Vol. 143, No. 14 — July 8, 2009

Registration

SOR/2009-201 June 18, 2009

CANADA STUDENT FINANCIAL ASSISTANCE ACT
CANADA STUDENT LOANS ACT

Regulations Amending the Canada Student Financial Assistance Regulations and the Canada Student Loans Regulations

P.C. 2009-1041 June 18, 2009

Her Excellency the Governor General in Council, on the recommendation of the Minister of Human Resources and Skills Development, hereby makes the annexed Regulations Amending the Canada Student Financial Assistance Regulations and the Canada Student Loans Regulations, pursuant to

(a) section 15 (see footnote a) of the Canada Student Financial Assistance Act (see footnote b); and

(b) section 17 (see footnote c) of the Canada Student Loans Act (see footnote d).

REGULATIONS AMENDING THE CANADA STUDENT FINANCIAL ASSISTANCE REGULATIONS AND THE CANADA STUDENT LOANS REGULATIONS

CANADA STUDENT FINANCIAL ASSISTANCE ACT

CANADA STUDENT FINANCIAL ASSISTANCE REGULATIONS

1. Paragraph 8(1)(c) of the Canada Student Financial Assistance Regulations (see footnote 1) is replaced by the following:

(c) the applicable day, other than the applicable day referred to in paragraph 15(1)(j), on which the borrower’s interest-free period is terminated in accordance with section 15.

2. Paragraph 12.1(1)(d) of the Regulations is replaced by the following:

(d) on request, pay to the Minister or the lender, as the case may be, any interest payable on those loans to the day before the first day of the confirmed period; and

3. Paragraph 12.2(1)(d) of the Regulations is replaced by the following:

(d) on request, pay to the Minister or the lender, as the case may be, any interest payable on any outstanding student loan or guaranteed student loan made to that student as a part-time student, to the day before the first day of the confirmed period.

4. Paragraph 12.3(c) of the Regulations is replaced by the following:

(c) the applicable day on which the period during which no amount on account of principal or interest is required to be paid by the borrower is terminated in accordance with section 15.

5. Section 12.5 of the Regulations is replaced by the following:

12.5 The maximum amount, for any province, for the purposes of subsection 12(6) of the Act is $10,000 less the aggregate principal amount of any outstanding student loans or guaranteed student loans made to that student as a part-time student.

PAYMENT OF PRINCIPAL AND INTEREST

12.6 The principal amount of a student loan made to the borrower as a part-time student, and any interest, commence to be payable by the borrower on the last day of the seventh month after the day on which the borrower most recently ceased to be a full-time student under section 8 or a part-time student under section 12.3, as the case may be.

6. (1) Paragraph 15(1)(j) of the Regulations is replaced by the following:

(j) the last day of the confirmed period during which the borrower has been a full-time student for

(i) in the case of a full-time student with a permanent disability or in the case of a full-time student to whom a guaranteed student loan has been made as a full-time student, whether or not that loan is outstanding, 520 weeks,

(ii) in the case of a student enrolled in a doctoral program of studies, 400 weeks, or

(iii) in any other case, 340 weeks; or

(2) Section 15 of the Regulations is amended by adding the following after subsection (1):

(1.1) For the purposes of paragraph (1)(j), the number of weeks is the aggregate of the number of weeks corresponding to the borrower’s confirmed periods as a full-time student, or the equivalent, under the Act and the Canada Student Loans Act, less the number of weeks determined by the Minister for which the designated educational institution has provided that the borrower, despite subsection 8(2), was no longer a full-time student.

7. Section 17 of the Regulations and the heading before it are replaced by the following:

PAYMENT OF PRINCIPAL AND INTEREST

17. The principal amount of a student loan made to the borrower as a full-time student, and any interest, commence to be payable by the borrower on the last day of the seventh month after the day on which the borrower most recently ceased to be a full-time student under section 8.

CANADA STUDENT LOANS ACT

CANADA STUDENT LOANS REGULATIONS

8. (1) Paragraph 9(1)(j) of the Canada Student Loans Regulations (see footnote 2) is repealed.

(2) Section 9 of the Regulations is amended by adding the following after subsection (8):

(9) The Minister shall, effective on the last day of the confirmed period during which the borrower has been a full-time student for 520 weeks, terminate an interest-free period in respect of all of the borrower’s outstanding full-time guaranteed loans.

