Regulations Amending the Canada Student Financial Assistance Regulations: SOR/2023-157
Canada Gazette, Part II, Volume 157, Number 14
Registration
SOR/2023-157 June 23, 2023
CANADA STUDENT FINANCIAL ASSISTANCE ACT
P.C. 2023-689 June 23, 2023
Her Excellency the Governor General in Council, on the recommendation of the Minister of Employment and Social Development, makes the annexed Regulations Amending the Canada Student Financial Assistance Regulations under paragraphs 15(1)(d.1)footnote a, (p)footnote b and (q) of the Canada Student Financial Assistance Act footnote c.
Regulations Amending the Canada Student Financial Assistance Regulations
Amendments
1 Section 10.1 of the Canada Student Financial Assistance Regulations footnote 1 is replaced by the following:
10.1 Despite section 10, for the loan year commencing on August 1, 2023, the amount for any province is $300 per week.
2 Section 14.3 of the Regulations is renumbered as subsection 14.3(1) and is amended by adding the following:
(2) Paragraph (1)(a) does not apply in respect of the loan year commencing on August 1, 2023.
3 (1) The portion of subsection 38(4) of the Regulations before paragraph (a) is replaced by the following:
(4) Despite subsection (3), the grant for the loan year commencing on August 1, 2023 is the lesser of
(2) Paragraph 38(4)(b) of the Regulations is replaced by the following:
- (b) $2,520, and
(3) The description of A in paragraph 38(4)(c) of the Regulations is replaced by the following:
- A is $2,520,
(4) Paragraph 38(4)(c) of the French version of the Regulations is amended by replacing the semi-colon at the end of the description of B with a comma.
4 (1) 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 the loan year commencing on August 1, 2023 is, for each dependant for each month of study, the lesser of $280 and the amount determined by the formula
(2) The description of A in subsection 38.1(3) of the Regulations is replaced by the following:
- A is $280;
5 (1) 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 the loan year commencing on August 1, 2023 is the lesser of
(2) The portion of subparagraph 38.2(3)(b)(i) of the Regulations before the formula is replaced by the following:
- (i) one or two dependants, the amount determined by the following formula, to a maximum of $56 per week of study:
(3) The description of A in subparagraph 38.2(3)(b)(i) of the Regulations is replaced by the following:
- A is $56,
(4) The portion of subparagraph 38.2(3)(b)(ii) of the Regulations before the formula is replaced by the following:
- (ii) three or more dependants, the amount determined by the following formula, to a maximum of $84 per week of study:
(5) The description of A in subparagraph 38.2(3)(b)(ii) of the Regulations is replaced by the following:
- A is $84,
(6) Paragraph 38.2(3)(c) of the Regulations is replaced by the following:
- (c) $2,688.
6 Subsection 40.01(4) of the Regulations is replaced by the following:
(4) Despite subsection (3), the grant for the loan year commencing on August 1, 2023 is $2,800.
7 (1) 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 the loan year commencing on August 1, 2023, the maximum amount of the grant for each month of study is the lesser of $525 and the amount determined by the formula
(2) The description of A in subsection 40.02(2.1) of the Regulations is replaced by the following:
- A is $525;
8 Subsections 40.021(1.1) to (3) of the Regulations are replaced by the following:
(2) If the thresholds determined in accordance with subsection (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), the Consumer Price Index is the annual all-items Consumer Price Index for Canada published by Statistics Canada.
