |
|---|---|---|
2 |
$45,068 |
0.00917325994725376 |
3 |
$55,196 |
0.00789328281632331 |
4 |
$63,735 |
0.00757331919647083 |
5 |
$71,258 |
0.00725334107023048 |
6 |
$78,060 |
0.00693337031130833 |
7 or more |
$84,313 |
0.00671997849606881 |
TABLE 9
| Column 1 |
Column 2 |
Column 3 |
|---|---|---|
2 |
$45,068 |
0.00183465198945075 |
3 |
$55,196 |
0.00157865656326466 |
4 |
$63,735 |
0.00151466383929417 |
5 |
$71,258 |
0.00145066821404609 |
6 |
$78,060 |
0.00138667406226167 |
7 or more |
$84,313 |
0.00134399569921376 |
TABLE 10
| Column 1 |
Column 2 |
Column 3 |
|---|---|---|
4 |
$63,735 |
0.00227199575894125 |
5 |
$71,258 |
0.00217600232106914 |
6 |
$78,060 |
0.00208001109339250 |
7 or more |
$84,313 |
0.00201599354882064 |
TABLE 11
| Column 1 |
Column 2 |
Column 3 |
|---|---|---|
1 |
$31,868 |
0.0238 |
2 |
$45,068 |
0.0172 |
3 |
$55,196 |
0.0148 |
4 |
$63,735 |
0.0142 |
5 |
$71,258 |
0.0136 |
6 |
$78,060 |
0.0130 |
7 or more |
$84,313 |
0.0126 |
Coming into Force
10 These Regulations come into force on August 1, 2020, but if they are registered after that day, they come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues
The economic impacts of the COVID-19 pandemic will significantly affect the ability of students to afford the costs of post-secondary education in the coming academic year. Recent labour market trends show that employment among youth aged 15 to 24 dropped by 34.2% from February to April 2020. footnote 2 With a disruption in earnings, or no longer having access to jobs that supplement their income, many students will be facing challenges to afford the cost of post-secondary education. Moreover, even within existing levels of student financial assistance, students from low-income families might be at risk of postponing their post-secondary education or dropping out of their program entirely in order to manage the financial strain of the current economic uncertainties.
To help alleviate the financial strain on students, the Government of Canada introduced a six-month moratorium on the repayment of Canada Student Loans and Canada Apprentice Loans from March 30, 2020, to September 30, 2020. This measure provides financial relief to student and apprentice loan borrowers in repayment facing a loss of income due to the impacts of the COVID-19 pandemic. However, the moratorium on repayment does not offer the immediate support needed for new or returning post-secondary education students this fall.
Objective
The objective of these regulatory amendments is to support low- and middle-income students to better afford the cost of post-secondary education for the 2020–2021 loan year (August 1, 2020, to July 31, 2021) given the immediate economic impacts they are facing from the COVID-19 pandemic. In addition, these regulatory amendments will ensure that borrowers who are resuming their regular repayment arrangements at the end of the repayment moratorium will not be adversely impacted.
Description and rationale
The Canada Student Loans Program (CSLP) offers grants and loans to eligible full-time and part-time students to help pay for their post-secondary education. The amount an eligible student receives depends on several factors such as their family income, if they have dependants, their tuition fees and living expense and if they have a disability.
Relevant sections of the Canada Student Financial Assistance Regulations (CSFAR) will be amended to double Canada Student Grants, increase the Canada Student Loan weekly full-time loan limit and adjust sections pertaining to the Repayment Assistance Plan. These increases will help support eligible students by providing non-repayable grants and access to additional loans to support their post-secondary education.
Grants for full-time students
The CSFAR set the maximum amount an eligible student can receive from the Canada Student Grant for Full-time Students at $375 per month. The CSFAR are amended to increase the maximum grant amount to $750 per month for the 2020–2021 loan year.
Full-time students with dependants may also be eligible for the Canada Student Grant for Full-time Students with Dependants, which provides up to $200 per dependant, per month. The CSFAR are amended to increase the maximum grant amount to $400 per dependant, per month for the 2020–2021 loan year.
Grants for part-time students
The CSFAR set out the maximum amount an eligible student can receive from the Canada Student Grant for Part-time Students at $1,800 per loan year. The CSFAR are amended to increase the maximum to $3,600 for the 2020–2021 loan year.
Part-time students with dependants may also be eligible for the Canada Student Grant for Part-time Students with Dependants. For students with one or two dependants, the grant provides up to $40 per week and for students with three or more dependants provides up to $60 per week. It also sets out the total loan year maximum for the grant at $1,920. The CSFAR are amended to increase the maximum grant amounts to $80 per week for students with one or two dependants and to $120 per week for students with three or more dependants for the 2020–2021 loan year. The total maximum for the grant is increased to $3,840 for the 2020–2021 loan year.
Grants for students with permanent disabilities
Students with permanent disabilities may also be eligible for the Canada Student Grant for Students with Permanent Disabilities, which provides additional grants of $2,000 per loan year. The CSFAR are amended to increase the maximum grant amount to $4,000 for the 2020–2021 loan year.
Student loans
The CSFAR set out the maximum weekly Canada Student Loan amount an eligible full-time student can receive at $210. The CSFAR are amended to increase the maximum weekly student loan amount for eligible full-time students to $350 per week for the 2020–2021 loan year.
