Canada Student Loans Program annual report 2018 to 2019

Employment and Social Development Canada

The mission of Employment and Social Development Canada (ESDC), including the Labour Program and Service Canada, is to build a stronger and more inclusive Canada, to support Canadians in helping them live productive and rewarding lives and to improve Canadians' quality of life.

Canada Student Loans Program

The Canada Student Loans Program (CSLP) provides targeted grants and needs‑based loans to help students access post secondary education and offers repayment assistance to borrowers with financial difficulty.

A. Canada Student Grants

In 2018 to 2019, 533,000 students received $1.6 billion in financial assistance they will not have to pay back; this represents an increase of 9% in the number of recipients and 18% in the value of the grants relative to the previous loan year.

Canada Student Grants (CSG) provide non-repayable funding to full- and part-time students and are targeted to students from low- and middle-income families, students with permanent disabilities and those with dependants. Students are automatically assessed for CSGs when applying for student financial assistance through their province or territory of residence.

In 2018 to 2019, the CSLP provided the following grants to eligible students:

• Canada Student Grant for Full-time Students: up to $375 per month of study
• Canada Student Grant for Full-Time Students with Dependants: $200 per month of study for each dependant under 12 years of age (or for each dependant over 12 years of age with a permanent disability)
• Canada Student Grant for Students with Permanent Disabilities: $2,000 per year for full-time or part-time students with permanent disabilities
• Canada Student Grant for Services and Equipment for Students with Permanent Disabilities: up to $8,000 per year to cover exceptional education-related costs
• Canada Student Grant for Part-Time Students: up to $1,800 per loan year
• Canada Student Grant for Part-Time Students with Dependants: up to a maximum of $1,920

The following table provides a summary of the distribution of Canada Students Grants by type.

Table 1 – Canada Student Grants by type

Table 1A – Canada Student Grants – Number of recipients¹

Canada Student Grant	2016 to 2017	2017 to 2018	2018 to 2019
Full-Time Students2	344,165	451,296	477,892
Skills Boost Top-up	N/A	N/A	64,821
Full-Time Students with Dependants	35,322	40,523	63,828
Students with Permanent Disabilities	37,263	46,432	50,543
Services and Equipment for Students with Permanent Disabilities	10,125	10,550	10,873
Part-Time Students	19,155	21,261	28,493
Part-Time Students with Dependants	332	376	2,643
Total	379,606	490,377	532,785

• ¹ The number of recipients do not sum to the total, as some recipients can receive multiple grants in the same year.
• ² In 2017 to 2018, the Canada Student Grant for Full-Time Students replaced 2 separate grants, the Canada Student Grant for low-income students (CSG-LI) and the Canada Student Grant for middle-income students (CSG-MI).

Table 1B – Canada Student Grants – Millions of dollars

Canada Student Grant	2016 to 2017	2017 to 2018	2018 to 2019
Full-Time Students2	803.6	1,118.9	1,198.5
Skills Boost Top-up	N/A	N/A	98.1
Full-Time Students with Dependants	87.7	102.6	152.0
Students with Permanent Disabilities	71.0	88.3	97.0
Services and Equipment for Students with Permanent Disabilities	23.3	22.0	23.0
Part-Time Students	28.6	32.6	43.5
Part-Time Students with Dependants	0.3	0.4	1.9
Total	1,014.6	1,364.9	1,614.1

• ² In 2017 to 2018, the Canada Student Grant for Full-Time Students replaced 2 separate grants, the Canada Student Grant for low-income students (CSG-LI) and the Canada Student Grant for middle-income students (CSG-MI).

The number of students who received the Canada Student Grant for Full-Time Students with Dependants increased by 58% in the 2018 to 2019 loan year, and the value increased by 48%. The number of part-time students who received grants increased by 34% to 28,500 and the value increased by 33% to $44 million. This is mainly from a substantial increase in the number of students who received the Canada Student Grant for Part-Time Students with Dependants (+603%) and the Canada Student Grant for Part-Time Students (+34%).

In the 2018 to 2019 loan year, the CSLP disbursed $120 million in grants to 50,500 students with permanent disabilities in Canada Student Grants for Students with Permanent Disabilities and Canada Student Grants for Services and Equipment for Students with Permanent Disabilities, an increase of 9% in the number of recipients and a 9% in the value from the previous loan year.

The following diagram shows the distribution of Canada Student Grants for full- and part-time students by province or territory.

