Regulations Amending Certain Regulations Made Under the Canada Student Financial Assistance Act: SOR/2021-138

Canada Gazette, Part II, Volume 155, Number 14

Registration
SOR/2021-138 June 17, 2021

CANADA STUDENT FINANCIAL ASSISTANCE ACT

P.C. 2021-580 June 17, 2021

His Excellency the Administrator of the Government of Canada 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 Certain Regulations Made Under the Canada Student Financial Assistance Act.

Regulations Amending Certain Regulations Made Under the Canada Student Financial Assistance Act

Canada Student Financial Assistance Regulations

1 The portion of subsection 38(4) of the Canada Student Financial Assistance Regulations^{footnote 1} before paragraph (a) is replaced by the following:

(4) Despite subsection (3), the grant for each of the loan years commencing on August 1, 2021 and August 1, 2022 is the lesser of

2 The portion of subsection 38.1(3) of the Regulations before the formula is replaced by the following:

(3) Despite subsection (2), the grant for each of the loan years commencing on August 1, 2021 and August 1, 2022 is, for each dependant for each month of study, the lesser of $400 and the amount determined by the following formula:

3 The portion of subsection 38.2(3) of the Regulations before paragraph (a) is replaced by the following:

(3) Despite subsection (2), the grant for each of the loan years commencing on August 1, 2021 and August 1, 2022 is the lesser of

4 Subsection 40.01(4) of the Regulations is replaced by the following:

(4) Despite subsection (3), the grant for each of the loan years commencing on August 1, 2021 and August 1, 2022 is $4,000.

5 The portion of subsection 40.02(2.1) of the Regulations before the formula is replaced by the following:

(2.1) Despite subsection (2), for each of the loan years commencing on August 1, 2021 and August 1, 2022, the maximum amount of the grant for each month of study is the lesser of $750 and the amount determined by the following formula:

6 Subsections 40.021(2) and (3) of the Regulations are replaced by the following:

(1.1) The annual income thresholds set out in column 2 of Tables 7 to 11 of Schedule 4 are adjusted on August 1, 2022 by the annual percentage increase to the Consumer Price Index for the previous calendar year, rounded to the nearest dollar. The adjustment applies for the loan year commencing on August 1, 2022.

(2) If the thresholds determined in accordance with subsection (1) or (1.1) are less than those applicable for the previous loan year, no adjustment is to be made and the thresholds applicable for the previous loan year continue to apply for that loan year.

(3) For the purpose of subsection (1) or (1.1), the Consumer Price Index is the annual all-items Consumer Price Index for Canada published by Statistics Canada.

7 Tables 7 to 11 of Schedule 4 to the Regulations are replaced by the following:

TABLE 7

Income Threshold for Eligibility for Grants for Loan Years 2021-2022 and 2022-23 — Part-time Students

Column 1 Family Size (number of persons)	Column 2 Annual Income Threshold	Column 3 Annual Phase-out Rate
1	$32,102	0.114240
2	$45,399	0.082560
3	$55,602	0.071040
4	$64,204	0.068160
5	$71,782	0.065280
6	$78,634	0.062400
7 or more	$84,933	0.060480

TABLE 8

Income Threshold for Eligibility for Grants for Loan Years 2021-2022 and 2022-23 — Full-time Students with Dependants

Column 1 Family Size (number of persons)	Column 2 Annual Income Threshold	Column 3 Monthly Phase-out Rate
2	$45,399	0.009173260
3	$55,602	0.007893280
4	$64,204	0.007573320
5	$71,782	0.007253340
6	$78,634	0.006933380
7 or more	$84,933	0.006719980

TABLE 9

Income Threshold for Eligibility for Grants for Loan Years 2021-2022 and 2022-23 — Part-time Students with One or Two Dependants

Column 1 Family Size (number of persons)	Column 2 Annual Income Threshold	Column 3 Weekly Phase-out Rate
2	$45,399	0.00183466
3	$55,602	0.00157866
4	$64,204	0.00151466
5	$71,782	0.00145066
6	$78,634	0.00138668
7 or more	$84,933	0.00134400

