Appearance of the Deputy Minister Standing Committee on Public Accounts (PACP) -  December 1, 2020

Opening

Madame Chair,

We are appearing before you today to talk about the Auditor General’s Spring Report on Student Financial Assistance.

The report’s recommendations align with our continuous work to strengthen the Canada Student Loans Program, while making post-secondary education more affordable and accessible to all Canadians.

Repayment of student loans

The Government has made significant investments in recent years, including increasing Canada Student Grants and expanding its eligibility to make post-secondary education more affordable.

Since the onset of the pandemic, the Government has taken measures to address the impacts of COVID-19 on students, which included temporarily suspending the repayment of student loans and applicable interest, and doubling Canada Student Grants for the current school year.

The Government has also taken steps to make student loan repayment more manageable. In Budget 2008, the Government announced the introduction of the Repayment Assistance Plan (RAP), which was subsequently approved by the Parliament, and was implemented in 2009.

RAP allows student loan borrowers to repay only what they can reasonably afford given their income and family size; and the Government contributes to their payments such that the loan is paid off within 15 years of leaving school.

In 2016, the Government made it more generous by increasing the zero payment income threshold to $25,000. This is a benefit, like many other Government benefits, and should not be viewed as a loss.

In fact, the Department has made, and continues to make, efforts to raise awareness of RAP so that eligible borrowers can take advantage of it while they are trying to integrate into the labour market.

Spending on RAP is very different from the write-off loss due to default, and therefore they are reported separately in public accounts.

The Parliament has chosen to use grants to help students in financial need, and the RAP as a means to assist students in precarious financial situations to repay their loans.

We agree with the OAG that we can improve informing Parliament on program costs and we are already taking steps to do so. However, we intend to continue reporting program spending, such as RAP, and write-off loss separately.

While we have made great strides, we know that there is still more work to do. We acknowledge the longer-term issues raised by the OAG, we agree with their recommendations, and we are taking action to address them.

Student loan repayment continues to be 1 of the priorities for the Canada Student Loans Program.

Our efforts in this area need to be coordinated with the provinces, as well as other delivery partners, such as the CRA and the CSLP’s service provider. This takes time.

However, given the work that the Department has already undertaken, we are confident that we will be able to implement our Action Plan, though some of the timelines may need to be reassessed due to the pandemic.

Student financial literacy

We agree with the OAG that more needs to be done to improve financial literacy among young Canadians.

To this end, Employment and Social Development Canada, in consultation with the Financial Consumer Agency of Canada, has developed a financial literacy plan to inform borrowers of their repayment obligations and provide them with financial literacy tools.

Since the audit, the Department has already launched a virtual repayment counsellor on the National Student Loans Service Centre web portal. New financial literacy content continues to be added on repayment options and obligations.

The Department also has a plan to consult with provincial partners and external stakeholders on mandatory financial counselling for borrowers.

Evaluation

Finally, the OAG has recommended a comprehensive evaluation of both the Canada Student Loans Program and Canada Education Savings Program.

While our on-going evaluation work has focused on the impact of the 2 programs individually, the Department has also been working with Statistics Canada for several years now on developing appropriate datasets that would allow a comprehensive evaluation to examine the interaction between the 2 programs.

This data has now become available and we initiated an evaluation of the interactions between the CESP and the Canada Student Loans Program. With a better understanding, we will be able to take appropriate steps to reduce financial barriers for students.

Going forward

All the efforts we have been undertaking have ensured that the default rate on student loans continues to decline. The most recent 3-year default rate of 8% is actually the lowest it has ever been. For 2003 and 2004, for example, it was 28%.

Some of this success can be attributed to the Repayment Assistance Plan, which provides support to borrowers in financial difficulty, so they can get back on their feet and focus on their careers. The use of this model is in line with Parliament’s intent in establishing this program.

Closing

Going forward, we will continue to focus on improving the administration of our programs while working to support student loan borrowers so that post-secondary education is more accessible to Canadians.

Thank you for the opportunity to appear before you today.

I will now take your questions.

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Key messages

• ESDC manages the contract, and in particular the incentive payments, in collaboration with Public Services and Procurement Canada and provincial partners. Each year ESDC negotiated an increasingly lower target to lower the default rate based on a series of very specific commitments to be undertaken by the service provider. This approach has resulted in a Canada Student Loan default rate that is at all-time low.
• The Auditor General’s observation that the electronic vision for managing students loans was not delivered on schedule is correct. The schedule for Service Delivery transformation was revised to minimize risks and ensure an error-free transition from a paper-based system to an electronic system. Important changes like the ability to sign loan agreements electronically, and to authenticate borrower identity online without borrowers having to drive to a Canada Post location were rolled out first; many other features that directly benefit students have also been introduced with many others to be introduced in the coming months.

Since 2000, the administration of the Canada Student Loans Program (CSLP) has been contracted to a private sector service provider. The Department maintains full control of the program, including policy design and development, while the service provider administers the grants and loans, including the disbursement of funds and the administration of student loan repayment. Under the same contract, the service provider also administers loans and grants for 5 integrated’ provincial programs (ON, BC, NB, NL and SK).

With respect to incentive payments, the OAG audit focused on the contract that was awarded in 2006 and was operational between 2008 and 2019. A new contract was awarded to the same service provider (D+H) in 2016 and became operational in 2019. This contract will be in place until 2027 with options to extend until 2034 and represents a transformation to a digital service delivery model. Both contracts were awarded after significant industry consultation and an open and transparent competitive process.