Text description of Diagram 1

Province or territory	Number of recipients	Millions of dollars
Newfoundland and Labrador	5,078	17.0
Prince Edward Island	2,606	7.7
Nova Scotia	14,421	48.6
New Brunswick	11,269	34.7
Ontario	358,669	1,051.1
Manitoba	11,678	37.8
Saskatchewan	14,363	49.7
Alberta	66,836	220.7
British Columbia	47,664	146.2
Yukon	201	0.7
Total	532,785	1,614.1

B. Canada Student Loans

In the 2018 to 2019 loan year, approximately 625,000 students received $3.6 billion in Canada Student Loans; this represents an increase of 6% in the number of recipients and 7% in the value of the loans relative to the previous loan year.

The Canada Student Loans Program provides eligible students grants and loans to help them pay their tuition, books, mandatory fees, living costs and transportation. Canada Student Loans are available to Canadian students with a demonstrated financial need who are enrolled in degree, diploma or certificate programs at designated post-secondary educational institutions in Canada and abroad.

Student loans are also interest-free for the entire period of studies.

The following table provides a summary of Canada Student Loans for full- and part-time students by province or territory.

C. Loan repayment, assistance and forgiveness

Unlike traditional loans, Canada Student Loans do not accrue interest while the borrower is in school, but rather interest begins to accumulate once the borrower leaves school.

Borrowers are not required to make payments in the first 6 months after the end of their studies. As of November 2019, the 6 month non-repayment period is also be interest free.

Once 6 months have elapsed, borrowers begin to repay their loans through monthly payments, typically over a 114-month period (9.5 years). Depending on their financial situation and income level, borrowers may revise their repayment terms to pay more quickly or to extend the payment period to reduce their monthly payments (up to a maximum of 14.5 years).

The average Canada Student Loan balance at the time of leaving school was $13,367 for the 2018 to 2019 loan year. The increase in available grants and students not needing to rely as heavily on loans has meant that student debt has remained relatively stable over the past years.

Differences in loan balances reflect each student’s particular situation. Loan balances are measured at the time of leaving school, which includes students who graduate, as well as those who do not complete their program of study. Among the key factors attributing to differences are the type and location of institution, as well as the program of study. In the 2018 to 2019 loan year, the average loan balance of university students was $17,200, higher than that of college students ($10,242) and those attending private institutions ($11,041). This difference is partly because university programs generally tend to take longer to complete.

Repayment Assistance Plan

More than 330,000 borrowers received support under the Repayment Assistance Plan in the 2018 to 2019 loan year; an increase of 1% from the previous loan year.

The Repayment Assistance Plan (RAP) is available to help borrowers who experience difficulty in repaying their student loans.

A single borrower does not have to repay their Canada Student Loan until they are earning at least $25,000 per year. This income threshold is adjusted based on family size, meaning that for a family of four, no payment would be required until they are earning at least $59,512. To remain on RAP, borrowers must re-apply every 6 months.

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

For the first 5 years on RAP (RAP Stage 1), the Government of Canada pays the interest not covered by a borrower’s monthly payment on their student loan. For borrowers with longer-term financial difficulty (beyond 5 years), the Government of Canada begins to contribute towards both the principal and interest (RAP Stage 2) such that the loan is fully paid off in 15 years since leaving school. If a borrower is already over 10 years in repayment when they first apply for RAP, they would be on Stage 2 from the start, that is, the government would contribute to both interest and principal.

The Repayment Assistance Plan for Borrowers with a Permanent Disability (RAP-PD) offers more generous assistance than RAP.

The Government of Canada pays both the interest and principal not covered by the monthly payments, such that the loan is paid off 10 years after the completion of studies, for those who remain on RAP-PD. In addition, disability-related expenses are taken into account in the eligibility assessment, which may further reduce the individual’s monthly payments.

The following diagram provides a summary of the number of RAP recipients by RAP stage and payment type in 2018 to 2019.

Text description of Diagram 2

Province or territory	All Stages	Stage 1	Stage 2	Permanent Disability (PD)
Newfoundland and Labrador	5,180	3,740	1,079	361
Prince Edward Island	2,108	1,572	x	x
Nova Scotia	15,479	11,352	2,693	1,434
New Brunswick	14,507	10,005	3,687	815
Ontario	200,909	151,785	31,637	17,487
Manitoba	4,675	3,742	634	299
Saskatchewan	6,420	4,852	777	791
Alberta	39,260	33,936	3,246	2,078
British Columbia	41,767	30,936	7,907	2,924
Yukon	76	61	x	x
Total	330,381	251,981	52,045	26,355

• ^x cells are suppressed to prevent statistical disclosure of number of recipients greater than 0 but less than 10.