(10) For the purposes of subsection (9), the number of weeks is the aggregate of the number of weeks corresponding to the borrower’s confirmed periods as a full-time student, or the equivalent, under the Act and the Canada Student Financial Assistance Act, less the number of weeks determined by the Minister for which the specified educational institution has provided that the borrower, despite subsection 4.1(2), was no longer a full-time student.

9. (1) Paragraph 10(1)(b) of the Regulations is replaced by the following:

(b) an event referred to in paragraph 9(1)(h) or subsection 9(9) has not occurred in respect of the borrower’s guaranteed student loans;

(2) Paragraph 10(2)(b) of the Regulations is replaced by the following:

(b) an event referred to in paragraph 9(1)(h) or subsection 9(9) has not occurred in respect of the borrower’s guaranteed student loans;

10. Section 11 of the Regulations and the heading before it are replaced by the following:

PAYMENT OF PRINCIPAL AND INTEREST

11. The principal amount of a guaranteed student loan made to the borrower as a full-time student, and any interest, commence to be payable by the borrower on the last day of the seventh month after the day on which the borrower most recently ceased to be a full-time student under section 4.1.

COMING INTO FORCE

11. These Regulations come into force on August 1, 2009.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue

Educational attainment is a key driver for economic growth and is critical to Canada’s continued prosperity. Advantage Canada, the Government’s long-term economic plan, recognized that Canada must put in place the elements that will enable individuals and businesses to compete effectively in a global market with the best in the world. This means ensuring that Canada has access to the right skills, ideas and assets to thrive in a knowledge-based global economy.

The rising cost of post-secondary education has created difficulty for part-time learners in accessing higher education. Assistance for part-timer learners has remained unchanged since 1995, and has not kept pace with the rising costs of post-secondary education. Support for part-time studies has been viewed as unattractive by young and mature learners who have indicated that the maximum assistance of only $4,000 is not meeting their financial needs. In addition, part-time students do not benefit from an interest-free period like full time students and are required to repay interest on their loans while they are in studies. This is believed to be a contributing factor to the overall low uptake of the part-time program (see footnote 3) and is also inconsistent with the requirements for those who study on a full-time basis.

Under current CSLP rules, a full-time student is considered in an “interest-free” period and no interest is payable on the loan as long as they continue to confirm their enrolment as a full-time student. Currently, once a student reaches the assistance maximums specified in the Regulations (i.e. 340, 400 and 520 weeks as the case may be in various situations) the student is no longer considered to be in “interest-free” status and is no longer entitled to additional assistance in the form of new loans, grants or interest subsidies. Under these circumstances, borrowers are automatically placed in repayment where the principal amount and any interest becomes payable. Students impacted by this rule have highlighted that being forced into repayment while they are in studies is unfair and creates financial difficulty for them when their loans go into repayment before they have completed their studies. Although full-time borrowers will be eligible to apply for repayment assistance once they exhaust their maximum weeks of studies they would need to meet the eligibility requirements and may be required to make full or partial payments while they are still in studies.

Objectives

The measures are designed to effectively mitigate the identified issues and short-comings of the current part-time loans program by ensuring an equitable amount of financing is available for part-time borrowers and also ensure that students will not have to face financial difficulties due to their student loans while completing their full-time or part-time studies.

Description

The federal government is the only level of government that offers part-time loans to students. Ongoing discussions with the participating provinces led to federal/provincial/territorial (FPT) consensus in terms of the need to improve the framework for loans for part-time learners.

The following are the key elements of the changes:

Loans to part-time students

The changes:

• Ensure financial support which reflects the actual cost of learning for part-time learners;
• Ensure part-time learners are not required to repay the principal or the accruing interest of their student loan until 6 months after the borrowers ceased to be a part-time student;
• Improve the different needs of part-time students (family, work and financial responsibilities) by maintaining separate part-time and full-time programs.