9 (1) Schedule 4 to the Regulations is amended by replacing the references after the heading “SCHEDULE 4” with the following:
(Paragraphs 14.3(1)(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))
(2) Tables 7 to 11 of Schedule 4 to the Regulations are replaced by the following:
TABLE 7
| Column 1 Family Size |
Column 2 Annual Income Threshold |
Column 3 Annual Phase-out Rate |
|---|---|---|
| 1 | $35,429 | 0.079968 |
| 2 | $50,104 | 0.057792 |
| 3 | $61,365 | 0.049728 |
| 4 | $70,859 | 0.047712 |
| 5 | $79,222 | 0.045696 |
| 6 | $86,784 | 0.043680 |
| 7 or more | $93,737 | 0.042336 |
TABLE 8
| Column 1 Family Size |
Column 2 Annual Income Threshold |
Column 3 Monthly Phase-out Rate |
|---|---|---|
| 2 | $50,104 | 0.006421282 |
| 3 | $61,365 | 0.005525296 |
| 4 | $70,859 | 0.005301324 |
| 5 | $79,222 | 0.005077338 |
| 6 | $86,784 | 0.004853366 |
| 7 or more | $93,737 | 0.004703986 |
TABLE 9
| Column 1 Family Size |
Column 2 Annual Income Threshold |
Column 3 Weekly Phase-out Rate |
|---|---|---|
| 2 | $50,104 | 0.00128426 |
| 3 | $61,365 | 0.00110506 |
| 4 | $70,859 | 0.00106026 |
| 5 | $79,222 | 0.00101546 |
| 6 | $86,784 | 0.00097068 |
| 7 or more | $93,737 | 0.00094080 |
TABLE 10
| Column 1 Family Size |
Column 2 Annual Income Threshold |
Column 3 Weekly Phase-out Rate |
|---|---|---|
| 4 | $70,859 | 0.00159040 |
| 5 | $79,222 | 0.00152320 |
| 6 | $86,784 | 0.00145601 |
| 7 or more | $93,737 | 0.00141120 |
TABLE 11
| Column 1 Family Size |
Column 2 Annual Income Threshold |
Column 3 Monthly Phase-out Rate |
|---|---|---|
| 1 | $35,429 | 0.01666 |
| 2 | $50,104 | 0.01204 |
| 3 | $61,365 | 0.01036 |
| 4 | $70,859 | 0.00994 |
| 5 | $79,222 | 0.00952 |
| 6 | $86,784 | 0.00910 |
| 7 or more | $93,737 | 0.00882 |
Coming into Force
10 These Regulations come into force on August 1, 2023, 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.)
Executive summary
Issues: Recovery from the COVID-19 pandemic, inflationary pressures, rising post-secondary education (PSE) costs and higher prices for food, housing and other necessities make it challenging for many students to afford PSE and manage financially. Difficulties affording PSE can be expected to have long-term impacts for all Canadians, especially in light of labour market trends and increased demand for PSE credentials coupled with the increasing cost of tuition. Without an increase to available student financial assistance (SFA), many students will not have access to the financial assistance they need.
Description: The amendments to the Canada Student Financial Assistance Regulations will help address the financial challenges faced by students and make PSE at a designated college, university or other post-secondary institution more affordable for students from low- and middle-income families for the 2023-24 loan year. These regulatory amendments will increase the amounts of available Canada Student Grants (CSGs) and Canada Student Loans (CSLs), while also removing barriers to accessing available financial assistance faced by first-time SFA applicants aged 22 or older by waiving the requirement for them to pass a credit screening.
Rationale: These regulatory amendments are expected to improve access to and affordability of PSE for the 2023-24 loan year by increasing available SFA and removing barriers to access available SFA. These amendments are expected to benefit approximately 683 000 students in the 2023-24 loan year.
Issues
During the COVID-19 pandemic, the financial impact of PSE-associated costs on low- and middle-income students and their families was significant. In 2020, more than four in ten PSE students surveyed by Statistics Canada were very or extremely concerned about their ability to keep up with their expenses and pay for next term’s tuition or accommodation costs.footnote 2 Coming out of the pandemic, inflationary pressures, rising PSE costs and higher prices for food, housing, and other necessities will make it difficult for many students to afford PSE and manage financially. Difficulties affording PSE can be expected to have long-term impacts for all Canadians, especially in light of labour market trends and increased demand for PSE credentials — between 2020 and 2028, two thirds of Canadian jobs will require some PSE.footnote 3 Furthermore, although tuition varies across the country because it is regulated differently by provinces and territories (PTs) and can change based on the program of study, on average, it has increased over time. From 2006-07 to 2019-20, average tuition for all students in the Canada Student Financial Assistance (CSFA) Program increased by 50% — from $5,600 to $8,400. Over the same period, the average living expenses for all students in the CSFA Program rose by 37% — from $9,300 to $12,700. Taken together, costs rose by 42%.
Under existing regulations, approximately 80 000 applicants undergo credit screening annually. Less than 1% of those screened are initially rejected for SFA due to poor credit, and 85% of those who appeal are ultimately approved for SFA. As a result, these statistics have demonstrated that the policy intent to utilize this regulatory requirement as a risk mitigation measure is not substantiated because in reality it only creates a barrier for first-time SFA applicants aged 22 or older who have to pass the credit screening or deal with the administrative burden associated with submitting appeals. To compound this, participating PTs who carry out the screenings on behalf of the Government of Canada have noted there is administrative burden and costs in conducting credit screening.