TABLE 10

Income Threshold for Eligibility for Grants for Loan Years 2021-2022 and 2022-23 — Part-time Students with Three or More Dependants

Column 1 Family Size (number of persons)	Column 2 Annual Income Threshold	Column 3 Weekly Phase-out Rate
4	$64,204	0.00227200
5	$71,782	0.00217600
6	$78,634	0.00208002
7 or more	$84,933	0.00201600

TABLE 11

Income Threshold for Eligibility for Grants for Loan Years 2021-2022 and 2022-23 — Full-time Students

Column 1 Family Size (number of persons)	Column 2 Annual Income Threshold	Column 3 Monthly Phase-out Rate
1	$32,102	0.0238
2	$45,399	0.0172
3	$55,602	0.0148
4	$64,204	0.0142
5	$71,782	0.0136
6	$78,634	0.0130
7 or more	$84,933	0.0126

Regulations Amending the Canada Student Financial Assistance Regulations

8 Subsection 7(3) of the Regulations Amending the Canada Student Financial Assistance Regulations^{footnote 2} is repealed.

9 Subsection 9(3) of the Regulations is repealed.

10 Subsection 13(3) of the Regulations is replaced by the following:

(3) Subsection 9(5) of these Regulations comes into force on August 1, 2023.

Coming into Force

11 (1) Subject to subsection (2), these Regulations come into force on August 1, 2021.

(2) Sections 8 to 10 come into force on July 31, 2021.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues

Students are facing unprecedented challenges because of the COVID-19 pandemic. The temporary doubling of the amounts of Canada Student Grants (CSGs) for eligible full-time and part-time students, students with dependants and students with permanent disabilities for the 2020–2021 loan year has helped to address the financial needs of Canadian students during the pandemic. Without amendments to the Canada Student Financial Assistance Regulations (CSFAR), the amounts of the CSGs will return to their pre-pandemic levels on August 1, 2021. And, without additional financial supports in place, many students will face significant challenges in accessing post-secondary education (PSE) over the next two years. Unemployment and poor employment prospects continue to impact the ability of low-income students to save and pay for the cost of PSE during the COVID-19 pandemic and economic recovery period. In Budget 2021, unemployment among young people was cited as “14 per cent, compared to 7.5 per cent among Canadians as a whole.”^{footnote 3}

To adapt to the changing nature of work, many Canadians will also need to develop new skills in order to find employment and succeed in today's economy. Since 2018, adult learners who have been out of secondary school for at least 10 years, and eligible for the full-time CSG (CSG-FT), have been entitled to an additional $1,600 per loan year ($200 per month) in top-up funding to the CSG-FT. Despite potentially higher incomes than younger students, adult learners may have added responsibilities such as mortgages and raising families. Without amendments to the CSFAR, the $1,600 adult learner top-up to the CSG-FT will sunset on July 31, 2021. When Budget 2021 was released, it identified that “about 296,000 people are still out of work, and 247,000 are facing sharply reduced work hours, and with that reduced wages, and reduced access to opportunities.”^{footnote 4} During the economic recovery, additional financial supports will be needed to help Canadians afford the costs of returning to PSE full-time to upgrade their skills.

The flexibility to assess a student's eligibility for CSGs based on their current year's income can significantly improve the ability of students to afford the upfront costs of PSE. Without amendments to the CSFAR, the previous year's income would become the only option for determining eligibility for the CSGs when the pilot project sunsets on July 31, 2021. Labour market recovery in Canada is expected to take time given the scale of the disruptions in certain sectors and the difficulties some workers or businesses may face in reintegrating into the post-pandemic economy.^{footnote 5} As a result of the COVID-19 pandemic, changes in family income for low- and middle-income learners could be significant. The flexibility to use the current year's income instead of the previous year's income is needed to provide CSGs that are better aligned to the actual needs of each individual.