The two improvements to financial assistance for part-time students provided by the CSLP are the following:

• Allowing borrowers studying part-time to defer payments on their part-time loans so that repayment on loans commences six months after studies have been completed. Under the new requirements interest accrues on the loan while the student is in study as well as the first six months following the end of their studies, at which point payments commence. Procedures remain in place for borrowers wanting to continue making monthly interest payments. The balance of their loan is not repayable until the student is no longer in studies.
• Increasing the maximum loan limit from $4,000 to $10,000 (subsection 12(5) of the CSFAR) to reflect increased educational costs and to recognize that most part-time studies require more time for completion. This limit only encompasses the principal portion of the loan, not the accruing interest. Conceivably, this may leave the student with a loan balance of more than $10,000 because of the interest that may have accrued until they finish their studies. Borrowers experiencing financial difficulties may apply for the RAP once they are no longer part-time students.

Repayment requirement at maximum weeks of assistance

This change:

• Ensures that borrowers upon reaching their maximum weeks of assistance are able to finish their studies without the requirement of repayment on the principal and interest while in-study.

As with current Regulations, if the student exceeds their maximum length of assistance (i.e. 340, 400 and 520 weeks as the case may be in various situations), they are no longer entitled to additional assistance in the form of new loans, grants or interest-free periods. Under new provisions, students are not required to make payments as long as they remain in full-time studies.

Full-time students benefit from an interest-free period up until they reach their maximum length of assistance; once it has been reached, interest will commence to accrue up until they finish their studies.

In order to qualify for this benefit, students are required to demonstrate that they continue to be full-time students by submitting a confirmation of enrolment for each study period as they would normally have done to get a loan, grant or to receive interest-free status. All of the borrower’s full-time loans under this benefit are not consolidated until after they have finished their studies.

Regulatory and non-regulatory options considered

A regulatory framework for student financial assistance has been in place in Canada since 1964. These regulatory amendments are in response to legislative changes to the Canada Student Financial Assistance Act (CSFAA) and the Canada Student Loans Act (CSLA) included in the Budget Implementation Act 2008 and are required to support the implementation of these measures.

Benefits and costs

Costs

The costs to the Government for these amendments in respect of loans to part-time students are estimated to be $500,000 per year. The deferral of payments for full-time students who reach the maximum length of time of assistance is a cost-neutral measure as interest on these loans still accrues and is repaid upon completion of studies.

Benefits

The increase of the limit on loans to part-time students is expected to increase the number of borrowers assisted to approximately 2 500 individuals per year. Post-secondary education students are facing increased costs and increase in available funding is required to allow part-time students to upgrade their education levels and hence their employability. The increased availability of funds is expected to increase the overall numbers of part-time students in the context of life-long learning by allowing them the opportunity to improve their skills while continuing to work and advance in their careers. The deferral of interest payments (which could be significantly higher with an increase in available funding to $10,000 in principal amount) until a borrower has completed their studies provide more flexibility to part-time learners in repaying their loan balances.

Although the number of full-time students who reach their maximum length of time to benefit from loans, grants or interest-free status prior to completing their program of study is relatively small, the ability to defer payments for these students is expected to have a considerable impact on their completion of post-secondary education as students no longer have to deal with repayment concerns until they have finished their studies.

Rationale

Canada is facing shortages in the supply of skilled labour in key sectors and in certain regions. With an aging labour force, long-term wealth and prosperity must now depend on sustained productivity growth, an area in which Canada lags behind several trading partners (including the United States).

With a shift to a knowledge-based economy, life-long learning gains an ever increasing importance in the development of skills to enhance productivity. This ongoing training is primarily accomplished through part-time studies. As such, part-time studies are playing an increasing role in the development of the Canadian economy.

While education falls under provincial jurisdiction, the federal government plays a crucial role in financial assistance to students. Since 1964, the Canada Student Loans Program (CSLP) has been key to delivering financial assistance to students studying at a post-secondary level. The federal government is the sole provider of student loans for part-time learners. The borrowing limits for these loans to part-time students have been unchanged since 1995; in order to keep pace with the increased costs of education these limits needed to be raised.

Consultation

Human Resources and Skills Development Canada (HRSDC) conducted extensive diagnostic and consultative activities from the spring to the fall of 2007.