The service provider received compensation for (i) ongoing account management; (ii) change management (to introduce program changes); and (iii) performance incentive. As per the contract, 20% of the annual Account Management Fee was set aside for incentive payments, part of which was based on lowering default rates. (Approximately $68 million was paid in incentives for default reduction – out of about $900 million in total payments over 12 years).

The observation made by the OAG is problematic because:

1. Limited contractual flexibility: The default rate for the first year of operation (2008 to 2009) was specified in the contract, and as per the contract, each year, the 2 parties had to agree on the target for the coming year. As a result, the flexibility was somewhat limited (in recognition of which the OAG appears to have only made an observation but not a recommendation).

The Department’s objective has always been to develop challenging, but not impossible to meet default rate targets. [2 sentences redacted]. While the OAG claims that the service provider did not have to demonstrate any improvement, the data clearly shows that default rate continued to improve during the contract (table below).

2. Program change alone was not sufficient to lower default rate: The OAG report claims that incentives were paid to the service provider for lowering default rates, even though the rates automatically decreased because of the Repayment Assistance Plan (RAP). If RAP alone were sufficient for the reduction in default, then the reduction would have been instantaneous immediately after the introduction of RAP. However, as data clearly shows, the improvement occurred over time. This is because policy changes need to be accompanied by campaigns to increase awareness, and proactive and tailored communications with the borrowers – none of which the service provider was compelled to do outside of the incentive payment scheme. Under the incentive scheme, the Department ensured that the service provider implemented targeted measures to continuously reduce the default rate. This included various interventions, such as behavioral nudging techniques (some of which were developed in collaboration with Privy Council Office Innovation Hub). Implementation of these interventions ensured that the default rate continued to improve over time.

3. Incentive paid for achieving targets and taking actions: Each year, a pre-condition for any incentive payment was to first implement a set of actions aimed at reducing default and achieve the targets. The plan of action and the targets were reviewed and approved by all the parties involved, namely, ESDC, PSPC and the 5 integrated provinces.

The OAG’s second comment notes that some services, specifically the electronic vision for managing student loans, was not delivered on time. After the current contract was awarded in 2016, the contract was revised to reflect a multi-phased approach to mitigate risks and ensure a seamless delivery, consistent with ESDC’s direction. The first phase was delivered in April 2018 and enabled an electronic identity verification and an electronic loan agreement. Phased implementation will continue with new components coming online regularly such as the Online Funding Tracker, the Online Revision of Repayment Terms, as well as the Virtual Repayment Councillor, which have already been implemented.

5.A. Verification of Repayment Assistance Plan Applications

One of the OAG’s recommendations focuses on the integrity of the Repayment Assistance Plan (RAP) verification. The OAG observed that the current verification process for RAP is inadequate and does not prevent ineligible applicants from obtaining the benefit.

5.B. Informing Parliamentarians about Non-Repayment of Student Loans

One of the OAG’s 5 recommendations is for ESDC to develop performance indicators that consider the impact of the Repayment Assistance Plan (RAP) on the non-repayment of student loans.

5.C. Credit bureau reporting of defaulted loans

One of the OAG’s 5 recommendations is that ESDC should inform credit bureaus about student debts in default.

5.D. Financial literacy

One of the OAG’s 5 recommendations relates to financial literacy and has 2 components for Employment and Social Development Canada (ESDC):

1. to publish financial information on the web; and
2. to consult stakeholders on mandatory training for student loan applicants

5.E. Evaluation of student financial assistance programs

The OAG audit report recommends that ESDC should consider undertaking a thorough evaluation of both CSLP and CESP.

6.A. Overview of post-secondary education and federal supports

1. How does Employment and Social Development Canada (ESDC) support youth to participate in Post-Secondary Education?

ESDC provides support post-secondary students as well as youth at risk in the K-12 system so that they are ready and financial able to pursue post-secondary education:

• The Canada Education Savings Program (CESP) offers education the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB) for children from low-income families. In 2019, $996 million of CESG was disbursed to 3 million children; additionally, $205 million was disbursed in CLB
• The Canada Student Loans Program (CSLP) provides targeted grants and needs based loans to help students access PSE and offers repayment assistance to borrowers with financial difficulty. In 2019 to 2020, the CSLP provided $1.6 billion in Canada Student Grants (CSG) to over 528,000 students and $3.4 billion in Canada Student Loans (CSL) to 608,000 borrowers
• Further, ESDC also supports organizations, such as Pathways to Education Canada who help youth in lower-income communities complete high school and transition into PSE and employment; and Indspire, who provide financial and non-financial supports to Indigenous students

2. What measures have been put in place to make Post-Secondary Education (PSE) more affordable and student debt more manageable in light of the COVID-19 pandemic?