D. Student demographics

The demographic profile of Canada Student Loan Program recipients remained consistent with that of previous years. The majority of students who received a grant and/or loan in 2018 to 2019 were female (60%), were between the ages of 20 to 24 (44%), attended university (57%) and were enrolled in an undergraduate program (59%).

Fifteen percent of students were 30 years of age and older, and 5% of students were pursuing a Master’s or Doctorate degree.

The following table provides a summary of the profile of students who received Canada Student Grants and/or Canada Students Loans in 2018 to 2019.

In the 2018 to 2019 loan year, the vast majority of full-time students remained in their home province or territory to pursue post-secondary education. 91% of students studied in their home province or territory within Canada, compared to just 7% who studied in Canada but outside their home province or territory. 2% studied outside Canada.

The following table provides a summary of the percent of full-time students studying inside and outside of Canada in 2018 to 2019.

• ^x: cells are suppressed to prevent statistical disclosure of number of recipients greater than 0 but less than 10.

Working with partners

The CSLP works collaboratively with provincial and territorial governments to deliver student financial assistance to Canadian students. In participating provinces (all jurisdictions except Quebec, Nunavut and Northwest Territories), approximately 60% of a full-time student’s assessed financial need is funded by the Government of Canada, while the province or territory covers the remaining 40%.

A private-sector service provider, contracted by the Government of Canada, and branded as the National Student Loans Service Centre (NSLSC), administers grants and loan disbursement and loan repayment. The NSLSC also administers student aid in five integrated provinces (British Columbia, Saskatchewan, Ontario, New Brunswick and Newfoundland and Labrador) as a single, integrated loan.

In support of their own student aid programs, the 3 non-participating jurisdictions received $492.3 million in alternative payments for the 2018 to 2019 loan year, compared to the previous year’s payment of $456.7 million:

• Quebec received $486.4 million – representing an increase of $35.4 million from last year’s payment of $451.0 million
• Nunavut received $2.8 million – representing an increase of $0.1 million from last year’s payment of $2.7 million
• the Northwest Territories received $3.1 million – representing an increase of $0.048 million from last year’s payment of $3.0 million

Service modernization

The Government of Canada is dedicated to continuously streamlining and modernizing the CSLP, as well as improving services for students. In collaboration with provincial and territorial partners, the CSLP is implementing a new electronic service delivery model in order to provide students with access to additional or enhanced digital self-service options, and a number of new features and services have been introduced since April 2018. The transformation initiative aims to significantly enhance the loan experience for borrowers by:

• enhancing the secure online National Student Loans Service Centre portal, which provides timely, mobile-friendly information regarding financial assistance (including status of disbursements, financial literacy resources, and options for repayment)
• reducing or eliminating the paper-based administrative burden for borrowers, and increasing the number of transactions that can be completed online through access to additional self-service options, such as customizing payment terms/amounts and making one-time payments
• producing greater efficiencies within the student financial assistance delivery system

As of April 2018, new full-time students can have their identity validated and submit their loan agreements online rather than visit designated Canada Post outlets (extended to new part-time students as of June 2019), and all existing clients are now able to sign in to their online accounts using either their banking or Government of Canada online credentials. Clients can also update their personal information and banking information online. As of July 31, 2019, over 364,000, or 99%, of new students are taking advantage of these new online services.

Client satisfaction

The CSLP is committed to ensuring that clients receive quality service. An annual client satisfaction survey is used to assess clients’ satisfaction with the services related to their grants and loans.

In the 2018 to 2019 loan year, 82% of clients said they were satisfied with the overall quality of service they received in regard to their grant or loan. Satisfaction levels have remained high over the past number of years.

Portfolio performance

The CSLP works with the service provider and provincial partners to minimize the value of loans going into default. Although the vast majority of students repay their loans in full and on time, some borrowers experience difficulty in repayment. A loan is deemed in default when in arrears for more than 270 days (roughly equivalent to missing 9 monthly payments).

The CSLP uses a 3-year default rate as a main indicator of the performance of the portfolio. This rate compares the value of the loans that enter repayment in a given loan year, and default within 3 years, to the value of all the loans that entered repayment in that loan year.

As noted in the following table, the default rate has decreased significantly in the last decade. The introduction of grants and RAP, coupled with increased and targeted communications by the service provider, have helped a greater number of students manage their repayment obligations, leading to a lower default rate.

