HUMA Committee Meeting

STANDING COMMITTEE ON HUMAN RESOURCES DEVELOPMENT AND THE STATUS OF PERSONS WITH DISABILITIES

COMITÉ PERMANENT DU DÉVELOPPEMENT DES RESSOURCES HUMAINES ET DE LA CONDITION DES PERSONNES HANDICAPÉES

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, April 3, 2001

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[English]

The Chair (Mr. Peter Adams (Peterborough, Lib.)): Could we begin? I apologize to our guests for the delay. I think you know that this is one of only two rooms in which committees are televised. The previous committee used up all its time, and we had to reshuffle.

I also would point out to you this format we're using, because this is a roundtable meeting, rather than our usual type of meeting. This is why we're sitting as we are.

Even though we're already a little bit late, I'd like to talk to my colleagues first. Then I'll introduce the topic of this meeting and what we're doing.

I want to say to my colleagues, first, that we don't have a quorum for votes, so we can't adopt the steering committee report. But should we get the numbers during the meeting, we will. I think we're all familiar with what's in that steering committee report anyway. That's one.

Second, with respect to that report, one study we're conducting is on Canada student loans, which we're beginning today. The other is for our second report on EI, for which we have proposed three meetings. The first of those meetings was to be on Thursday, but it's my understanding that the officials are not available to brief us on the aspects of EI that were not directly covered by C-2. As a result, I propose that the meeting be postponed until the first Tuesday back. In other words, we will not have a meeting on Thursday.

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In the steering committee report it was envisaged that we would have a certain number of meetings on each topic. I tried to fit them into different dates, but already here's an example of a date we simply can't achieve. I apologize for that.

Do members understand what I'm saying? We will not be meeting Thursday, but we would begin the EI hearings on the first Tuesday we're back.

With respect to today, there are a couple of things. The first is at the behest of Libby Davies.

Libby, you will notice your motion is not on the agenda. It has been on our agenda on numerous occasions. I know, for reasons of your priorities between EI and education, you were doing other things at that time.

Libby Davies had a motion that we should revisit Canada student loans. My colleagues and I greatly appreciate that, and, Libby, we're beginning to do it. We're not, though, in fact addressing your motion, as you can see. We can't because we don't have the numbers anyway. That is one of the reasons we're returning to Canada student loans.

We have suggested we will have three meetings on Canada student loans. This meeting, in my mind, is a reprise of the last one we had. One of the witnesses from HRDC, Thomas Townsend, is here again. I'll introduce his colleague in a moment.

The idea of this meeting is that we be brought up to speed on where Canada student loans are at the present time. I hope that will be useful for the witnesses. It will certainly be useful for the members, because we do have new members on the committee who were not members of this committee in the last Parliament. It's important for us to do that. It is an update.

There is another purpose, though, for inviting all of you. We would like some ideas or suggestions of your priorities for what we might best do in the next two meetings. These meetings will take place in April or May of this year and we will be following up on today's meeting. I hope today, and then when you've gone home after today, you will think on it and give us whatever advice you can in your questions, in your discussion, as to how best we might use those two meetings.

Two meetings don't sound like much to you. In the nature of a committee of this type, to have three meetings on one topic is a reasonable achievement, let me put it that way.

I want to point out that the Council of Ministers of Education Canada, with which you are all familiar, wished to have a representative here today. They have major meetings this week and will not be here. They may well appear before this committee on this same topic, as will others, at a later date.

The same applies to the Canadian Federation of Medical Students. They were not invited today. They have particular concerns about Canada student loans in the professional faculties. Again, I hope, either in writing or orally, they will be able to present to us.

There will be food available today, I say to my colleagues. Although we may well will finish at one o'clock, we conceivably will go to 1:30 if we need the time.

The witnesses know, and my colleagues may not, the way in which we're going to proceed. I'm going to ask the officials from HRDC to make a presentation for perhaps ten minutes, plus or minus, a reasonable presentation as to where we are and so on. When that is finished, I'm going to proceed around the table. I would like each witness to present himself or herself and say something about their interest in this topic within two minutes. I would have the members introduce themselves at the same time. I will then proceed to questions from members. I have to do this. It is the way, as you know, these committees proceed. I'm going to try, as the questioning proceeds, to pull in witnesses with questions.