The Government of Canada provided financial relief to post-secondary students during the COVID-19 pandemic. Specifically,

• All Canada Student Loan repayments were paused and interest did not accrue for the period of March 30 to September 30, 2020. Approximately 1.3 million student loan borrowers benefited from this measure
• The Canada Emergency Student Benefit, (CESB) provided $2.9B in financial support to over 708,000 to post-secondary students and recent graduates who could not find summer employment due to COVID-19

To support new and returning post-secondary students this fall, the Government also introduced enhancements to Canada Student Loans and Grants, effective for 1 year starting August 1, 2020. These measures are supporting approximately 765,000 returning and prospective students in 2020 to to 2021:

• Doubling Canada Student Grants for all eligible full-time students to up to $6,000 and up to $3,600 for part-time students. The Canada Student Grants for Students with Permanent Disabilities and Students with Dependents were also doubled
• Removing the expected student and spousal contribution, in recognition that many students and families will struggle to save for school this year
• Raising the maximum weekly loan amount that can be provided to a student in 2020 to 2021 from $210 to $350

3. Will the moratorium on loan repayment be extended during the pandemic?

On November 24, 2020, a motion passed in the House of Commons to extend the repayment pause for another 6 months that would be retroactive from October 1 and would expire on May 31, 2021. This motion is non-binding and would require further legislative changes. At this time, we do not have any additional information and as such, there are no further changes being made to extend the repayment moratorium and payments are due as scheduled.

6.B. Debt levels and repayment assistance

1. What is the average Canada Student Loan (CSL) balance per student entering repayment?

Students who left their studies in 2018 to 2019 had an average CSL debt of $13,400, which is roughly the same as the previous year. This amount reflects the federal portion of a student loan and has remained relatively stable over the past decade.

When broken down by institution type, University students have higher debts compared to college students. The average Canada Student Loan balance of undergraduate students upon leaving their studies was $16,400, whereas the average loan balance for college was $10,200 in 2018 to to 2019. The difference in debt load is due in part to the fact that undergraduate studies take longer to complete and therefore a higher loan balance.

2. What is the Repayment Assistance Plan (RAP)?

The Government of Canada recognizes that borrowers may experience financial difficulties at different points in their lives, making it hard for them to repay their loans. The Repayment Assistance Plan (RAP) is available to help.

RAP aims to provide relief to student loan borrowers who face employment challenges, a sudden income drop or family composition changes, such the birth of a child. Under RAP, no borrower has to repay their Canada Student Loan until they are earning at least $25,000 per year; this income threshold is adjusted upward based on family size. For those with an income over this threshold, monthly payments are limited to no more than 20% of their gross monthly family income. Furthermore, for borrowers on RAP, the Government of Canada pays the interest owing on their Canada Student Loan that their monthly affordable payment does not cover. If a borrower remains on RAP for an extended period, the government will begin to cover both the principal and interest that exceeds the reduced monthly payments, ensuring that the loan is paid off within 15 years, or 10 years if the borrower has a permanent disability.

3. How does a borrower qualify for the Repayment Assistance Plan (RAP)?

When borrowers struggle in repayment, CSLP offers the RAP to help alleviate some of the financial burden by reducing or delaying loan repayments. Borrowers apply for RAP in 6 month periods and their income and family size are taken into consideration. Monthly payments under RAP are limited to less than 20% of a borrower’s income and no borrower will have a repayment period of more than 15 years, or 10 years if they have a disability. For borrowers with income below $25,000 per year, no payment will be required. This threshold is adjusted by family size so that a borrower with a family of 4, will not be required to make a payment if they are earning under $59,512.

4. How many Canada Student Loan borrowers in repayment use the Repayment Assistance Plan (RAP)?

In the 2018 to 2019 loan year, approximately 330,000 borrowers used RAP, and 85% of them were not required to make any payments. This is a 1% increase from the 2017 to 2018 loan year.

5. What benefits are offered under the Repayment Assistance Plan (RAP)?

RAP offers different benefits depending on whether clients need short-term assistance soon after entering repayment or longer-term assistance after many years in repayment.

RAP Stage 1:

The Government of Canada pays the interest not covered by a borrower’s monthly payment on their student loan. An eligible borrower could receive this benefit for up to 60 months or within 10 years after they complete their studies, whichever comes first.

RAP Stage 2:

After 60 months of RAP or 10 years after a borrower completes their studies, whichever comes first, the Government of Canada will begin to pay towards both the principal and interest owing. As long as the borrower remains eligible, their loan will gradually be paid off after 15 years.

6. What is the Repayment Assistance Plan for Borrowers with a Permanent Disability (RAP-PD)?

RAP-PD makes it easier for borrowers with a permanent disability experiencing financial difficulties to manage their student loan by limiting payments to what they can reasonably afford.

Under RAP-PD, no borrower has to repay their Canada Student Loan until they are earning at least $25,000 per year; this income threshold is adjusted upward based on family size. For incomes over the threshold, monthly payments are limited to no more than 20% of a borrower’s gross monthly family income. Borrowers can also report disability-related expenses that could further reduce their monthly payments.

Furthermore, the Government of Canada pays both the interest and principal not covered by the borrower’s monthly affordable payments, such that the loan is paid off 10 years after the completion of studies for those who remain on RAP-PD.

7. What is the current Repayment Assistance Plan (RAP) eligibility verification process?

Employment and Social Development Canada has a systematic, sample-based income verification process. The RAP sampling process is based on a random sampling method wherein a pre-determined percentage of RAP applicants are selected for verification based on their RAP term (in other words, the number of times they have been on RAP). When selected for verification, borrowers are asked to provide documentation to validate the income they reported on their RAP application.

8. Why does Employment and Social Development Canada (ESDC) not verify the income of all Repayment Assistance Plan (RAP) applicants?

ESDC has a systematic, sample-based income verification process for RAP. The department uses a sampling methodology that is based on industry and Government of Canada standards which includes risk management principles.