Recently, the Government of Canada has provided additional supports for students by temporarily doubling the value of CSGs from August 1, 2020, to July 31, 2023, and permanently eliminating interest on CSLs and Canada Apprentice Loans as of April 1, 2023.footnote 4 However, with the temporary doubling set to expire at the end of the 2022-23 year, it is expected that inflationary pressures, rising costs of PSE and higher prices for food, housing and other necessities will continue to challenge students. Without the regulatory amendments to increase funding for the 2023-24 loan year, many students will not have access to the financial assistance they need.
Background
Canada Student Financial Assistance Program
The Canada Student Financial Assistance (CSFA) Program provides eligible students with grants, loans and repayment assistance to help students from low- and middle-income families access and afford PSE at a designated college, university, or other post-secondary institution. CSGs and CSLs are available to students from nine provinces (British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island) and the territory of Yukon. In these jurisdictions, students receive both federal and provincial SFA. Meanwhile, Quebec, Nunavut and the Northwest Territories receive alternative payments from the federal government to administer their own SFA programs.
Students have benefited from recent CSFA Program improvements to help with access and affordability of PSE. Since 2016, the Government of Canada has made investments in the CSFA Program to expand eligibility, enhance grant supports, and expand access to disability supports. These investments have included
- expanding the eligibility for full-time CSGs so it is based on a more generous, progressive income threshold, with grant amounts gradually decreasing as family income increases (as of August 1, 2016);
- simplification of CSFA Program eligibility through the introduction of a fixed student contribution that allows students to gain labour market experience without worrying about a reduction in the level of SFA they would receive (as of August 1, 2016);
- eligibility for CSG for students with dependants and part-time grants and loans has been expanded to align with the new progressive income threshold that was established in 2016 for full-time CSGs (as of August 1, 2018);
- increasing the value of the CSG for Services and Equipment for Students with Permanent Disabilityfootnote 5 to $20,000, and expanding the eligibility for the Severe Permanent Disability Benefit so that more students with severe permanent disabilities can qualify for loan forgiveness (as of August 1, 2019);
- temporary doubling of the CSG for full- and part-time students, students with disabilities, and students with dependants until July 31, 2023 (as of August 1, 2020);
- making permanent the flexibility to use current year income instead of the previous year’s to determine eligibility for CSG (as of August 1, 2021); and
- expanding eligibility supports for students with disabilities to recipients whose disabilities are persistent or prolonged, but not necessarily permanent (as of August 1, 2022).
Canada Student Grants
Canada Student Grants (CSGs) were introduced in 2009 to help students from low- and middle-income families, students with dependants, and students with disabilities. These grants are intended to support students who face the most significant financial barriers in accessing PSE, without increasing their debt. CSGs help foster access to PSE, especially for those who are debt adverse, and assist in keeping debt loads manageable.
CSGs have made up an increasing share of federal support between 2006-07 and 2019-20. CSGs are provided to students first, with additional unmet need covered by CSLs. Full-time students who apply for SFA and have at least $1 of assessed financial need are automatically assessed for CSGs and may be eligible to receive more than one CSG for a loan year depending on their circumstances. Because full-time CSGs are not capped at need, assessed need does not play a role in determining the monetary value of grants to be awarded; therefore, some full-time students may receive grant amounts beyond their assessed need. For part-time CSGs, which are capped at need, the exact amount awarded to a student is determined according to a threshold where the value of the grant gradually decreases as income increases based on family size.
Canada Student Loans
CSLs were made available to students starting in 1964. From 1964 until 1995, these loans were categorized as guaranteed CSLs and were issued by financial institutions. From 1995 to 2000, the loans were issued by the Government of Canada as risk-shared CSLs in which the Government of Canada and financial institutions shared the risk of possible unpaid loans. From 2000 onwards, the Government of Canada has issued direct CSLs, meaning that the risk is borne entirely by the Government of Canada.
CSLs provide students with access to liquidity to pay for tuition and living expenses, without dramatically increasing the cost to Government as a majority of borrowers fully repay their loans. Full-time CSL amounts are capped at 60% of a student’s calculated need, up to a weekly maximum of $210 and part-time CSLs are capped at $10,000 outstanding. CSLs are designed with the understanding that PSE credentials (e.g. undergraduate diploma) improve labour market outcomes, yielding benefits for Canada and students. The earning premiums that come with higher levels of education leave graduates with more disposable income to manage debts, including the repayment of CSLs.