Colleagues, I hope you understand what I'm doing. I will start with the official opposition and try to give the parties their fair share. I'll do my very best to get you in, if you can catch my eye. I would urge my colleagues, given the format, to ask short questions and hopefully give short responses.

By the way, I would suggest to my colleagues that the questions can be addressed to any of the witnesses here, as well as to the HRDC officials. Okay?

Libby Davies, go ahead.

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Ms. Libby Davies (Vancouver East, NDP): Before we begin, I want to make a brief point of clarity about the motion.

First of all, I appreciate very much that we're going to have three meetings on the Canada student loans program and post-secondary education. I think that's really good. It's long overdue. I'm very happy that the committee has agreed to this.

In terms of my motion, this was actually introduced almost a year ago, at the close of the session last summer. It followed up the dealings that we had on the change in the service providers for the Canada student loans program.

I realize that the witnesses don't have the motion unless they were present at that meeting, but my motion is really not taking a position; it is to review and to report back. I would be satisfied if, as a result of the discussion today and the observations that the witnesses make in terms of issues that they want to bring forward, these particular components of my motion...

Some of these components have actually now eclipsed. They are no longer relevant because of the changes that have taken place in the past year. But on, for example, the report back on impact of changes to the Bankruptcy and Insolvency Act, the report back on the percentage and causes of defaults, and so on, if I could get an assurance that this will be part of the information that comes back in our subsequent meetings, I would be happy to consider that this motion is part of the work we undertake. That was really my intent in the first place.

The Chair: By the way, Libby, it's in good faith that I'm operating the way I am. I could have argued that the motion had lapsed, because we did bring it forward a number of times—and I understood why you couldn't deal with it. Also, it did involve past incarnations of the committee. But I think it is true that the committee's intention is to follow through on your motion, even though I could have ruled that it had lapsed—and I know you would have brought it forward again.

Ms. Libby Davies: The committee was dealing with the EI business, though.

The Chair: I understand. We are going to follow through Libby Davis' motion as well as we can.

I want to introduce our witnesses from HRDC, but in doing so I want to point out on behalf of my colleagues that this committee has not received a reply yet in follow-up to our meetings in the last Parliament, nor to the letter I sent on behalf of the committee, with the knowledge of the committee, last week asking for that reply to our last meeting, which was in June of last year.

I don't know exactly where the responsibility for these matters lies in HRDC, but it's something that I have said before. I know officials get very busy, and I know HRDC is a large department and has a lot of things to do, but our standing committee, with its limited resources, is doing its very best. You've just heard our little discussion about Libby's time and our time on EI. We're doing our very best to have some sort of oversight over HRDC, and I think the very least we can have would be a pro forma response of some sort, even if the department cannot generate a genuine response.

I'd be most grateful if you would convey that to whomever it should be conveyed to.

Colleagues, I will introduce our witnesses from HRDC: Thomas Townsend, director general, learning and literacy secretariat; and Margaret Biggs, assistant deputy minister, nationally delivered programs branch.

We welcome you both. Please proceed.

Ms. Margaret Biggs (Assistant Deputy Minister, Nationally Delivered Programs Branch, Department of Human Resources Development Canada): Thank you very much, and good morning.

I'd like to thank the committee for the opportunity to provide an update on the implementation of the direct financing regime for the Canada student loans program. Since the department's last appearance, which was, as the chair indicated, last June, a number of activities have been undertaken that have ensured the uninterrupted delivery of the program. Our focus throughout has been on trying to guarantee a seamless transition for our student borrowers.

Today, in addition to providing an update of reprise on the transition to the direct financing regime, we'd like to touch briefly on some of our long-term goals for this program, and in particular, how we're hoping to enhance service to students and improve the stewardship of the program and the loan portfolio.

In March of last year, when the risk-shared arrangements with financial institutions expired, the Government of Canada decided, as you know, to finance the Canada student loans program directly.

[Translation]

This decision was only made after a prolonged series of negotiations, in which too few financial institutions were willing to continue their participation in this important social program.