9. What is Employment and Social Development Canada (ESDC) doing to strengthen the current Repayment Assistance Plan (RAP) eligibility verification process?

ESDC has a systematic, sample-based income verification process for RAP eligibility. However, the Department acknowledges that verification of certain groups has challenges, specifically applicants who report zero income in the preceding month, which accounts for approximately 20% of applicants.

ESDC has engaged partners, including the Canada Revenue Agency (CRA), provinces, and its service provider on more robust RAP verification methods. We are working with the CRA on an Information Sharing Agreement that will allow the Department to verify applicant information against tax data. This will include the applicant’s family income, marital status and number of dependants against CRA tax data during the application process, while maintaining the current systematic sampling size and timing.

10. Is the cost of student financial assistance misleading when Employment and Social Development Canada (ESDC) does not include the Repayment Assistance Plan (RAP) costs in their reporting of financial losses?

RAP is a program benefit to which eligible student loan borrowers are entitled. RAP expenditures are not a financial loss, as it is a benefit provided by the Government of Canada to support students who are experiencing difficulty repaying their Canada Student Loans.

The Department already reports to Parliament on all program expenses, including amounts of write-off of unrecoverable student loans and the cost of RAP, through Public Accounts. More detailed information is also included in the CSLP Annual Report. In addition, each year, the Office of the Chief Actuary (OCA) prepares a 25 year forecast of all program costs and revenues. The report is published annually and tabled in Parliament every 3 years.

To add more depth to our public reporting, and increase transparency, the department has started working with Office of the Chief Actuary to develop a new indicator for RAP. This indicator is currently under development and the department is considering it options going forward with regards to implementation.

6.C. Delinquency, default and collections

1. What is a delinquent loan?

A student loan becomes delinquent when the borrower’s payment is late by less than 270 consecutive days. During this time, the CSLP’s third-party Service Provider, branded as the National Student Loans Service Centre (NSLSC), monitors the loan repayment behaviour of borrowers and undertakes follow-up actions on delinquent loans (for example calls and/or sends letters, payment reminders, texts, etc.). The Service Provider also reports to credit bureaus on a monthly basis. Loans for which payments are 30 days late are reported as delinquent, and this remains on the borrower’s credit report for approximately 6 years. Borrowers with delinquent loans are offered repayment options such as RAP, even retroactively, to help bring their loans into good standing.

2. What is a loan in default?

If a borrower does not make a payment or does not acknowledge their debt for 270 consecutive days, the loan enters into default. The Canada Revenue Agency (CRA) is responsible for collecting loans in default or otherwise know as loans in collection.

In 2018 to 2019, $350 million Canada student loans in default transferred to the CRA for collection. As of September 2020, a total of $2.45 billion in Canada student loans were in collections with the CRA.

3. What is the Canada Student Loans Program’s (CSLP) default rate?

The CSLP uses a 3-year default rate as a main indicator of the performance of the portfolio. This rate represents the proportion of loans that go into default within 3 years of entering repayment. There have been significant improvements to the default rate. In 2003 to to 2004, the 3-year default rate for borrowers entering repayment was 28%. As a result of repayment assistance measures as well as targeted interventions by the CSLP service provider, the default rate has continuously improved. In 2017 to 2018 the default rate was 8%, the lowest CSLP default rate ever.

4. What is the Canada Revenue Agency’s (CRA) role once a student loan goes into default?

CRA is the collection agency for the Canada Student Loans Program. Once a student loan payment is not made for 270 days, the loan goes into default is transferred to the CRA for collections. The CRA is responsible for collections activities to recover the loan, including:

• Contacting the debtor via telephone: The CRA Debt Management Call Centre makes outbound calls and responds to the majority of inbound calls from the Department of ESD program debtors. During this time, if debtors can be reached, the CRA actively promotes the rehabilitation of CSLs and explains the benefits of loan rehabilitation to the debtors.
• Contact Tracing: The CRA tracing unit performs soft tracing activities for the purpose of locating debtors, employers and sources of revenue for collections.
• Collections: The CRA Tax Services Office negotiates payment arrangements with debtors, administers and evaluates financial questionnaires to deem whether or not debtors are able to pay, and takes legal action as delegated under CSLP legislative authority, if necessary, to recover Crown debt.
• Legal Action: When collection efforts are unsuccessful and a review of the debtor’s financial situation indicates that the debtor is able to pay, legal action may be pursued. Only files that meet specific criteria can be referred to CRA’s Collections Litigations and Advisory Services, with considerations given to the costs associated with pursuing legal action versus the amount of potential recovery. Legal action can include income garnishment, withholding government payments from refund set off programs, pursuing judgments, compromise settlements, and placing liens and/or seizing borrower assets until the debt is repaid in full

In 2018 to 2019, the CRA recovered $195.7 million in defaulted Canada Student Loans, a slight increase from the $192 million recovered the year prior. This includes $89.5 million through the refund in set-off program.

5. Does the CRA report loans in collections to the credit bureaus?

When loans are in good standing, the CSLP’s service provider reports to credit bureaus monthly. When a loan defaults and is transferred to the CRA, 1 final report is sent to the credit bureau. Our 2 departments are working together to develop a process for credit bureau reporting. This will be implemented by fall 2022 as part of ongoing program enhancements.