Credit screening
Credit screening was introduced in 1999 as a risk mitigation measure with the objective of preventing default on loans after financial institutions were partners in government student lending throughout the 1990s. Since 1999, the CSFA Program has required first-time SFA applicants who are 22 years and older to undergo credit screening. Applicants are denied federal grants and loans if they (1) missed payments on at least three debts, where each debt was higher than $1,000 and more than 90 days overdue, in the 36 months before applying; and (2) had control over the circumstances that led to the missed payments.
First-time CSFA Program applicants aged 22 or over were targeted for credit screening because they were more likely to have been out of the education system for significant lengths of time, and to have previously accessed credit than younger applicants. When credit screening was established, a review/appeal process was considered an essential component to ensure that the CSFA Program maintained its primary goal of increasing the affordability of PSE for students with demonstrated financial need. To meet this goal, individuals whose poor credit history was a result of circumstances beyond their control (e.g. essential home repairs, uninsured medical, dental or optical expenses, caring for children with disabilities, caring for elderly/infirm relatives, and legal fees), rather than systemic abuse, could have their eligibility for a loan reconsidered through the review process.
Since the introduction of credit screening, the CSFA Program has introduced other measures to reduce the risk of loan default. For example, the CSFAR stipulates that borrowers who are 90 or more days in arrears on CSL payments are restricted from receiving additional SFA from the CSFA Program; there are also limits on the number of study periods a borrower can receive financial aid. Furthermore, the introduction of the Repayment Assistance Program (RAP) in 2009 has helped borrowers manage their repayment and avoid default to keep their loan in good standing. For borrowers who do go into default, there are a number of activities that are undertaken to collect on the debt (e.g. legal action, income tax set-offs) and borrowers have the option to rehabilitate their loans (e.g. on August 1, 2019, eligibility for loan rehabilitation was increased to help more borrowers access supports such RAP and begin making affordable payments on their debt). The most recent publicly available datafootnote 6 demonstrates that, as a result of increased integrity measures and improved program administration, the default rate for federal student loans has declined by 7 percentage points over a ten-year period, from 15% in 2009-10 to 8% in 2018-19.
Objective
The objective of these regulatory amendments is to improve access and affordability of PSE for the 2023-24 loan year by increasing funding and removing barriers.
Description
These regulatory amendments will increase funding and remove barriers to PSE by
- increasing by 40% from the pre-pandemic levels the following CSGsfootnote 7 for the 2023-24 loan year, starting on August 1, 2023:
- Canada Student Grant for Full-Time Students (CSG-FT), from a maximum of $375 for each month of study to a maximum of $525 for each month of study,
- Canada Student Grant for Part-Time Students (CSG-PT), from a maximum of $1,800 for the loan year to a maximum of $2,520 for the loan year,
- Canada Student Grant for Students with Disabilities (CSG-D),footnote 8 from $2,000 for the loan year to $2,800 for the loan year,
- Canada Student Grant for Full-Time Students with Dependants (CSG-FTDEP), from a maximum of $200 for each dependant for each month of study to a maximum of $280 for each dependant for each month of study, and
- Canada Student Grant for Part-Time Students with Dependants (CSG-PTDEP), from a maximum of $1,920 for the loan year to a maximum of $2,688 for the loan year;
- increasing the weekly CSL limit for full-time studentsfootnote 9 from $210 to $300 for the 2023-24 loan year, starting on August 1, 2023; and
- waiving the credit screening requirement for first-time SFA applicants aged 22 or over, to access SFA for the 2023-24 loan year, starting on August 1, 2023.
Regulatory development
Consultation
The CSFA Program regularly engages with stakeholders, including student groups, borrowers, and PTs through the National Advisory Group on Student Financial Assistance (NAGSFA) and the Intergovernmental Consultative Committee on Student Financial Assistance (ICCSFA). Through these groups, the CSFA Program discusses affordability of and access to PSE. Through these discussions, the CSFA Program heard the following input regarding these regulatory amendments.
Pre-budget consultation
In June 2021, ICCSFA met to discuss affordability of and access to PSE generally. During this conversation and following further in-depth analysis done by the Policy Development subcommittee, ICCSFA approved the subcommittee’s recommendation to end the use of credit screening when assessing applications for SFA as it viewed it as a barrier to accessing SFA for first time SFA applicants aged 22 or older.