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[English]

Given that previous arrangements with financial institutions expired July 31, the government took the necessary steps to ensure that students with financial need had the necessary resources to pursue their post-secondary education. So as we indicated in our last appearance, the implementation of the direct financing regime was divided into two phases: the first was a bridging phase, which commenced in August and went through until February 2001; and then a longer-term transition phase, which included the selection and establishment of service providers.

We're pleased to report to the committee, which has shown a great interest in this program, that in collaboration with our provincial and territorial partners in the governments, financial institutions, and our key stakeholders, there were no major disruptions in the delivery of the program during the transition to this new direct financing regime.

I'm going to ask my colleague Thomas Townsend, who is currently the director general for the Canada student loans program, to walk you through the steps we put in place since we last were here, which were necessary to implement the new regime, as well as to outline the steps we've taken to improve service to our students and stewardship of the program.

Thomas.

Mr. Thomas Townsend (Director General, Learning and Literacy Secretariat, Department of Human Resources Development Canada): Thank you.

Beginning with the 2000 Budget Implementation Act, all the necessary legislative and regulatory amendments to provide for directly financed student loans were successfully made. Human Resources Development Canada secured interim arrangements with participating financial institutions to disperse student loans for a seven-month period beginning August 1, 2000, and ending February 28, 2001. These arrangements provided us with sufficient time to enter a competitive tendering process for a third-party service provider. A request for proposal for a service provider was issued September 14, and closed October 16, 2000.

In developing the request for proposal, the Government of Canada decided to split the portfolio between public and private institutions to allow each service provider to customize and tailor their specific services to meet the needs and requirements of borrower segments.

[Translation]

Our expectation is that this division will have a significant impact on service to students and the overall performance of the portfolio.

[English]

Within the RFP, we also included a mandatory requirement for the public service provider—this is for the public institutions—to enter into a strategic alliance with an aboriginal organization to carry out a real and representative amount of work. Our hope here is that this alliance will help sensitize and inform service providers about the unique challenges facing aboriginal student borrowers.

EDULINX was awarded the contract for administering and managing loans for student borrowers attending public institutions, while BDP Business Data Service became responsible for the loans of student borrowers attending private educational institutions. Both service providers are here with us today.

[Translation]

The two service providers have been fully operational since March 1, 2001 and operate under the name of National Student Loans Service Centre - Public or Private Divisions.

[English]

I want to emphasize that while the service providers are responsible for the administration and management of loans, the Government of Canada is accountable for all aspects of the program.

Concerning communication with students, in order to communicate the changes to the program and their impacts on student borrowers, we developed a comprehensive communication strategy in consultation with provinces and our stakeholders. The objectives of this strategy were to ensure that students understand what changes would meet them and how they would affect them.

[Translation]

In order to prepare for the final transition to Service Providers on March 1, the Government of Canada used information leaflets and a poster campaign during the months of February and March to inform student borrowers as to how they could obtain their money under the new arrangements with Service Providers.

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[English]

Since August 1, 2000, over 89,000 individuals have called through the Government of Canada's 1-800-O-CANADA phone lines to obtain information on the new loan program, and approximately 170,000 individuals have been visiting the Canada student loans portions of the CanLearn website. We believe that these results indicate that our communications strategy has reached its objective of keeping students apprised of changes in the program.

[Translation]

The seven-month interim arrangements expired at the end of February. As I mentioned earlier, the two Service Providers became fully operational on March 1, 2001, assuming full responsibility for the management and administration of the direct loan portfolio.

[English]

Since March 1 the service providers have transitioned 290,000 student loans that were issued on our behalf by the banks during the transition period and have issued 350,000 pieces of correspondence to student borrowers informing them of the new Government of Canada direct financing regime.

In the month of March the service providers have processed over 15,000 loans at a combined value of $30 million. They have answered 62,000 phone calls during the month of March and consistently met the very rigorous standards that we have prescribed. The average wait time for the service providers is less than 30 seconds.

There have been difficulties, as there inevitably will be with a transition of this magnitude. We have worked with the staff of the service providers to rectify these issues as quickly as possible. I would like to point out a couple to the committee. One example is that there were some borrowers who experienced a delay in getting their cheques early in the month of March.

As a measure of the way we will be managing the program going forward, each and every one of those students was contacted directly. Although students were not happy that they had not received the money, or there was going to be a delay, they were pleased that we were taking the time, care, and attention to call them.