6. What steps can borrowers take to return their defaulted loans back into good standing?

To bring a Canada Student Loan back to good standing, borrowers must enter into a repayment arrangement with the Canada Revenue Agency (CRA). This arrangement involves paying all the outstanding interest, and making the equivalent of 2 monthly payments in accordance with the repayment agreement. Once a loan is in good standing, borrowers can apply to receive further student financial assistance or support through RAP.

Effective January 1, 2020, a borrower can now capitalize all outstanding interest on their loan instead of paying off the interest as a condition of loan rehabilitation.

If a borrower is not in a financial positon to rehabilitate their loan, they may contact the CRA to discuss repayment options, including their financial hardship measure of support.

7. What happens to borrowers who default on their Canada Student Loans?

Failing to pay a Canada Student Loan has consequences for the borrower. The service provider sends the credit bureau a monthly report on the delinquent status of the loan. The borrower’s credit score will also be negatively affected and this will make it more difficult for them to borrow money for future purchases like a house or car.

Once a loan enters collections, the Canada Revenue Agency may also recoup income tax refunds or pursue legal action, potentially leading to wage garnishments or asset seizures.

Furthermore, borrowers with Canada Student Loans that are not in good standing are no longer eligible for further grants, loans or repayment assistance until their loan is paid off or back in good standing. Even if a loan is removed from active recovery and the Government of Canada eventually writes it off, the loan is not forgiven. The borrower continues to owe the money.

6.D. Write-offs

1. Why did the Government of Canada write off $180.4 million in Canada Student Loans?

$180.4 million in unrecoverable Canada Student Loans was recommended for write-off in 2019 to 2020 for a number of reasons; primarily for loans that reached the statue-barred limitation for collection, bankruptcy, compromised settlements, hardship and low dollar value of debt in relation to the cost of its recovery.

2. What are the trends in write-offs?

The write-off dollar value amount varies from year to year though it consistently represents approximately 1% of the Canada student loan portfolio. In each of the past 2 years, student loan write-offs were below 1%, which is consistent with the reports produced by the Office of the Chief Actuary (OCA) who projects that write-off values will continue to represent approximately 1% of the CSL portfolio, even as the size of the portfolio continues to grow. In 2019 to 2020, $180.4 million in unrecoverable student loans were recommended for write-off. In 2018 to 2019, $162.2 million was recommended for write-off, and in 2017 to 2018, $203.4 million was recommended for write-off. The variance in the write-off amount is explained by normal variation from year to year, and partly due to the growing size of the direct student loan portfolio, which has grown 82% in the last 10 years.

6.E. Financial literacy

1. Why is financial literacy important for post-secondary students?

Financial literacy is important at every life stage. For some post-secondary education students, understanding how to apply for and obtain the financial assistance they need to go to school and then how to manage their student loan may be a challenge. That is why ESDC, in collaboration with the Financial Consumer Agency of Canada, is committed to providing them with the financial literacy tools and information they need to succeed.

2. What is Employment and Social Development Canada (ESDC) doing to address the OAG’s recommendation about the making available all the financial information need by Canada Student Loan recipients?

In collaboration with the Financial Consumer Agency of Canada (FCAC), ESDC established an overall financial literacy plan in 2017, which aims to ensure that clients are fully informed of their obligations and options during every stage of the loan lifecycle by providing user-friendly financial information. Since the audit, significant progress has been made in this area. For example, a Virtual Repayment Counsellor was launched on the National Student Loan Service Center web portal in November 2019, new and updated financial literacy web content on repayment obligations and options continue to be posted.

3. What is Employment and Social Development Canada (ESDC) doing to address the OAG’s recommendation about consulting with stakeholders on mandatory training for student loans applicants before loans are provided and for student loan recipients who abandon or complete their studies?

The Department will engage key partners, including provinces and territories, the Financial Consumer Agency of Canada and other stakeholders on the feasibility of mandatory counselling. This has also been identified in our management action plan.

6.F. Student financial assistance program evaluation

1. Has Employment and Social Development Canada (ESDC) assessed the full impact of student financial assistance on post-secondary education?

ESDC is currently conducting, and finalizing work on, an in-depth evaluation of the Canada Education Savings Program (CESP) which will asses the factors that may influence participation among families with lower income. The results of this evaluation are scheduled to be published by the fall of 2021. ESDC is also launching an evaluation specifically on the impacts of the CESP and the interactions between the CESP and the Canada Student Loans Program. These results will be publicly available by the summer 2022.

With a more in depth understanding of these impacts, ESDC will be able to take the appropriate steps to further reduce financial barriers and enhance access and affordability for students.

6.G. Service provider contract management

1. How does Employment and Social Development Canada (ESDC) ensure strong contract management of the service provider performance?

Since 2000, the administration of the CSLP has been contracted to a private sector service provider. The Department maintains full control of the program, including policy design and development, while the service provider administers the grants and loans, including the disbursement of funds and the administration of student loan repayment.

The service provider receives compensation for (i) ongoing account management; (ii) change management (to introduce program changes); and (iii) performance incentive for lowering default rates. ESDC’s objective has always been to develop challenging, but not impossible to meet default rate targets. Under the incentive scheme, the Department ensures that the service provider uses targeted measures to continuously reduce the default rate.

Implementation of these measures ensured that the default rate has continued to improve over time, from 28% in 2003 to 2004 to 15% in the 2009 to 2010 to 8% in the 2017 to 2018, an all all-time low. Moving forward, the Department will continue to ensure that default targets are aligned with current realities, are appropriately challenging, and account for program or policy changes.