To help address these challenges and support students, in Budget 2021, the Government of Canada committed to temporarily double the amounts of the CSGs for full- and part-time students, students with dependants, and students with disabilities, as well as to extend the $1,600 adult learner top-up to the CSG-FT until the end of July 2023. Finally, it committed to make permanent the flexibility to assess a student's eligibility for CSGs based on their current year's income instead of their previous year's income. Implementing these commitments requires amendments to the CSFAR. These measures are expected to strengthen Canada's competitiveness in the long run by helping low- and middle-income students to better afford PSE, which is critical for participation in the labour market and a key source of opportunities for Canadians seeking a better quality of life.

Background

The recently renamed Canada Student Financial Assistance Program (CSFA Program) provides eligible students with grants and loans to help pay for PSE at a designated college, university or other post-secondary institution. Each year, the CSFA Program provides loans to approximately 35% of all full-time post-secondary students in Canada. Since 1995, the Program has provided over $3 billion in grants to approximately 1.7 million students. Delivered in collaboration with 10 provinces and territories (P/Ts), the CSFA Program provides up to 60% of a borrower's calculated financial need in grants and loans, while participating P/Ts cover the remaining need.

The CSFAR provide the framework to administer CSGs and Canada Student Loans (CSLs), including the direct CSLs that have been issued since 2000 up to the present day and risk-shared CSLs that were disbursed between 1995 and 2000.

Canada Student Grants

To help address the economic impacts of the COVID-19 pandemic for PSE students, the Government doubled the amounts of the CSGs for eligible full-time and part-time students for the 2020–2021 loan year.^{footnote 6} The CSG for full-time students (CSG-FT) was increased to up to $750 for each month of study and the CSG for part-time students (CSG-PT) was increased to up to $3,600 for the loan year.

The CSG for students with permanent disabilities (CSG-PD) and CSG for full-time and part-time students with dependants (CSG-FTDEP and CSG-PTDEP) were also doubled for the 2020–2021 loan year. The CSG-PD was increased to $4,000 for the loan year. In addition, the CSG-FTDEP was increased to up to $400 per dependant, for each month of study. Meanwhile, the CSG-PTDEP was increased to a maximum of $3,840 for the loan year.

Each year, over 580 000 students rely on student financial assistance through the CSFA Program to help them pay for the cost of tuition, school supplies and living expenses. For the 2020–2021 loan year, CSGs provided an additional $2,600, on average, of grant funding to students in need during the school year.^{footnote 7} These financial supports covered approximately 90% of the average undergraduate tuition in Canada for low-income students during the COVID-19 pandemic.^{footnote 7}

Skills Boost Pilot Project

In Budget 2017, the Government introduced measures to provide enhanced student financial assistance to working or unemployed Canadians looking to return to school to upgrade their skills. These measures included the three-year Skills Boost Pilot Project that consisted of the following elements: a $1,600 top-up to the CSG-FT for adult learners who had been out of secondary school for at least 10 years; and the flexibility to assess a student's eligibility for CSGs based on their current year's income instead of their previous year's income.

The adult learner top-up to the CSG-FT provides $200 per month of study for a total of up to $1,600 over the loan year. This additional funding better reflects the increased financial pressures that adult learners can face, such as housing costs, dependants, pre-existing debts and saving for retirement. Approximately 60% of recipients of the top-up grant to the CSG-FT have reported that the grant was an important factor in their decision to return to school.^{footnote 8}

The flexibility to use the current year's income instead of the previous year's income to determine eligibility for the CSGs also helps individuals who experience a significant drop in their income from the previous year receive the financial support that they need. While this flexibility already existed for CSLs and P/T grants and loans, the Pilot Project extended this flexibility to CSGs.

Objective

The objective of the regulatory amendments is to make PSE more accessible and affordable for students through the implementation of Budget 2021 commitments. These measures are aligned with the Government's commitment to provide relief from student debt. CSGs are non-repayable and targeted to individuals from low- and middle-income households who face the deepest challenges to access and afford PSE and those mostly affected by the downturn in the economy as a result of the COVID-19 pandemic.