There have been some issues involving Canada Post locations, which we are handling on a case-by-case basis.

Educational institutions that require better information on student tuition payments have requested changes in the report they receive. With respect to this, the necessary changes to the electronic transmission and the report are being taken care of and educational institutions will start to receive the new report shortly.

It's important to point out that we chose March 1 as the transition moment because the months of March and April are those months where the lowest number of student loans are actually disbursed. This was to give us time to correct any deficiencies that we observed in the program and to ensure complete readiness for the September period.

Going forward, while we will continue to do an enormous amount of work on the administration of the program, I would like to focus on two principal objectives of the direct loans and those that have been of interest to this committee: improving services to student borrowers and improving the stewardship of the Canada student loans portfolio.

As previously recognized by the standing committee, the Government of Canada has an opportunity to enhance services to student borrowers under direct financing.

[Translation]

One of the primary criticisms by student borrowers over the years has been limited service. In some instances, students have argued that they were treated as second-class citizens by financial institutions. Through our contract with Service Providers, our goal is to significantly improve the borrower's experience with Canada Student Loans.

[English]

We have structured our contracts with service providers to have incentives that incurred better management of the student loans portfolio. There are provisions and performance incentives for maximizing the number of active consolidations. Frequently, students' loans would go into repayment with no direct contact with the student borrower. The service providers have incentives that will encourage them to do this.

There are also incentives for loans that would be rehabilitated. These are loans where a payment or two payments would be missed, and they are to ensure that in fact the service providers are working to keep the loans in good standing. There are also incentives for the service providers to minimize the number of defaults. The emphasis, again, is on keeping the loans in good standing, providing service to student borrowers.

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[Translation]

Poor communications were often cited as an example of where service to students could be improved. In drafting the contracts, we listened to our stakeholders and the student community at large. The contract includes a comprehensive and continuous communications plan with student borrowers.

[English]

This strategy of continuous contact with students has worked very effectively in both the United Kingdom and the United States, contributing to better repayment practices, and better overall appreciation of the program by the student borrowers.

In addition, the Government of Canada has extended the period of time service providers will have to get a loan back into good standing from 90 days to 270 days. During the 270-day period service providers would be expected to communicate with borrowers, encourage them to participate in any number of the government programs of debt management, and to work with borrowers to re-establish the loan in regular payment status.

One of the things most often asked of us by the borrowers is to improve our Internet capacity.

[Translation]

Today, the majority of student borrowers insist on Internet-based services. The Canada Student Loans Program is committed to leading the implementation of Government On-Line initiatives to ensure student borrowers receive services through this channel.

[English]

We have as well developed the site CanLearn Interactive, which is designed to help student borrowers plan for their education, identify their financial requirements, and in fact seek out the resources they will need. Just recently the one-millionth person used the CanLearn site to conduct their budgeting and to identify finances for study. This milestone was reached in a little less than 12 months. It has made CanLearn not only the favourite learning site in Canada, but also a successful collaboration of the Government of Canada, provinces, the private sector, and many of the organizations that are present here.

We'll continue to work and remain committed to the idea of one student, one loan. There are clauses in the service provider contract that allow for provinces willing to harmonize their program with the Canada student loans program to use our service providers. As a result, the Province of Saskatchewan has indicated its intention to enter into negotiations in agreement with the Government of Canada to integrate the delivery of the Canada student loans program with theirs.

[Translation]

We are also pursuing discussions with a number of other provinces on the integration of the federal and provincial loans programs.

[English]

In addition to enhancing service to student borrowers, the other issue I would like to take a few moments to address is the stewardship of the program.

[Translation]

Now that the Canada Student Loans Program is directly financed by the Government of Canada, we are liable for the entire balance of the loans issued. This is a responsibility that we take very seriously. On behalf of citizens and taxpayers, we have a responsibility and duty to protect the integrity and performance of the portfolio.

[English]

We are integrating modern controllership principles in our daily operations, which entail such activities as ongoing compliance audits, program effectiveness review, and in partnership with the provinces and territories and the service providers, to manage loan default rates.