6.H. National Student Loans Service Centre (NSLSC) call center

1. Why are student loan borrowers having difficulty talking to an agent at the NSLSC?

The NSLSC has been experiencing significantly higher than normal call volumes since the beginning of October. This was driven by a number of factors:

• Resumption of repayment after the repayment moratorium ended on September 30, 2020
• The annual peak of borrowers entering repayment in November (6 months after they graduate in April/May); and
• Strengthened security measures to protect against cyberattacks
• Recently a number of government departments discovered attempted cyberattacks through login credentials used by the Government of Canada, including the National Student Loans Service Center. In order to ensure security of student accounts, students are asked to provide additional details to be able to log in; this has caused a number accounts being locked, and students need to call NSLSC to unlock their accounts. To date, our investigation has not found any improper activity in relation to NSLSC accounts

The NSLSC was expecting and had prepared for an increase in calls following the end of the COVID moratorium and for the beginning of the annual peak repayment period of November; however the security measures added significantly to the call volume.

This unprecedented volume of calls led to longer than usual wait times and sometimes to phone system blockage. To address this, the NSLSC has increased its phone system capacity and has added call centre agents. Since then the situation has improved; we continue to monitor the situation closely.

6.I. Jasmin Simpson v. Attorney General of Canada and Attorney General of Ontario caseofaoc

1. What is the government doing in regards to the recent Ontario Superior Court ruling in the Jasmin Simpson v. Attorney General of Canada and Attorney General of Ontario case?

By decision dated October 26, 2020, the Court held that the operation of the Canada Student Loans Program (“CSLP”) in the case of the applicant, who is a person with a disability, resulted in her incurring more loan debt than her non-disabled peers, and that this amounted to discrimination contrary to section 15 of the Canadian Charter of Rights and Freedoms (“Charter) and was not justified under section 1.

The Government of Canada has not appealed the decision.

The Government supports students with disabilities with the cost of post-secondary education through a number of measures, including additional grants available through the CSLP, and will continue to explore ways to ensure that students with disabilities receive the support they need to be able to access post-secondary education.

6.J. One year elimination of interest on loans

1. Why is the Government of Canada only proposing to eliminate interest on Canada Student Loans and Canada Apprentice Loans for 1 year?

As you know, the Government announced a one-year elimination of interest on Canada Student Loans in its Fall Economic Statement. This measure will require a legislative amendment, and we will work on implementing this soon afterwards.

No interest will accrue during this 1 year period, reducing financial pressure on borrowers facing the financial impacts of the COVID-19 pandemic. This measure will help relieve the debt burden of 1.4 million borrowers in 2021 to 2022.

However, borrowers will be still required to continue to make monthly payments on their Canada Student Loans during the one-year period in which interest is eliminated.

1. Background

The 2020 Spring Reports of the Auditor General of Canada were tabled in the House of Commons on July 8, 2020, and referred to the Standing Committee on Public Accounts for further consideration. On October 29, the Auditor General briefed the committee in camera to update the Committee on the current audits. As such, on November 5, 2020, PACP adopted a motion to study Report 2, Student Financial Assistance.

The purpose of the meeting is to provide an opportunity for Committee Members to question you, as Accounting Officer, on the conclusions and recommendations found in the audit. Overall, Report 2 concluded that Employment and Social Development Canada (ESDC) did not efficiently manage some aspects of financial assistance to post-secondary students. The audit found that ESDC had not thoroughly assessed the individual and combined impact of the Canada Education Savings Program and the Canada Student Loans Program on students’ capacity to access post-secondary education. It had also not assessed the obstacles that keep students from being able to repay their loans. The audit also noted basic weaknesses in program management.

At the request of the Committee, the December 1 meeting will be 2 hours in duration: a discussion with you and the Auditor General of Canada, Karen Hogan. Senior principals responsible for the audit are expected to testify with the Auditor General.

The Canada Revenue Agency and the Financial Consumer Agency of Canada were involved in this audit and will also testify on December 1.

2. Committee proceedings

PACP is composed of 11 MPs.

PACP is 1 of 4 committees where the chair is a member of the official opposition. In addition, in the current minority Parliament, the Government does not hold the majority at PACP. The Chair is Ms. Kelly Block, a member of the Conservative Party of Canada. The 2 Vice-Chairs are Liberal MP Lloyd Longfield and BQ MP Maxime Blanchette-Joncas.

Other members are:

• Luc Berthold (CPC)
• Kody Blois (Liberal)
• Greg Fergus (Liberal)
• Matthew Green (NDP)
• Philip Lawrence (CPC)
• Francesco Sorbara (Liberal)
• Len Webber (CPC)
• Jean Yip (Liberal)

At the beginning of the meeting, the Auditor General will be provided with 5 minutes for her opening statement. Once completed, you will also have 5 minutes for your remarks. PACP has also a strong preference to receive opening statements 72 hours in advance. Furthermore, ESDC will have to provide a detailed action plan to address the audit recommendations which have been agreed to - including specific actions, timelines for their completion and responsible individuals - to the committee and the Office of the Auditor General of Canada within at least 48 hours in advance.

The Office of the Auditor General of Canada will typically share remarks in advance if the hearing.