Description

The Regulations Amending Certain Regulations Made Under the Canada Student Financial Assistance Act will

• temporarily double the maximum grant an eligible full-time student can receive for the CSG-FT for the 2021–2022 and 2022–2023 loan years, which includes up to $750 per month for each loan year;
• temporarily double the maximum grant an eligible full-time student with dependants can receive for the CSG-FTDEP for the 2021–2022 and 2022–2023 loan years, which includes up to $400 per dependant, per month of study for each loan year;
• temporarily double the maximum grant an eligible part-time student can receive for the CSG-PTDEP for the 2021–2022 and 2022–2023 loan years, which includes up to $3,600 for each loan year;
• temporarily double the maximum grant an eligible part-time student with dependants can receive for the CSG-PTDEP for the 2021–2022 and 2022–2023 loan years, which includes up to $80 per week of study for students with one or two dependants or up to $120 per week of study for students with three or more dependants and to a total maximum of $3,840 for each loan year;
• temporarily double the maximum grant an eligible student with a permanent disability can receive for the CSG for the 2021–2022 and 2022–2023 loan years for students with a permanent disability to $4,000 for each loan year;
• replacing tables 7 to 11 of the CSFAR to ensure accurate thresholds and phase-out rates for the CSGs are identified for the 2021–2022 and 2022–2023 loan years;
• temporarily extend the adult learner top-up to the CSG-FT for the 2021–2022 and 2022–2023 loan years, which includes up to $1,600 for each loan year, for adult learners who are eligible for the CSG-FT and that have been out of secondary school for at least 10 years ; and
• make permanent the flexibility to assess a full-time student's eligibility for the CSG-FT and CSG-FTDEP based on their current year's income instead of their previous year's income.

Regulatory development

Consultation

The CSFA Program regularly engages with stakeholders, including student groups, borrowers, and provinces and territories, through the National Advisory Group on Student Financial Assistance (NAGSFA) and the Intergovernmental Consultative Committee on Student Financial Assistance (ICCSFA). Most CSFA Program stakeholders are supportive of measures to temporarily double the amounts of the CSGs until July 31, 2023; to temporarily extend the adult learner top-up of $1,600 to the CSG-FT until July 31, 2023; and to make permanent the flexibility to assess a student's eligibility for the CSGs based on their current year's income instead of their previous year's income. As these amendments are in response to the extraordinary public health situation posed by the COVID-19 pandemic, measures need to be in place expeditiously to be effective. The measures need to be in force in time for the 2021–2022 loan year. Consequently, prepublication in the Canada Gazette, Part I, was not undertaken.

Modern treaty obligations and Indigenous engagement and consultation

The regulatory amendments are not expected to have differential impacts on Indigenous peoples or negative implications for modern treaties, as per Government of Canada obligations in relation to rights protected by section 35 of the Constitution Act, 1982, modern treaties and international human rights obligations.

The proposals included in Budget 2021 were assessed for modern treaty implications as per the Cabinet Directive on the Federal Approach to Modern Treaty Implementation. The assessment found no immediate impacts on modern treaty obligations.

Instrument choice

The regulatory amendments made to temporarily double the amounts of the CSG-FT, CSG-PT, CSG-PTDEP, CSG-FTDEP and CSG-PD could not be addressed by other means other than regulatory amendments. Likewise, extending the $1,600 adult learner top-up to the CSG-FT and making assessment flexibility permanent all require regulatory amendments. As a result, non-regulatory options were not considered.

Regulatory analysis

Benefits and costs

A cost-benefit analysis was conducted to assess the incremental impacts to stakeholders of temporarily doubling the amounts of the CSGs until July 31, 2023, extending the Skills Boost Top-Up Grant until July 31, 2023, and making the assessment flexibility permanent, compared to a baseline scenario in which these regulatory amendments are not made. The complete cost-benefit analysis is available upon request.