As a first step the department has tabled the consolidated statement of student loans as part of its report on planning and priorities. This document pulls together information that is contained in many documents submitted by both HRDC and the Department of Finance into a single location so that the totality of the view on the Canada student loans program can be seen. An actuarial review will take place each year for the next five years, which will provide accurate information on the size and the growth of the portfolio, as well as the program cost forecasting.

[Translation]

In concluding our remarks today, I would like to thank members of the Standing Committee for the opportunity to provide a further update on the implementation of direct financing.

[English]

We are proud of what we have accomplished to date. In the span of 12 months we have completely redesigned a program that is of very great importance to Canadians and to student borrowers. We have managed to do so without any disruption in the service. We look forward to the challenges ahead of us.

Thank you very much, and we would be pleased to answer questions.

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The Chair: Margaret and Thomas, thank you very much for that. It's very useful, and we greatly appreciate having the written version.

Would one of my colleagues move that we accept the second report of the subcommittee on agenda and procedure? That's the report that deals with future business.

Ms. Val Meredith: I so move.

(Motion agreed to)

The Chair: Now, would someone move that I be authorized to release the summary of evidence on Bill C-2 prepared by the Library of Parliament to department officials, to help them prepare for future meetings with us?

Ms. Anita Neville: I so move.

(Motion agreed to)

The Chair: Could we begin with Bob Best? I say this to members of Parliament more than our witnesses: keep it very short. The idea is to find out who you are, and what aspect of the issue you're interested in.

[Translation]

Mr. Robert Best (Director, Government Relations and Public Affairs, Association of Universities and Colleges of Canada): Thank you, Mr. Chairman.

Allow me to introduce myself. My name is Bob Best, and I am Director of Government Relations and Public Affairs for the Association of Universities and Colleges of Canada.

I would like to begin by thanking the Committee for its ongoing interest in the issue of student financial assistance and for the invitation to be with you today.

My opening comments will be brief. I have already given the Clerk a two-page document that provides a detailed explanation with respect to each of the points I will be raising with you.

I would like to briefly touch on six points.

First of all, I want to publicly acknowledge the efforts of Human Resources Development Canada throughout the transition to the direct loan system. The Department has always been good at consulting its partners.

We share with the Department the goals of improved service to students and greater transparency within the CSLP throughout the transition to the direct loans regime.

We are certainly prepared to cooperate with the Department to attain those goals.

[English]

Second, there has been some progress—

The Chair: Bob, it will have to be very quick. We're up to a minute and 30 seconds.

Mr. Robert Best: That's funny—I practised it, and it was actually shorter than that. Excuse me, Mr. Chairman.

There has been some progress on a recommendation we made in June to increase to 270 days the 90-day period beyond which a delinquent loan is deemed to be in default. I would welcome confirmation that the longer period of 270 days is in fact in the contract with service providers, and will be used in calculating default rates.

Thirdly, last September's request for proposals divides the service, as Mr. Townsend indicated, into separate components for public and private education institutions. We agree with the intent here, but suggest that those definitions lack precision and clarity. We think a more meaningful distinction is actually between not-for-profit educational institutions on the one hand, and commercial for-profit institutions on the other.

We learned in December that full implementation of the debt reduction repayment measure, which has been delayed since it was announced in the 1998 budget, will be in effect in the fall of 2001. We certainly support that.

Two last points, very quickly. An issue that has consistently been raised by us, by this committee and by other stakeholders, is the matter of the $600 threshold on scholarship, bursary, and employment income in the current needs assessment. Apparently it remains an impasse between the departments involved.

Finally, we are very interested in harmonization. Mr. Townsend referred to it; and I hope we can learn something more today about the government's intentions with regard to harmonization.

Thank you.

The Chair: Thank you very much. Had you been an MP, I would have cut you off.

I say this with no disrespect to anybody, but if we're going to get into some discussion, the committee is always pleased to receive written material. We will incorporate it into the work we're doing.

Terry-Anne Boyles.

Ms. Terry-Anne Boyles (Vice-President, Members Services and Public Policy, Association of Canadian Community Colleges): Thank you very much, Mr. Chairman.

The Association of Canadian Community Colleges represents 175 colleges, technical institutes, and CEGEPS in Canada.