In November 2022, ICCSFA met again and requested a broader range of affordability measures be put in place to support students. The discussion touched on the temporary measures in response to COVID-19 and PTs shared that these enhancements were positive, particularly the increase in available SFA through increased grants and loans. At the end of the meeting, PTs agreed that increasing available SFA provided to students through grants and loans would be a positive way to address affordability pressures faced by students.
Similarly, student stakeholder groups like the Canadian Alliance of Students Association (CASA) have been advocating for some time for supportive measures to relieve inflationary pressures on students through increased funding.footnote 10 In particular, CASA has argued that doubling grants in the past three years has made a difference and its end would represent a hardship for students, especially in the context of current cost of living challenges/increases.footnote 11
Post-budget 2023 consultation
Overall, PTs have received the announced regulatory amendments positively and expressed no issues with their ability to implement for the start of the 2023-24 loan year, beginning August 1, 2023. In addition, public feedback from student stakeholder groups like CASA, was positive.footnote 12
Given that stakeholders were supportive of increased funding for students, the need to provide students with supports to attend PSE for the start of the 2023-24 loan year and the limited time frame to implement the changes, no prepublication was undertaken.
Cost-benefit analysis consultations
The CSFA Program did not engage in consultations specific to the cost-benefit analysis.
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, according to Government of Canada obligations in relation to rights protected by section 35 of the Constitution Act, 1982, modern treaties and international human rights obligations. These regulatory amendments were assessed for modern treaty implications following the Cabinet Directive on the Federal Approach to Modern Treaty Implementation. The assessment found no immediate impacts on modern treaty obligations.
Instrument choice
Increasing CSGs by 40% from pre-pandemic levels, increasing the weekly CSL limit and waiving the credit screening requirement for first-time SFA applicants aged 22 or older could not be addressed by means other than regulatory amendments. The Canada Student Financial Assistance Act (CSFAA) provides that eligibility for grants and loans and the amounts of grants and loans are prescribed by the Regulations. As a result, non-regulatory options were not considered.
Regulatory analysis
Baseline scenario
A cost-benefit analysis was conducted to assess the incremental impacts to stakeholders of the regulatory amendments. Under the baseline scenario, in the absence of the regulatory amendments to the CSFAR, the value of CSGs would return to their pre-2020-21 levels on August 1, 2023, the CSL weekly loan limit would remain at its present $210 per week amount, and first-time SFA applicants who are 22 years of age or older would need to undergo credit screening in order to gain access to CSFA Program supports.
Regulatory scenario
Under the regulatory scenario, for the 2023-24 loan year, starting on August 1, 2023, and ending on July 31, 2024, CSGs are increased by 40% from pre-pandemic levels, the CSL limit is increased to $300 per week, and the requirement to pass credit screening is waived for first-time SFA applicants 22 years of age or older.
Benefits and costs
The stakeholders that will be most directly affected are student borrowers and the Government of Canada. PT partners of the CSFA Program and Canadian society at large will be affected indirectly.
Key data sources for this cost-benefit analysis include CSFA Program administrative data (e.g. number of program recipients, CSG and CSL amounts in past years, etc.) and external literature on PSE persistence. Actuarial forecasts provided by the Office of the Chief Actuary (e.g. number of students who will access CSLs in future years), which are based on demographic information, economic conditions, and the policy parameters of the CSFA Program as of July 31, 2021, were also used to develop cost estimates. In addition, a literature review helped identify the impact of increased SFA on student groups, such as low- and middle-income students, adult learners, students with dependants, and students with disabilities, among other student populations. The complete cost-benefit analysis is available upon request.
Cost-benefit statement
- Number of years: 10 (2023-24 to 2032-33)
- Base year for costing: 2023
- Present value base year: 2023
- Discount rate: 7%
Monetized costs
The cost to the Government of Canada for providing additional grants and loans under the regulatory amendments is based on estimates using CSFA Program administrative data and the Office of the Chief Actuary projections.
The cost of distributing increased grant amounts to students (592 000 students in 2023-24) under the 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 cost of distributing increased loan amounts to students (272 000 students in 2023-24, of which 90 000 are unique CSL-only beneficiaries) under the regulatory amendments include the cost of loan disbursements for the Government of Canada. This cost includes the cost of government borrowing (approximately $146 million), a risk provision for defaults (approximately $45 million) and a risk provision for the Repayment Assistance Plan (RAP) for loans that will be repaid by the federal government through RAP (approximately $12 million).