A diagnostic was developed based on an internal analysis of the CSLP to develop broad policy directions for federal financial assistance to students. Conclusions were shared with provincial/ territorial officials as well as selected experts, which validated the diagnostic’s findings, i.e. a need to change the rules on loans to part-time students and to improve the provisions on the maximum length of assistance for full-time students. Following these consultations, there was agreement that the diagnostic had correctly captured the successes and the challenges of federal financial assistance to students.

The department of Human Resources and Skills Development Canada also conducted an online consultation in September 2007, which yielded responses from individual Canadians, stakeholder groups, and additional submissions presented outside of the online process. Of note, comments were received from key members of the National Advisory Group on Student Financial Assistance (NAGSFA), whose members include the Canadian Alliance of Student Associations, the Canadian Federation of Students, provincial post-secondary officials and Student Financial Aid administrators. NAGSFA meets on a regular basis with officials from HRSDC.

Provincial/territorial counterparts have been extensively consulted and the importance of the provision of part-time assistance has been confirmed. Some jurisdictions have been especially vocal in the need and the effects of changes to part-time studies.

Implementation, enforcement and service standards

These changes will come into force on August 1, 2009 to correspond with the beginning of the 2009-2010 academic year. This would provide the availability of the increased loan limit in time for the 2009-2010 school year.

The changes will be delivered through the National Student Loans Service Centre (NSLSC). The NSLSC is the contracted corporation that delivers student loans and debt management measures on behalf of the Canada Student Loans Program.

The changes to the requirement with respect to loans given to part-time students will be managed according to the same process as in the past with an increase to the loan limit and the benefit of in-study payment deferral on interest and principal. The payment deferral for those who reach the maximum length of time of assistance is managed through the current student loan process as delivered by the NSLSC.

Financial institutions own and administer all federal student loans disbursed prior to 2000, which includes all Guaranteed (prior to 1995) and Risk-shared Loans (1995-2000). It is intended that the changes to loans given to part-time students and payment deferral for those who have reached their maximum length of time of assistance apply to all three CSLP loan regimes. For these particular changes, loans normally held by the financial institutions may be administered by the Government of Canada.

Performance measurement and evaluation

The improvements to the CSLP will be monitored, assessed and reported by HRSDC against the CSLP’s Results-based Management and Accountability Framework (RMAF), which includes considerations for client-centric service quality, service delivery efficiency and portfolio performance. The RMAF will be expanded to include the new Canada Student Grant Program.

As a companion document to the Program’s RMAF, the CSLP has developed a Risk-based Audit Framework (RBAF) to document the key risks faced by the Program and to identify an action plan of audit and review strategies that will mitigate these risks.

The RMAF and RBAF are being updated and unified into an integrated document. The new integrated RMAF/RBAF will reflect the new changes and will be finalized by the end of the 2009-2010 fiscal year. As part of this initiative, a draft Performance Measurement Framework (PMF) is undergoing a review and consultation process and will be finalized to reflect the new changes. This process will include consultation and review among departmental officials, central agencies and various other partners and stakeholders.

In 2006-07 the CSLP began a 5-year Summative Evaluation Framework Plan. In the final year of this Plan a supplementary evaluation plan would begin, in order to evaluate program changes announced in Budget 2008.

Given the size and complexity of the CSLP, a 5-year approach to evaluation work, consistent with that used in other large departmental programs such as Employment Insurance and Canada Pension Plan, was adopted for the summative evaluation of CSLP.

There will be an extensive survey of post-secondary education entrants in 2008-2009 to act as a baseline for pre-Budget 2008 measurements. There will be follow-up surveys beginning in 2011-2012 to begin to measure the effectiveness of the Budget 2008 initiatives. The summative evaluation report will be complete in 2015-2016 to evaluate the effectiveness of the program changes.

Contact

Barbara Glover
Director General
Canada Student Loans Program
Human Resources and Skills Development Canada
200 Montcalm Street, Tower II, 1st Floor
Gatineau, Quebec
K1A 0J9
Telephone : 819-997-1094
Fax : 819-953-9591

Footnote a
S.C. 2008, c. 28, s. 108

Footnote b
S.C. 1994, c. 28

Footnote c
S.C. 2008, c. 28, s. 113

Footnote d
R.S., c. S-23

Footnote 1
SOR/96-329

Footnote 2
SOR/93-392

Footnote 3
 In 2005-2006, $3.8 million was disbursed to 2 127 part-time students.

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