Repayment assistance
The CSFAR set the eligible criteria for the Repayment Assistance Plan (RAP), it is a feature of CSLP that makes it easier for borrowers to manage their student loan by limiting payments to what borrowers can reasonably afford. The introduction of the repayment moratorium from March 30, 2020, to September 30, 2020, means that no borrower, including those on a RAP, would have to repay their loan or accrue interest on their loan until September 30, 2020. However, once the moratorium is lifted, borrowers on a RAP who pay what they can afford on their income would need to resume repayment based on their status before the COVID-19 crisis took place. Given the economic impact of the COVID-19 pandemic, by the time repayment of loans is set to resume on October 1, 2020, the incomes of many borrowers on RAP could be significantly lower than when they were originally assessed for repayment relief. The regulatory amendment will allow borrowers who are unable to make payments following the end of the CSLP repayment moratorium to make no payment for the remainder of their RAP term.
Income thresholds and phase-out rates
The CSFAR provide a breakdown of the income thresholds and phase-out rates footnote 3 for Canada Student Grants. Schedule 4 of the CSFAR is amended by adding tables 7 to 11 to ensure that the accurate thresholds and phase-out rates for Canada Student Grants are outlined for the 2020–2021 loan year.
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 consulted with the ICCSFA and NAGSFA on potential support for students impacted by the COVID-19 pandemic, including an increase to grants and loans limits. Stakeholders were supportive of these measures.
As these amendments are in response to the immediate and extraordinary public health situation posed by the COVID-19 pandemic, measures need to be in place expeditiously to be effective. Consequently, no prepublication was undertaken.
Cost-benefit analysis
The analytical requirements for the cost-benefit analysis have been adjusted as these regulatory amendments relate to the response to the COVID-19 pandemic. Students, including student borrowers who qualify for the CSLP and the Government of Canada are directly affected by these regulatory amendments. Businesses, employers, employees, provincial and territorial partners in the CSLP, non-participating provinces and territories, and Canadian society more generally are indirectly affected by these regulatory amendments.
The estimated cost to the Government of Canada for implementing these regulatory amendments include the direct cost of providing additional grants and loans, and the compensation (alternative payment) provided to non-participating jurisdictions (Quebec, Northwest Territories and Nunavut) pursuant to the Canada Student Financial Assistance Act. The nominal total cost of the regulatory amendments to the Government of Canada is $1.84B over three years, to increase grants and loans disbursed to students. While these regulatory amendments will be in effect for one loan year (August 1, 2020, to July 31, 2021), the cost of these amendments fall into three fiscal years, starting 2020–2021 and ending in 2022–2023, due to alternative payments being paid the following fiscal year. The cost of additional grants is $1.55B while the cost to the government of additional loans is $286.7M. The actual cost of additional loans is expected to be much lower given the high repayment rate on Canada Student Loans and once interest revenues on student loans and borrowing costs are taken into account. As these regulatory amendments will be in effect for one loan year, these costs are short term.
First Year: |
Second Year: 2021–2022 |
Third Year: 2022–2023 |
3-Year Total |
||
|---|---|---|---|---|---|
Costs |
Government of Canada: Additional grants |
822.7 |
626.4 |
105.0 |
1,554.2 |
Government of Canada: Additional loans |
149.9 |
116.5 |
20.2 |
286.7 |
|
Total costs |
972.6 |
743.0 |
125.3 |
1,840.8 |
In terms of benefits, it is estimated that approximately 768 000 footnote 4 new and returning full-time and part-time students will benefit due to these regulatory amendments. Under the baseline scenario with reduced employment prospects for students and decreased financial ability for parents to support their children’s education, it is likely that some students would postpone their education or drop out altogether because of the financial pressures.
The benefits of the regulatory amendments include the increase in students’ disposable income through grants (transfers) and the increased loan levels, which ensure that students can continue to pursue their studies despite the impact of the COVID-19 pandemic on their ability to save during the 2020 summer season. The expected outcome of the regulatory amendments is to maintain the graduation rates and related gains (incomes, productivity, health, etc.) that would have prevailed in the absence of the COVID-19 pandemic-related constraints.
In conclusion, the benefits of these regulatory amendments are expected to outweigh costs. Furthermore, the Government of Canada will incur some of these costs for one year only; however, these amendments preserve the long-term individual and societal benefits of education including higher incomes, productivity, health, reduced income inequalities as well as positive intergenerational effects.
Small business lens
The small business lens does not apply to these regulatory amendments, as there are no impacts on small businesses.
One-for-one rule
The one-for-one rule does not apply, as there is no change in administrative burden and no administration costs that will impact businesses.
Regulatory cooperation and alignment
The regulatory amendments are not related to any commitment under a formal regulatory cooperation forum. The ICCSFA is a federal/provincial body for student financial assistance in Canada, but this organization does not focus on regulatory cooperation.
Implementation
These regulatory amendments will come into force on August 1, 2020, to align with the beginning of the 2020–2021 loan year. This will require coordination with the third-party service provider who operates the National Student Loans Service Centre and provincial and territorial jurisdictions for timely implementation. In addition, student financial assistance stakeholders will be notified of the changes through regular ICCSFA and NAGSFA meetings to explain how the amendments will better support students during the COVID-19 pandemic and going forward.
Contact
Milena Gulia
Director
Policy and Research
Canada Student Loans Program
Employment and Social Development Canada
200 Montcalm Street, Tower II, 1st Floor
Gatineau, Quebec
K1A 0J9
Email: milena.gulia@hrsdc-rhdcc.gc.ca