The cost of removing credit screening is also captured and includes total grants and loans disbursed to an additional 1 000 students newly eligible for CSFA Program funding.
The total monetized costs are estimated at $890 million (present value) over the next 10 years.
| Impacted stakeholder | Description of cost | Base year: 2023-24 | Second year: 2024-25 | Fifth year: 2027-28 | Final year: 2032-33 | Total (present value) |
Annualized value |
|---|---|---|---|---|---|---|---|
| Federal government | Cost of increasing grants | $681M | $0M | $0M | $0M | $681M | $97M |
| Federal government | Cost of increasing loans | $203M | $0M | $0M | $0M | $203M | $29M |
| Federal government | Cost of waiving credit screening | $4M | $3M | $0M | $0M | $7M | $1M |
| All stakeholders | Total costs | $887M | $3M | $0M | $0M | $890M | $127M |
Note: Numbers may not add up due to rounding.
Increased grants transfers
The regulatory amendments will result in post-secondary students receiving more non-repayable funding during their studies. The larger amount of grants represents a direct transfer to students. Students who are in a province that does not participate in the CSFA Program will also benefit from the regulatory amendments through the transfer of additional alternative payments, to their province or territory.
Future earnings potential from reducing the number of students dropping out of PSE
By increasing CSGs and CSLs to students and waiving the credit screening requirement for first-time SFA applicants aged 22 or older for the 2023-24 loan year, the Government of Canada will help reduce funding gaps and also encourage students to complete PSE.footnote 13footnote 14 These measures in turn will improve affordability and lead to higher future earning potential. Studies demonstrate that higher education generates an earnings premium when comparing incomes of high school graduates and post-secondary attendees.footnote 15 Future earnings potential is monetized for two groups of students — those who would have dropped out from PSE studies for financial reasons and those who now have access to the CSFA Program due to the waiving of the credit screening requirement. The earning benefits accrued by those otherwise unable to complete PSE under the baseline scenario where grants revert to pre-pandemic levels 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 students in the CSFA Program take an average of 2–2.5 years to complete their degree or diploma, reflecting that college and university programs vary in length. 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 an upfront cost for 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 $1,648 million (present value) over the next 10 years.
| Impacted stakeholder | Description of benefit | Base year: 2023-24 | Second year: 2024-25 | Fifth year: 2027-28 | Final year: 2032-33 | Total (present value) |
Annualized value |
|---|---|---|---|---|---|---|---|
| Student beneficiaries | Transfers in cash (grants only) | $798M | $1M | $0M | $0M | $799M | $114M |
| Student beneficiaries | Future potential earnings — Reducing the number of students dropping out of PSE | -$91M | $105M | $107M | $112M | $612M | $87M |
| Student beneficiaries | Future potential earnings — New students due to eliminating credit screening | $0M | -$4M | $7M | $7M | $36M | $5M |
| Federal government | Additional federal income taxes from future potential earnings | $23M | $25M | $27M | $30M | $201M | $29M |
| All stakeholders | Total monetized benefits | $731M | $128M | $141M | $149M | $1,648M | $235M |
| Impacts | Base year: 2023-24 |
Second year: 2024-25 | Fifth year: 2027-28 | Final year: 2032-33 | Total (present value) |
Annualized value |
|---|---|---|---|---|---|---|
| Total benefits | $731M | $128M | $141M | $149M | $1,648M | $235M |
| Total costs | $887M | $3M | $0M | $0M | $890M | $127M |
| NET IMPACT | -$156M | $125M | $141M | $149M | $759M | $108M |
Note: Numbers may not add up due to rounding.
Quantified (non-$) and qualitative impacts
Positive impacts
- For CSFA Program recipients who receive additional funding and access to the CSFA Program:
- 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 16 Participation in adult education and training will allow for higher employment rates and greater labour market participation.