The stakeholders that will be most directly affected are student borrowers and the Government of Canada. The 10 participating provincial and territorial governments that work in collaboration in the delivery of the CSFA Program will be affected indirectly. They will retain the flexibility to decide whether to align their policies with those of the federal government. In addition, Canadian society will be affected indirectly given that PSE helps to mitigate overall income inequality.

Key data sources for this cost-benefit analysis include CSFA Program administrative data (e.g. number of student borrowers, CSL amounts, etc. in past years); external literature on PSE persistence; and actuarial forecasts provided by the Office of the Chief Actuary (e.g. number of students who will access CSLs in future years) based on demographic information, economic conditions, and the policy parameters of the CSFA Program as of March 2021. In addition, a review of research literature helped to identify the impact of non-repayable funding on student groups, such as low- and middle-income students, older learners, student parents, and students with disabilities, among other student populations.

Cost-benefit statement

• Number of years: 10 (loan years 2021–2022 to 2030–2031)
• Base year for costing: 2021
• Present value base year: 2021
• Discount rate: 7% (Canadian Cost-Benefit Analysis Guide: Regulatory Proposals)

Monetized costs

The cost to the Government of Canada for providing additional grants and loans under the amendments is based on estimates using CSFA Program administrative data and the Office of the Chief Actuary projections.

The cost of distributing additional grants to students (582 000 students on average for the years 2021–2022 and 2022–2023) under the proposed regulatory amendments is the dollar for dollar amount of additional grants plus the cost of alternative payments paid to non-participating jurisdictions on these additional grant disbursements. The additional grants also reduce the need for student loans leading to cost savings associated with these loans. The associated cost savings related to the lower amount of loans disbursed are counted separately and include the risk of default and government interest payments during the in-study and grace periods.

The costs of the assessment flexibility measure primarily relate to additional grant disbursement; however, there are some costs incurred by the Government that are associated with additional loan disbursement. These additional loan disbursements are due to students having higher assessed financial needs, which will be met with loans for some students. Furthermore, the cost takes into account the additional interest students are expected to pay due to these larger loans. The total monetized costs are estimated at $3,440 million (present value) over the next 10 years.

Table 1: Monetized costs (in millions of Canadian dollars)

Impacted stakeholder	Description of cost	Base year (2021–2022)	Second year (2022–2023)	Final year (2030–2031)	Total (present value)	Annualized value
Government of Canada	Cost of disbursing additional grants	$1,515	$2,205	$27	$3,721	$530
	Cost savings from reduced loan disbursements	−$113	−$186	$1	−$281	−$40
All stakeholders	Total costs	$1,402	$2,019	$28	$3,440	$490

Monetized benefits

Increased grants transfers

The regulatory amendments are expected to result in a greater number of post-secondary students receiving more financial support during their studies. This represents a direct transfer to student borrowers. The larger amount of grants represents a direct transfer to student borrowers. Benefits for students who are in P/Ts that do not participate in the CSFA Program are also included, as the analysis includes costs for additional alternative payments, which will be directly equal to the benefits.

Future earnings potential from reducing the number of students dropping out of PSE and convincing new students to pursue PSE studies following the regulatory amendments

By temporarily increasing grants to students, the Government of Canada will improve affordability and encourage students to access and complete PSE, which in turn will lead to higher future earnings potential. Future earnings potential is monetized for students who would either have dropped out from PSE studies for financial reasons or have decided to pursue PSE studies due to the reduced cost after the temporary doubling of grants. The earning benefits accrued by those otherwise unable to pursue PSE under the baseline scenario are offset by the tuition fees under the regulatory scenario, as this is an additional cost for students who would not have decided to pursue PSE studies without these regulatory amendments. These benefits are also netted of taxes, as these can be considered a separate benefit to the federal government.

The overall assumption is that new students joining the program should take an average of 2.5 years to complete their degree, reflecting that students can study for college or university degrees that vary in length to completion. To the extent that some of the students pursue higher university degrees, the benefits are likely to be higher than estimated.