Student financial assistance and debt alleviation is very much a priority for us. We want to stress that our interest is both in the short term and in the long term. We understand that today focuses on the current Canada student loan program, and we wish to compliment the department on its consultative processes with us—and also on its attention to alleviating the communication glitches experienced during the transition phase.

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Our ongoing concerns include the $600 cap on income. We recommend it be increased to $3,000. We also share a concern about the timeframe after which loans are considered to be in default. We would like it to be changed to 270 days. We are also concerned about the part-time learners and the student bodies that are forced into part-time learning because of costs. We would like a review of the part-time learning grant programs to take place.

In closing, I wish to emphasize the need for politicians and the department to turn to the longer-term policy issue. It's time to look at a new financial support system for Canada to alleviate the complexity and multiplicity of programs. Up to 80 programs are administered in our institutions.

On access and affordability, skills and learning are key words, but they're being undermined in the current context, and we'd like to draw your attention to that. We have a task force on student debt, which will issue its report at the end of May. I have provided to the staff copies of our backgrounder on student debt, and we believe that can form some of the lead-in discussion for future meetings.

Thank you.

The Chair: Terry, thank you very much. We're very pleased the colleges are here, and we do appreciate that additional material.

Lawrence Zimmering.

[Translation]

Mr. Lawrence Zimmering (President and CEO, BDP Business Data Services): Mr. Chairman, my name is Lawrence Zimmering. I am going to do my best to stay within the allotted time.

I am President and CEO of BDP Business Data Services. We are a Canadian corporation with more than one thousand employees here in Canada.

[English]

We're privileged to have been awarded the Canada student loan service provider contract to administer and service approximately 2,850 private educational institutions both in Canada and internationally. Students in these schools number in excess of 60,000. We are one of the two service providers.

Thank you.

The Chair: Thank you very much, Lawrence. We appreciate that.

Tony Norrad.

Mr. Tony Norrad (Member-at-Large, Universities, Canadian Association of Student Financial Aid Administrators): Good morning and thank you, Mr. Chairman.

My name is Tony Norrad. I'm the member-at-large, universities, for the Canadian Association of Student Financial Aid Administrators. We certainly welcome this opportunity to appear before the standing committee today.

In my presentation I'll primarily focus on the transition to the new direct Canada student loan program, and I will quickly highlight two additional issues that were raised during our last appearance before this committee in June 2000.

Though the transition has not been without its challenges, we certainly appreciate the level of communication that has existed between Human Resources Development Canada and the service providers in the secondary institutions.

The Chair: I'm sorry—

Mr. Tony Norrad: You want me to slow down.

The Chair: I'm getting conflicting advice. The translators are saying that people are speaking a little too quickly. But don't be too paranoid. I picked Bob Best first because I thought he would be best. There are two things in play here. Please continue.

Mr. Tony Norrad: My apology.

The Chair: No. The message came before you started.

Mr. Tony Norrad: We have been generally pleased with the cooperation of HRDC in bringing forward timely resolutions to our concerns and issues that have been identified on the front lines. We continue, however, to be deeply concerned about the potential confusion and problems that may arise for student borrowers, especially those with risk-shared loans, as we move through this transitional period. It is important that HRDC and the service providers continue with a communication strategy that effectively informs student borrowers of their responsibility not only for their new direct loans but also for their earlier non-direct loans.

One of our greatest areas of concern is the potential for an increase in the number of technical defaults by student borrowers. With the recent changes to both the federal and provincial student financial assistance programs, it will not be uncommon to find a student with six separate loans dealing with four different contacts. We strongly encourage HRDC to allow for flexibility in the Canada student loan program, particularly during this transitional period, to ensure that students do not prematurely enter into repayment and ultimately into a default situation.

Given the complexity of multiple loans, CASFAA recommends that HRDC, in cooperation with the provincial governments, look at creating a national clearing house in order to reduce the potential for problems.

CASFAA would like at this time to affirm our position in favouring a simplified, harmonized student financial assistance program that will facilitate student access. As others have already stated today, we are particularly encouraged to learn that HRDC and the provinces are currently discussing the integration of their provincial and federal loan programs, which we believe can only serve to strengthen the existing student assistance programs in Canada.

