Evaluation of the Immigration Loan Program
Purpose of the Evaluation and Scope
The evaluation of the Immigration Loan Program was conducted in fulfillment of the requirements under the Treasury Board (TB) Policy on Evaluation,Footnote 1 and was also identified as a recommended action item resulting from the Evaluation of the Government Assisted Refugee and Refugee Assistance ProgramFootnote 2 conducted by Citizenship and Immigration Canada (CIC) in 2011. The data collection and analysis for this evaluation were undertaken in-house by the Research and Evaluation Branch of CIC, between November 2013 and January 2015.
The evaluation assessed the relevance, delivery and performance of the program from 2003 to 2012 using multiple lines of evidence, as follows: interviews; focus groups with loan recipients; surveys of loan recipients, service provider organizations and sponsorship agreement holders; document and literature reviews; administrative data analysis; analysis of the longitudinal immigrant database.
The evaluation, guided by a logic model, examined the program within the context of three main activities (loan issuance, repayment and program management), leading to the following intermediate outcomes.
- Loans contribute to the settlement of recipients.
- Loans are repaid in full and in a timely fashion.
- The advance from the Consolidated Revenue Fund is adequately replenished to sustain the Immigration Loan Program.
The Immigration Loan Program is intended to ensure, “that some persons, otherwise unable to pay for the costs of transportation to Canada and medical admissibility exams, have access to a funding source”.Footnote 3 The loan program is funded through an advance of $110M from the Consolidated Revenue Fund. On average, $13M in loans are issued per year, with an average loan amount of $3,090.
The vast majority of loan recipients (98%) are resettled refugees (57.5%) are Government Assisted Refugees (GARs) and 40.3% are Privately Sponsored Refugees (PSRs). Correspondingly, 93.5% of GAR cases and 87.9% of PSR cases resettled in Canada during the 2008 to 2012 timeframe received at least one loan.
Loans may be issued overseas by visa officers, to cover the costs associated with the transportation of individuals and/or their dependants from point of origin to final destination in Canada (transportation loan), and medical exams required to establish admissibility to Canada (admissibility loan).Footnote 4 Loans may also be issued in Canada by CIC designated officers to cover costs associated with initial settlement not covered through the Refugee Assistance Program (RAP) (assistance loan).
Accounting and collections for the Immigration Loan Program are guided by the TB Debt Write-off Regulations and the TB Directive on Receivables Management. A variety of guidance and support are in place, from both CIC and TB, to support the financial management (accounting and collections) of the program.
Loan repayment schedules vary depending upon the size of the loan and repayments are to start 30 days after the recipient arrives in Canada. Interest is charged on loans, after an initial interest-free period which varies from 12 months to 36 months, depending upon the size of the loan. Individuals who are deemed to be unable to repay a loan due to high settlement needs (e.g. victims of trauma and torture, single parent head of households, seniors without accompanying or established family in Canada) are provided with a contribution, funded through RAP. A total of $500,000 is set aside annually from RAP to pay for contributions. In addition, at any time, loan recipients facing difficulties in repaying their loan can contact CIC Collection Services to make alternative arrangements (e.g., deferring payments or decreasing the size of the monthly payment for a period of time). Loans that are not being repaid can be written-off under certain circumstances, through a TB Submission. On average, approximately $700,000 is written-off per year.
Findings Related to Efficiency and Economy
From a financial management perspective, the loan program functions well, evidenced by the fact that the Consolidated Revenue Fund used to finance loans is adequately replenished and the loan portfolio is structured according to regulations and TB Directives. Efficiencies within CIC Collection Services were achieved over the past several years, resulting in a decrease in the number of required full-time employees dedicated to CIC Collection Services. Program monitoring occurs through the use of CIC financial systems and program data, providing a means to monitor the day-to-day operations of the loan program; however, these systems do not support full reporting on program outcomes (e.g., to what extent loans are repaid in a timely fashion).
Findings Related to Program Performance
Program performance was assessed in relation to the outcomes regarding determining need and ability to repay, understanding of the loan, access, the role of CIC Collection Services in facilitating loan repayment, loan repayment and impact on settlement.
The loan program is structured in accordance with TB Directives. However, the procedures required to assess a potential recipient’s ability to repay a loan at the time of loan issuance are not practical in the overseas refugee processing context, given limited information and time available to conduct the assessment; and refusing a loan could prevent the resettlement of the refugee.
Additionally, there is a risk that some refugee recipients do not fully understand the terms and conditions of the loan at the time of signing (due to various factors such as language barriers, a lack of time available to explain the loan, or the individual’s ability to understand the relative value of the loan), and that they do not know the amount of the loan prior to their departure for Canada. Without this understanding and knowledge, the spirit and intent of a loan agreement comes into question.