Additional federal income taxes from future potential earnings

While there is a cost upfront to the federal government in providing grants and loans to students, the students who complete PSE studies who would not have done so without financial support can gain higher future potential earnings. As a result, the federal government can collect a higher amount of income taxes from these future potential earnings, which tends to offset the initial cost of providing financial support to students.

The total monetized benefits are estimated at $12,091 million (present value) over the next 10 years.

Table 2: Monetized benefits (in millions of Canadian dollars)

Impacted stakeholder	Description of benefit	Base year (2021–2022)	Second year (2022–2023)	Final year (2030–2031)	Total (present value)	Annualized value
Students	Increased grants transfers	$1,515	$2,205	$27	$3,721	$530
	Reduced number of students dropping out of PSE – future potential earnings	−$212	−$6	$465	$2,303	$328
	New students due to doubling of grants – future potential earnings	$0	$0	$1,221	$4,020	$572
Federal Government	Additional income taxes from future potential earnings	$46	$93	$392	$2,047	$291
All stakeholders	Total benefits	$1,348	$2,292	$2,105	$12,091	$1,722

Monetized costs and benefits

Table 3 : Summary of monetized costs and benefits

Impacts	Base year (2021–2022)	Second year (2022–2023)	Final year (2030–2031)	Total (present value)	Annualized value
Total costs	$1,402	$2,019	$28	$3,440	$490
Total benefits	$1,348	$2,292	$2,105	$12,091	$1,722
NET IMPACT	−$54	$273	$2,077	$8,651	$1,232

Quantified (non-$) and qualitative impacts

Positive impacts

For CSFA Program recipients who receive additional non-repayable funding:

• Increased likelihood of accessing and completing PSE
  • As the CSFA Program provides non-repayable funding based on income and need, CSG recipients are low- and middle-income students and generally represent students facing higher financial need. Through reducing financial barriers, research studies find that there are positive impacts on PSE completion, attendance and persistence.^{footnote 9} Furthermore, those who complete PSE experience the demonstrated socio-economic and health benefits associated with PSE completion. Studies have shown that the completion of PSE is linked to improved overall health and longevity.^{footnote 10}
• Reduced PSE-related financial difficulties for recipients
  • The temporary doubling of grants will significantly increase the share of grant funding relative to total funding, thereby increasing the amount of non-repayable funding for low- and middle-income Canadian students in order to reduce PSE debts and increase PSE affordability. Literature demonstrates that debt accrued from PSE could have short- and long-term impacts on the financial well-being of borrowers.^{footnote 11} Furthermore, recent graduates and borrowers are affected negatively by periods of economic downturn.^{footnote 12} The economic precariousness of recent graduates is unlikely to disappear as the economy recovers from the pandemic. The provision of temporary additional grants will allow for students to be able to afford PSE in the short-term, while making the assessment flexibility permanent will account for long-term income losses for those facing financial difficulties by ensuring that CSGs are better aligned to the needs of each individual.
• Increased potential earnings for PSE graduates
  • By temporarily increasing the amount of grants, the Government of Canada will encourage students to access and complete PSE, which in turn will lead to higher future earnings. Studies demonstrate that higher education generates an earnings premium when compared to the incomes of high school graduates and post-secondary attendees.^{footnote 13}
• Decreased unemployment rates and shorter unemployment spells for PSE graduates
  • Through increasing PSE attainment, more university and college graduates will be able to experience the relatively lower unemployment rates associated with PSE credentials, compared to individuals with high school diplomas or less. Research estimates that labour market changes in recent years will affect employment levels of lower-skilled adults.^{footnote 14} Participation in adult education and training will allow for higher employment rates and greater labour market participation.