PACP has agreed that questioning of witnesses would be allocated as follows:

Round 1: 6 minutes for the first questioner of each party as follows

• Conservative Party
• Liberal Party
• Bloc Québécois
• New Democratic Party

For the second and subsequent rounds, the order and time for questioning be as follows:

• Conservative Party, 5 minutes
• Liberal Party, 5 minutes
• Bloc Québécois, 2 and a half minutes
• New Democratic Party, 2 and a half minutes
• Conservative Party, 5 minutes
• Liberal Party, 5 minutes.

3. Parliamentary and Media Analysis

The Report released in July did not generate the same level of interest as previous reports have during a typical sitting. Instead, other issues related to students, such as the Canada Student Service Grant and COVID measures, dominated in the media and in Parliament. In the House of Commons, there were no questions specific to Report 2 Student Financial Assistance. Questions about the OAG Reports included other topics such as immigration or focussed on demands from the official opposition to increase funding to the Auditor General to keep track of expenditures related to COVID.

On November 18, 2020, PACP tabled a Committee Report in the House of Commons asking the government to provide the auditor general with the $31M she has requested that is required for her to achieve the Office of the Auditor General objectives, and that the committee report this to the house.

Unrelated to the audit, on November 24, 2020, the House of Commons unanimously adopted a motion regarding the extension of the moratorium on repaying student loans from October 1, 2020 to May 31, 2021. The motion put forward by NDP MP Heather McPhersonr is none binding, however, it demonstrates an overall support to students.

Mandate of the Committee

When the Speaker tables a report by the Auditor General in the House of Commons, it is automatically referred to the Public Accounts Committee. The Committee selects the chapters of the report it wants to study and calls the Auditor General and senior public servants from the audited organizations to appear before it to respond to the Office of the Auditor General’s findings. The Committee also reviews the federal government’s consolidated financial statements – the Public Accounts of Canada – and examines financial and/or accounting shortcomings raised by the Auditor General. At the conclusion of a study, the Committee may present a report to the House of Commons that includes recommendations to the government for improvements in administrative and financial practices and controls of federal departments and agencies.

Government policy, and the extent to which policy objectives are achieved, are generally not examined by the Public Accounts Committee. Instead, the Committee focuses on government administration – the economy and efficiency of program delivery as well as the adherence to government policies, directives and standards. The Committee seeks to hold the government to account for effective public administration and due regard for public funds.

Pursuant to Standing Order 108(3) of the House of Commons, the mandate of the Standing Committee on Public Accounts is to review and report on:

• The Public Accounts of Canada
• All reports of the Auditor General of Canada
• The Office of the Auditor General’s Departmental Plan and Departmental Results Report; and
• Any other matter that the House of Commons shall, from time to time, refer to the Committee

The Committee also reviews:

• The federal government’s consolidated financial statements
• The Public Accounts of Canada
• Makes recommendations to the government for improvements in spending practices
• Considers the Estimates of the Office of the Auditor General

Other Responsibilities

• The economy, efficiency and effectiveness of government administration
• The quality of administrative practices in the delivery of federal programs; and
• Government’s accountability to Parliament with regard to federal spending

Committee Members

Chair

Kelly Block, Conservative, Carlton Trail—Eagle Creek, New Member

Vice-Chair

• Lloyd Longfield, Liberal, Guelph, Returning Member
• Maxime Blanchette-Joncas, Bloc Québécois, Rimouski-Neigette—Témiscouata—Les Basques, Returning Member - Public Accounts Critic

Members

• Luc Berthold, Conservative, Mégantic—L’Érable, New Member - TBS Critic
• Phillip Lawrence, Conservative, Northumberland—Peterborough South New Member - National Revenue Critic
• Len Webber, Conservative, Calgary Confederation, New Member
• Matthew Green, New Democratic Party, Hamilton Centre, Returning Member - TBS Critic
• Kody Blois, Liberal, Kings—Hants, New Member
• Greg Fergus, Liberal, Hull—Alymer, Returning Member (Non-voting - 42nd Parliament) - Parliamentary Secretary TBS and Digital Government
• Francesco Sorbara, Liberal, Vaughan—Woodbridge, Returning Member (43rd-1 Parliament)
• Jean Yip, Liberal, Scarborough—Agincourt, Returning Member (42nd Parliament)

Kelly Block

(Saskatchewan - Carlton Trail—Eagle Creek) Conservative, Chair

• Elected as the Member of Parliament in 2015 for Carlton Trail—Eagle Creek, previously for Saskatoon—Rosetown—Biggar from 2008-2015
• Served as vice-chair on the Standing Committee on Transport, Infrastructure and Communities in the 42nd Parliament
• Member of the Liaison Standing Committee
• Previous member of the Standing Committee of Government Operations and Estimates in the 43rd and 41st Parliament, the Standing Committee of Finance in the 40th Parliament
• Served as the Opposition critic for Public Services and Procurement Canada (appointed by Andrew Scheer)
• Prior to her election, Mrs. Block served two terms as the first female mayor of Waldheim, Saskatchewan, as chairperson of the Gabriel Springs Health District, and was awarded the Maclean's Parliamentarian of the Year – Rising Star – Award in June 2010

Lloyd Longfield

(Ontario—Guelph), Liberal, First Vice-Chair

• Elected as the Member of Parliament for the riding of Guelph in 2015
• Former member of the Public Accounts Committee (PACP) in the 43rd Parliament and is a standing Member of the Environment and Sustainable Development Committee (ENVI)
• Former Executive Director of the Guelph Chamber of Commerce, and former business executive