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My two final points were addressed in our June meeting and I won't go into detail today, but I do want to state on behalf of CASFAA that we do believe that a comprehensive review is necessary for the current student financial assistance programs for part-time learners. And finally, CASFAA recommends that a federal work study program be established as an integral part of the student financial assistance program in Canada.

Thank you, Mr. Chairman.

The Chair: Thanks, Tony. We're very pleased that you and your colleagues are represented here today.

Tom Mellish.

Mr. Tom Mellish (President and Chief Executive Officer, EDULINX Canada Corporation): Thank you, Mr. Chairman.

We at EDULINX Canada Corporation are absolutely thrilled to have been awarded the contract to support the Canada student loans program, public institution segment. With our operations based in Mississauga and our regional representatives across the country, we employ more than 600 student loan specialists, and currently administer a portfolio of just over one million student loans.

Through the combined experience of our shareholders, EDULINX has over 75 years of experience in servicing student loans both in Canada and in the United States. We are well advanced in terms of putting the initiatives in place to support this particular program. We have established a strategic alliance as was required in the statement of work with Tribal Wi-Chi-Way-Win Capital Corporation out of Winnipeg, and we'll be bringing them on line later this year, around July.

We're well advanced in terms of plans for the Internet. As of March 1, we had the Internet site up and running, dispensing information around the program. In two subsequent segments later this year, we will introduce the ability to get loan information and payment information, and then ultimately move to a fully interactive environment in which students will be able to engage actively in the management of their student loan in an on-line environment.

In terms of working our way through this, we have been very pleased with the collaborative process that HRDC has followed up to this stage. We think that has been a big part of why the transition has been as smooth as it is. Our commitment is to treat students with the respect that valued customers deserve.

Through these comments I hope I've conveyed to the committee a sense of the philosophies we at EDULINX believe are central to the effective delivery of the Canada student loans program.

In closing, I would like to express our great pleasure and enthusiasm in being part of one of the government's key education initiatives.

Thank you, Mr. Chairman and members of the committee.

The Chair: Thank you very much. I note from your introduction and for my colleagues that our agenda should read EDULINX Canada Corporation.

Brad Wuetherick.

Mr. Brad Wuetherick (Chair, Canadian Graduate Council): Thank you, Mr. Chairman.

First, I want to apologize to the translators that I've taken a bunch of things out of my speaking notes to try to shrink it.

I would like to thank the committee for including the Canadian Graduate Council in this discussion once again, and we would like to applaud the committee's decision to continue discussions about the Canada student loans program.

I have to admit that Human Resources Development Canada, and in particular Thomas Townsend and his staff, have been very cooperative and forthcoming throughout this process. As well, the National Advisory Group for Student Financial Aid has had the opportunity to discuss the changes in depth and visit with the service providers in person, which has been very useful. It is important to emphasize that the move to a government-controlled Canada student loans program must be applauded, and in principle is supported by the Canadian Graduate Council, although there are still some serious concerns that have to be addressed.

The first concern has to do directly with the apparent lack of communication that occurred between HRDC and post-secondary institutions about the changes. There was a great deal of confusion reported on many of the campuses I've contacted, a lot of it actually having to do with Canada Post. Although we were assured throughout the transition period that there was a comprehensive communication strategy, there were definite problems between students, institutions, and Canada Post.

For example, I received the revised information sheet, entitled “How to Get Your Canada Student Loan Funds”, only a few days before the March 1 changeover, which was a definite problem in getting the information out to the schools I represent. I think we must continue to improve our communications strategy over the next little while leading into the September 1 rush for student loans.

There are still a couple of outstanding policy issues that need to be addressed within the Canada student loans program. Defaults have been raised already; it does need to be moved to 270 days at a minimum, if not more.

Interest rates on Canada student loans must be reviewed. Right now, they're at least prime plus 2.5%. Those must be moved down to at least prime plus 1%, if not to prime.

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The needs assessment for the Canada student loans program, particularly for graduate students, needs to be re-addressed. The needs assessment does not allow for a realistic cost of living, particularly in the allowable income and the total amount for living allowance.

Current bankruptcy legislation unfairly criminalizes students and must be reviewed.

Harmonization must be a priority for the federal government and provincial governments leading into this next stage.