For borrowers with permanent disabilities who receive additional support:

• Federal and provincial student financial assistance plays a crucial role in the ability of students with a disability to access PSE. Some students with disabilities can take longer to complete their studies, accumulate higher debt loads and require accommodations and supports.^{footnote 15,footnote 16} For students with disabilities who receive the additional non-repayable support and assessment flexibility, the regulatory amendments may result in further educational access and attainment, increase affordability, and lower the financial barriers associated with PSE costs.

For borrowers with children who receive additional support:

• Increased grants for students with dependants will allow for reduced financial barriers and increased PSE participation. Studies show that a majority of student parents are low-income, less likely to persist in school, and more likely to have higher debt loads than other students.^{footnote 17,footnote 18,footnote 19} Temporary increases to non-repayable funding and the permanent assessment flexibility feature will allow students with dependants to receive further support. Furthermore, pursing post-secondary studies can also have long-term benefits for one's children. Studies suggest that higher parental educational attainment has been found to contribute to improved cognitive child development, increased parental investment in child health and education, higher post-secondary enrolment for children and, eventually, higher future earnings.^{footnote 20}

For Canadian society:

• These regulatory amendments may help reduce income inequality, as eligible low- and middle-income recipients will receive significantly higher financial support. As cited in McMahon,^{footnote 20} Leslie and Brinkman provide an extensive survey of research on the effects of PSE and conclude that it tends to lead to reduced income inequality in Canada.
• These regulatory amendments may also result in greater productivity to businesses and society as a whole, as they may result in more graduates. Research finds that workers with post-secondary credentials are not only more productive, but they also increase the productivity of firms through human capital spillovers, through making other less educated workers more productive as well.^{footnote 21}

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 to these regulatory amendments, as there is no change in administrative burden on 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-territorial body for student financial assistance in Canada, but the organization does not focus on regulatory cooperation. However, the CSFA Program has consulted with provincial and territorial stakeholders and they have been supportive of the measures. Quebec, Nunavut and the Northwest Territories do not currently participate in the CSFA Program. However, as per the CSFAA, these three jurisdictions receive an alternative payment contingent on their programs having “substantially the same effect” as the CSFA Program.

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.

Gender-based analysis plus

These regulatory amendments will support various vulnerable groups of borrowers and are expected to have significant benefits from the perspective of gender and diversity. The gender-based analysis plus (GBA+) did not identify any unintended adverse disproportionate or differential impacts resulting from the regulatory amendments.

As CSGs are targeted to low- and middle-income students, such that households who face the deepest challenges to access and afford PSE will benefit most from these increased amounts. Since students from families in the lower income quintiles are less likely to pursue higher education than their peers from high-income families, lowering economic barriers for low-income students through non-repayable grants can also promote persistence and likelihood of graduation.^{footnote 22,footnote 9} Research studies also demonstrate that increases to grant aid result in improved PSE persistence and grades, increased enrolment, attainment and graduation.^{footnote 23,footnote 24,footnote 25} In addition, the flexibility to use the current year's income (instead of the previous year's income) to assess a student's eligibility for CSGs also ensures a grant better aligned to need. This measure has become more important in the wake of the COVID-19 pandemic given increased unemployment and the prospect of ongoing income volatility.

Since a greater percentage of the total PSE population in Canada and CSFA Program recipients are women, these regulatory amendments are expected to benefit more women than men. Within the CSFA Program, women represent 60% of CSFA Program clients in 2018–2019, with men representing 40% of CSFA Program clients. Furthermore, the regulatory amendments will also support parents attending PSE. The CSFA Program administrative data shows that a significant majority of student parents are low-income students (81%), with nearly 95% facing unmet needs of close to $10,000 due to loan and grant limits. Student parents are currently more likely to be women (79% of students receiving grants for students with dependants are women) and tend to be older students (66% of student parents are over the age of 30).