Maxime Blanchette-Joncas

(Québec—Rimouski-Neigette – Témiscouata – Les Basques), Bloc Québécois, Second vice-chair

• Elected as the Member of Parliament for Rimouski-Neigette—Témiscouata—Les Basques in the 2019 federal election
• BQ Critic for Public Accounts
• Preceded in his riding by Guy Caron who served as the leader of the NDP from 2017 to 2019
• Business Administration graduate from the University of Quebec in Rimouski and former administrative officer at the Business Development Bank of Canada
• Was regional president of the Youth Forum of the Bloc Québécois

Luc Berthold

(Mégantic—L’Érable), Conservative, Member

• Elected as the Member of Parliament for Mégantic—L'Érable in 2015.
• Critic for TBS
• Previously the Vice-Chair of the Standing Committee on Transport, Infrastructure and Communities, and the Standing Committee on Agriculture and Agri-Food
• Prior to his election, Mr. Berthold was Nathalie Normandeau’s Political Assistant, and communications advisor for the Leader of the Official Opposition in 1999, the Interim Director of communications for Quebec’s Liberal Party in 2006, and worked as a speaker, coach and gave leadership training sessions

Phillip Lawrence

(Northumberland—Peterborough South), Conservative, Member

• Elected as the Member of Parliament for the riding of Northumberland—Peterborough South in the 2019 federal election
• Shadow Minister of National Revenue
• Former member of Standing Committee of Justice and Human Rights
• Prior to his election, Mr. Lawrence received his BA from Brock University in Political Science, he attended Osgoode Hall Law School and the Schulich School of business to obtain his law degree and MBA, and volunteered at the Financial Planning Standards Council

Len Webber

(Calgary Confederation), Conservative, Member

• Elected as the Member of Parliament for the riding of Calgary Confederation in 2015
• Former Vice-Chair of the Standing Committee on Health in the 42nd Parliament
• Previously a member on the Standing Committee on Health, the Subcommittee on Sports-Related Concussions in Canada of the Standing Committee on Health and the Subcommittee on Agenda and Procedure of the Standing Committee on Health
• Prior to his election, Mr. Webber was a Member of the Legislative Assembly of Alberta, representing the constituency of Calgary-Foothills from 2004 to 2014, work as an apprentice electrician and managed his own contracting company for 10 years, and served as vice president and director of the Webber Academy, a private, non-profit school in southwest Calgary for children from junior kindergarten to grade 12 founded by his father

Matthew Green

(Ontario—Hamilton Centre), NDP, Member

• Elected as the Member of Parliament foe Hamilton Centre in the 2019 federal election in the riding formerly held by NDP MP David Christopherson
• NDP Critic for National Revenue/CRA, Public Services and Procurement
• Former Councilor for the City of Hamilton (2014 to 2018)
• Member of the House of Commons Standing Committee on Public Accounts (PACP), the Standing Committee on Government Operations and Estimates (OGGO), and the Subcommittee on Agenda and Procedure of the Standing Committee on Government Operations and Estimates
• Member of the Canada-Africa Parliamentary Association (CAAF) and the Canadian Section of ParlAmericas (CPAM)

Kody Blois

(Kings—Hants), Liberal, Member

• Elected as the Member of Parliament for the riding of Kings—Hants in the 2019 federal election, in the riding formerly held by former TBS President Scott Brison
• Current member of the Standing Committee for Agriculture and Agri-Food, and the Subcommittee on Agenda and Procedure of the Standing Committee on Agriculture and Agri-Food
• Former member of the Standing Committee for Agriculture and Agri-Food, and the Standing Committee on Public Accounts
• Blois completed degrees in commerce, law, and public administration - which sparked his interest in serving his community

Greg Fergus

(Hull—Alymer), Liberal, Member

Parliamentary Secretary to the President of the Treasury Board and Minister of Digital Government

• Elected as the Member of Parliament for the riding of Hull—Aylmer in 2015
• Member of the Standing Committee on Access to Information, Privacy and Ethics
• Former member of the Standing Committee on Finance, and the Standing Committee on Public Accounts
• Current and Former Parliamentary Secretary to the President of the Treasury Board and Minister of Digital Government. Former Parliamentary Secretary to the Minister of Innovation, Science and Economic Development
• Former National Director of the Liberal Party of Canada and former political staffer in various Ministerial offices

Francesco Sorbara

(Vaughn—Woodbridge), Liberal, Member

• Elected as the Member of Parliament for the riding of Vaughan—Woodbridge in 2015
• Member of the Standing Committee on Access to Information, Privacy and Ethics
• Former member of the Standing Committee on Finance, as well as the Subcommittee on Agenda and Procedure of the Standing Committee on Finance, and the Standing Committee on Public Accounts
• Parliamentary Secretary to the Minister of National Revenue
• Sorbara is a chartered financial analyst and worked in the global financial markets for nearly 20 years in both Canada and the United States for Scotiabank, JPMorgan Chase, and global credit rating agency DBRS

Jean Yip

(Scarborough—Agincourt), Liberal, Member

• First elected in a by-election on December 11, 2017 as the Member of Parliament for the riding of Scarborough—Agincourt. Elected in 2019 as the Member of Parliament for the riding of Scarborough—Agincourt.
• Current member of the Special Committee on Canada-China Relations.
• Former member of the Public Accounts committee, and the Government Operations and Estimates Committee.