- Enhanced health and longevity: The regulatory amendments are expected to enable more students to access and complete PSE, and literature has consistently associated higher levels of educational attainment with enhanced health outcomes.footnote 17 The connection between education and health is multi-factorial. For example, higher levels of education create greater awareness of health risks, enable access to resources that promote healthier lifestyles, and facilitate access to careers with safer working conditions.footnote 18footnote 19
- Intergenerational effects of parental education on children: The regulatory amendments are not only expected to have positive impacts on direct beneficiaries, but also on children of those who are able to obtain PSE credentials as a result of the regulatory amendments. Studies have found that higher educational attainment creates indirect positive benefits for future generations; for example, children of PSE-educated adults are more likely to attend PSE themselves.footnote 20footnote 21
- 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 21 Leslie and Brinkman provide an extensive survey of research on the effects of PSE and conclude that PSE 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 22
Small business lens
Analysis under the small business lens concluded that the regulatory amendments will not impact Canadian small businesses.
One-for-one rule
The one-for-one rule does not apply to the regulatory amendments, as there will be no change in administrative burden and no administrative cost that will impact businesses.
Regulatory cooperation and alignment
These regulatory amendments are not related to any commitment under a formal regulatory cooperation forum. The CSFA Program has consulted with PT stakeholders, and they have been supportive of the measures.
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 are generally expected to support and benefit various gender and diversity groups including women, persons with disabilities, student parents or students with dependants pursuing PSE, and self-identifying Indigenous students. There were no unintended adverse, disproportionate or differential impacts identified resulting from the gender-based analysis plus (GBA+) conducted.
CSGs target low- and middle-income students, and since the large majority of CSL student beneficiaries are low- or middle-income, the regulatory amendments are expected to significantly benefit students from the low- and middle-income category. Research consulted points to the fact that students from families in the lower income quintiles are less likely to pursue higher education than their peers from high-income families. Reducing economic barriers for low-income students through non-repayable grants can encourage PSE persistencefootnote 23footnote 24 and result in improved grades, increased enrolment, attainment and graduation.footnote 25footnote 26footnote 27 The provision of interest-free CSLs will further help students gain access to more PSE funding to pursue their studies and, as a result, help reduce funding gaps for students and support PSE completion.
In 2020-21, the CSFA Program found that 61% of CSL recipients were women and 60% of CSG recipients were women. Since a greater percentage of the CSFA Program recipients are women, these regulatory amendments are expected to benefit more women than men. Increases to the CSGs and CSLs for the 2023-24 loan year will also make PSE more affordable for populations that experience significant additional barriers. The regulatory amendments will support parents attending PSE. Administrative data from the 2019-20 year shows that a significant majority of students with dependents are low-income students (78%), with nearly 94% facing unmet need of close to $10,000 due to loan and grants limits.
The CSFA Program finds that 8% of students in the program have a disability. The program data also indicates that of the students with disabilities, 60% are women. Since CSG-D is provided to all students with disabilities, regardless of income, the increase of grant funding will positively affect all students with a disability, and particularly women with disabilities.
A significant proportion of Indigenous students are likely to benefit from the amendments to increase the CSGs. Program data shows that approximately 6% of CSFA Program students self-identified as Indigenous in 2020-21 and of the total Indigenous student beneficiaries, approximately 81% received CSGs.footnote 28
According to the 2020-21 Program data, 66% of SFA recipients were under 25 and 34% of recipients were over the age of 25. The regulatory amendments will benefit Canadian youth under 25, and also graduate students over the age of 25 who typically do not qualify for full-time CSGs, by providing access to additional funding for these recipients to pursue their studies. Finally, waiving the credit screening requirement will affect first-time SFA applicants aged 22 or older and will facilitate access to SFA for older first-time applicants.
Implementation and compliance and enforcement
Implementation
These regulatory amendments will come into force on August 1, 2023, for the 2023-24 loan year.
Compliance and enforcement
To support effective management and accountability to students, the CSFA Program will continue to be monitoredfootnote 29 to ensure effective program performance and integrity. The CSFAA requires that the Minister of Employment, Workforce Development and Disability Inclusion table an actuarial report 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 CSFAA provides authority for the CSFA Program to ensure that grants and loans are not granted to students who are not eligible. Subsection 17(1) of the CSFAA provides for a fine of up to $1,000 for students who knowingly provide any false or misleading information, including by omission, in an application or other document. Also, section 17.1 of the CSFAA allows for any such student to be denied additional SFA as well as certain other CSFA Program benefits, including, but not limited to, repayment assistance periods.
Contact
Erin Hetherington
Director
Program Policy
Canada Student Financial Assistance Program
Employment and Social Development Canada
Email: EDSC.PCAFE.DEF.INV-DIS.DEF.CSFAP.ESDC@hrsdc-rhdcc.gc.ca