Students between the ages of 18 and 29 years old will benefit from the temporary doubling of the CSGs. According to 2018–2019 CSFA Program data, approximately 70% of student financial aid recipients were under 25 years old. Nevertheless, it is also estimated that adult learners will play an increasing role in PSE, as they seek lifelong learning opportunities. Since research demonstrates higher levels of education result in higher wage premiums, older Canadians may be looking to upskill to increase their income. These older students face significantly higher opportunity costs when attending PSE than their younger counterparts. In the CSFA Program, the share of recipients over the age of 25 was approximately 31% in 2018–2019. In terms of gender, similarly to the CSFA Program's general population, recipients of the top-up grant are more likely to be women (63%) than men (37%).

Temporary increases to the CSGs also make PSE more affordable for populations that experience additional barriers to pursuing PSE. The literature finds that persons with disabilities face significant financial barriers, take longer to complete their PSE and acquire higher debt loads. In terms of gender, the CSFA Program finds that there are more female students with permanent disabilities in the program; of the 7% of students with permanent disabilities in the program, 60% are women. As CSG-PD is provided to all students with disabilities, regardless of income, the doubling of grants will positively affect all students with a permanent disability. Moreover, CSFA Program finds that over 80% of students receiving the CSG-PD are also low- or middle-income students.

In addition, the regulatory amendments will also benefit students from visible minority groups, immigrant students and Indigenous students. The CFSA Program does not currently collect data on visible minority groups and immigrant students. Nevertheless, the regulatory amendments should allow more students from visible minority groups and immigrant students, especially those who are underrepresented in PSE and low-income, to access and afford PSE. Research demonstrates that visible minorities and immigrants are more likely to be low-income compared to the white population and the Canadian-born population.^{footnote 26,footnote 27} Meanwhile, approximately 5% of CSFA Program students self-identified as Indigenous in 2018–2019. Income gaps between Indigenous people and non-Indigenous people continue to persist in Canada, with Indigenous people having lower median after-tax income.^{footnote 28}

While the CSFA Program does not collect information on sexual orientation or gender minorities, LGBTQ2+ people are over-represented among low-income Canadians and high proportions of the LGBTQ2+ population enrol into PSE (24%).^{footnote 29} LGBTQ2+ students face significant financial barriers when attending PSE, with being more likely low-income and facing high levels of student debt. Research demonstrates that increases to student financial assistance result in lower barriers to accessing and attaining PSE, especially for low-income individuals. As a result, LGBTQ2+ individuals may benefit from the regulatory amendments through increases in non-repayable funding and income assessment.

Implementation, compliance and enforcement, and service standards

Implementation

The regulatory amendments will come into force on August 1, 2021. As these measures are already in place on a temporary basis, minor changes will be required by the CSFA Program's third-party service provider and participating jurisdictions who are responsible for assessing students' eligibility for CSGs and CSLs to extend the amendments.

Existing federal-provincial-territorial government and stakeholder forums will be used to notify all stakeholders of the changes, and to explain how they will support making student financial assistance more accessible and affordable. Social media and web platforms, and news releases will be used to communicate the new measures to student borrowers and other interested stakeholders.

Compliance and enforcement

To support effective management and accountability to students, the CSFA Program will continue to be monitored to ensure effective program performance and integrity. The CSFAA requires that the Minister 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 the figures presented in the report. The CSFAA also requires that the Minister table in Parliament an annual report on the CSFA Program, 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 regulatory amendments do not necessitate changes to the CSFA Program's compliance and enforcement tools or strategies. The CSFA program works with the P/Ts and there is ongoing monitoring for potential fraud and misuse. The CSFAA provides sufficient authority for the CSFA Program to ensure that CSGs are not granted to borrowers who are not eligible. Subsection 17(1) provides for a fine of up to $1,000 for borrowers who knowingly provide any false or misleading information in an application or other document. Also, section 17.1 of CSFAA allows for any such borrower to be denied additional student financial assistance as well as certain other CSFA Program benefits, including, but not limited to, interest-free periods or repayment assistance periods.

Contact

Nina Damsbaek
Director
Program Policy
Canada Student Financial Assistance Program
Employment and Social Development Canada
200 Montcalm Street, Tower II, 1st Floor
Gatineau, Quebec
J8Y 3B5