Loan rehabilitation

The CSLP offers loan rehabilitation as a way for borrowers to bring their defaulted loans back into good standing. Borrowers can rehabilitate their defaulted loans by paying their outstanding interest, plus 2 regular monthly payments. The CSLP works closely with the Canada Revenue Agency to raise awareness of loan rehabilitation.

On January 1, 2020, borrowers will have a new option to rehabilitate Canada Student Loans and Canada Apprentice Loans in default. They will have the option to add their interest to the principal of their loan (capitalize the interest) and make 2 payments to rehabilitate their loan.

Loan write-off

As per standard accounting practices, the Government of Canada must write-off Canada Student Loans that have been deemed unrecoverable after all reasonable collection efforts have been made. The majority of the write-off value is comprised of loans that have not received payment or acknowledgement of debt for 6 years. Other reasons for write-off include bankruptcy, extreme financial hardship, and compromise settlements.

The value of loans written-off in 2019 was $162.2 million of the overall value of the directly financed Canada Student Loan portfolio, which was much lower than the 2018 write-off $200 million. The write-off of any debt does not mean the debt is forgiven. Should an individual wish to access student financial assistance from the CSLP in the future, this debt must be addressed. In a situation where a CSL debt is reinstated, any interest charges that accrued on the debt are also reinstated.

Program integrity

The CSLP strives to safeguard the integrity of the Program by ensuring that all aspects of the Program are operating within the legal framework of the Canada Student Financial Assistance Act and the Canada Student Loans Act.

The Program has in place a number of policies and activities designed to ensure its integrity and to enhance governance and accountability:

• administrative measures may be taken when individuals knowingly misrepresent themselves to obtain student financial assistance; including being restricted from receiving student financial assistance for a specified period, being required to immediately repay any money obtained as a result of false information and having their grants converted to repayable loans. If warranted, further action may be taken such as criminal investigation or civil litigation. In the 2018 to 2019 school year, 39 cases of misrepresentation were confirmed as abuse
• in keeping with provisions of the Canada Student Financial Assistance Act, the Office of the Chief Actuary conducts a statutory actuarial review of the Program in order to provide a long-term forecast of the portfolio and program costs. The most recent Actuarial Report (2019) (PDF format) is available on the website of the Office of the Superintendent of Financial Institutions
• the Designation Policy Framework establishes Canada-wide criteria for designation—the process whereby post-secondary educational institutions are deemed eligible for student financial assistance programs. The Framework ensures that federal and provincial and territorial student financial assistance portfolios operate within the principles and practices of reasonable financial stewardship. As a part of this framework, the CSLP calculates and tracks the repayment rates of Canada Student Loans for designated Canadian institutions. The 2019 repayment rate for borrowers who entered repayment in 2017 to 2018 was 91%, the same as the previous year and the highest it has been over the past 15 years

Support for apprentices

The Canada Apprentice Loan (CAL) provides additional financial support to apprentices in Red Seal trades during periods of technical training, to help them complete their apprenticeship, and to encourage more Canadians to consider a career in the skilled trades.

Eligible apprentices may apply for loans of up to $4,000 per period of technical training, for a maximum of 5 periods. The loans are interest-free until apprentices complete or leave their apprenticeship training program, for up to a maximum of 6 years. Given the timing of technical training requirements in their province, apprentices in Quebec do not qualify for CAL. The province of Quebec is compensated with an annual special payment.

In the 2018 to 2019 loan year, Canada Apprentice Loans amounting to $54.7 million were disbursed to 13,100 apprentices. 77% of disbursed loans went to apprentices from 3 provinces: Alberta (39%), British Columbia (24%) and Ontario (14%).

Consolidated report on the Canada Student Loans Program

Since 2000, the Government of Canada has provided student financial assistance directly to borrowers, unlike earlier CSLP lending regimes that were administered by financial institutions.

Under direct lending, the Government of Canada finances and administers the CSLP, contracting with a private-sector service provider (the National Student Loans Service Centre (NSLSC)) to manage student loan accounts from disbursement to repayment.

Reporting entity

The entity detailed in this report is the CSLP only and does not include departmental operations related to the delivery of the CSLP. Expenditure figures are primarily statutory in nature, made under the authority of the Canada Student Financial Assistance Act and the Canada Student Loans Act.

Basis of accounting

The financial figures are prepared in accordance with generally accepted accounting principles and as reflected in the Public Sector Accounting Handbook of the Canadian Institute of Chartered Accountants.