Regarding access to the Immigration Loan Program, while several immigration classes are eligible to receive immigration loans, the program is being used primarily to pay for transportation and admissibility costs associated with the resettlement of refugees from abroad who do not have the means to pay for these costs themselves. Additionally, while assistance loans are available to meet labour market access needs, they are, in practice, used almost exclusively to pay for basic needs, more specifically, housing rental and utility deposits.
Analyses of loan repayment found that some refugee recipients are having difficulty meeting loan repayment requirements. In fact, very few loan recipients start repaying within the required 30 days of arrival, due in part to the fact that it takes up to 4 months for CIC to set up a loan account and issue the first loan statement, putting the vast majority in a situation of arrears from the outset. Furthermore, some recipients are not able to repay within the original loan term and some are not able to repay within the interest-free period. While CIC Collection Services are available to provide support to loan recipients, information on CIC Collection Services is not widely communicated, and many loan recipients are not aware of the support it can provide.
Repaying the loan was shown to have a negative impact on the settlement of some refugees. While there is a write-off mechanism in place for the program, it does not forgive the debt and cannot be pursued until all means of collection have been exhausted. Contribution funds can be provided overseas in situations where individuals are unlikely to be able to repay a loan; however, the budget allocated for contributions is not sufficient to meet the apparent demand and currently there is no mechanism in place to convert a loan to a contribution after arrival in Canada.
While having employment facilitates the ability to repay the loan, GARs and PSRs have a low incidence of employment income, and often rely on forms of financial assistance in the first year after landing. Overall, a greater percentage of GARs, recipients with larger loans and those with a lower annual household income experienced difficulty with loan repayment.
For many loan recipients, requirements to repay an immigration loan are a source of stress and create additional challenges, such as the ability to pay for basic necessities. Impacts on settlement are also felt due to the need to have employment income to facilitate repayment, which makes it difficult for some to take full advantage of settlement services, particularly language training.
Findings Related to Program Relevance
The role of the federal government in administering the Immigration Loan Program is appropriate. The program as implemented, however, is not fully aligned with Canada’s resettlement and settlement objectives, as the need to repay a loan is having a negative impact on the initial settlement of some refugees. While the program facilitates bringing refugees to Canada and helps Canada to meet its international commitments to protect them, the use of a loan may not be appropriate for all refugees who require financial support to pay the costs associated with their resettlement.
Conclusions and Recommendations
The Immigration Loan Program is governed by TB Directives that require loans be authorized and approved appropriately and on the expectation of full repayment. Evaluation findings indicate, however, that due to the overseas refugee processing context, challenges arise from the nature of the criteria established for visa officers to assess refugees’ ability to repay and the limited time and information available to properly assess them. This has resulted in the loan becoming the default option for most resettled refugees.
Recommendation #1: It is recommended that CIC fully comply with the requirements for loans programs as stated in Treasury Board (TB) Directives. In particular, given the context of overseas refugee processing, compliance with TB Directives requires policy and/or procedural changes to ensure:
- Adherence to the criteria established to assess ability to repay the loan; and
- Procedures for signing the loan agreement are clear and obtain free and informed consent from the client, including communicating the amount to be borrowed.
Acknowledging that some refugees may not qualify for a loan given the requirements under the TB Directives, it is therefore also recommended that CIC ensure policies and corresponding measures are in place to support its humanitarian policy objectives and to facilitate the resettlement of all refugees who do not qualify for a loan.
Findings on loan repayment demonstrate that some refugee recipients are having difficulty meeting repayment requirements. Furthermore, having to repay the loan is having a negative impact on the settlement of some refugees, posing difficulties in the payment of basic necessities like food, clothing and housing.
Recommendation #2: It is recommended that CIC make policy and/or procedural adjustments to its loan repayment requirements and collection practices to ensure that the loan program is aligned with CIC’s resettlement, settlement and integration policy objectives and does not adversely affect the settlement outcomes of resettled refugees. In particular, CIC should consider:
- Aligning the loan program policies with those of other refugee programming;
- Aligning the start of the repayment with the receipt of the first loan statement;
- Aligning the loan repayment schedule with the time needed to repay;
- Ensuring the use of interest and interest relief are appropriate to the financial situation of the client;
- Providing mechanisms to allow for debt forgiveness where necessary;
- Providing easy access to information on how to contact CIC Collection Services and the types of assistance available for clients.
There is a potential for the Immigration Loan Program to be more fully utilized in support of Canada’s settlement and integration objectives. For instance, while the in-Canada assistance loan is uniquely positioned to support settlement once in Canada, it is largely under-utilized in terms of both the type of assistance (i.e., limited to housing rental and utility deposits) and the recipients (i.e., almost exclusively GARs).
Recommendation #3: It is recommended that CIC explore how the Immigration Loan Program could better support the achievement of CIC’s settlement and integration policy objectives (i.e., that newcomers and citizens participate in fostering an integrated society), considering opportunities such as the expansion of the in-Canada assistance loan to improve labour market access for all newcomers, including refugees.
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