The third point I want to bring up is that in the new system of Canada student loans it must be essential that service providers remain accountable and transparent, and act as service providers so that they're not driving public policy.

Last, I want to bring up the fact that there is a definite need for this committee to investigate and implement a system of bursaries and grants for high-needs users for the Canada student loans program. I also must repeat something I have said before: that the Canada Millennium Scholarship Endowment Fund unfairly excludes graduate students from accessing a much-needed and a much-appreciated government funding program and that a parallel program for graduate students should be investigated.

I look forward to discussing all of these issues and other issues raised by our round tables. And I thank the committee for taking the initiative to discuss these issues with all of the stakeholders in the program. Thanks.

The Chair: Thank you very much. We will use your full text. And as I mentioned in the beginning—I realize it's a bit peripheral to you, but just so you know—various associations of students in professional faculties have contacted the committee.

Mark Kissel.

Mr. Mark Kissel (National Director, Canadian Alliance of Student Associations): Mr. Chair and ladies and gentlemen, my name is Mark Kissel and I'm the national director of the Canadian Alliance of Student Associations. CASA currently represents to the federal government 230,000 post-secondary-education students at 22 colleges and universities from all across Canada.

I'd like to begin by saying that in our opinion the service provided by the banks to the students was poor at best and that CASA is pleased, in principle, that the government has once again taken greater control of student loans.

It is difficult for CASA to accurately assess how effective the transition has been so far with the new service providers. The vast majority of students who we represent have not had to apply for a student loan since these new providers took hold, so to say that we have not heard many complaints from our member schools is not surprising.

The primary concern that CASA has with the transition process is we want to ensure that all of the new and pertinent information with regard to the transition reaches the students who will be applying for and receiving money from the Canada student loans program. CASA would like to see increased communication with students prior to the September rush, ideally prior to students leaving school for the summer, so that the total transition is as smooth as possible for everyone.

CASA is greatly concerned about the number of loans that many students will have to carry. Many students will have both a bank and government-issued student loan. While this may not be an issue now, CASA is concerned about the future and what it might hold for these students.

In conclusion, CASA sees this entire transition as an opportunity not only to provide students with services that are more responsive to their needs, but also as an opportunity to make other necessary changes to the program. It is rapidly becoming apparent that the solutions the program developed for students in the last century are becoming arcane in this one. The Canada student loans program needs better programs for debt remission, more accurate needs assessment criteria, lower interest rates, and a model of thinking that moves beyond just loans.

Thank you once again for this opportunity to address you. I look forward to today's discussion.

The Chair: Thank you, Mark. Do you realize I'm wearing your pin? I would apologize to CFS for that. It's pure coincidence.

Tom Lumsden.

Mr. J.T.S. (Tom) Lumsden (National Manager, Education Financing, Personal & Commercial Banking, Royal Bank Financial Group; Financial Arrangements Working Group): Good morning.

My name is Tom Lumsden and I'm the national manager for education financing for the Royal Bank of Canada. My role here today is to represent the financial institutions that participated in the former risk-shared Canada student loans program, including our support for the transition period of August 1 to March 1, 2001 and ongoing management of the runoff portfolios.

First, I'd like to compliment HRDC on the smooth transition of the fall 2000 disbursements into the new direct lending program. While not without some bumps in the road, based on the feedback received at our processing centres, there were no major disruptions in service with minimum impact to students. This required a significant amount of work on the part of all stakeholders and it was accomplished in a relatively short period of time.

Moving forward, our focus in this process is on what HRDC will be utilizing this fall to fulfil disbursement requirements under the new direct lending program. Our specific area of interest is the confirmation of enrolment procedures for students who are returning to school to ensure smooth transition into the new program, minimizing confusion for borrowers while ensuring FIs managing runoff portfolios obtain the necessary documentation to update our records. In addition, we need to review requirements procedures for the management of the runoff portfolios such as interest relief and repayment under multiple programs.

• 1200

Phase two of the communication strategy needs to address the process and procedures required for the disbursements in the fall of 2001 under the direct loan program and ongoing managing of the portfolios. The FIs have already started to work with officials from HRDC on the strategy. The next step, we believe, is to have a full stakeholder meeting, including the new service providers, to identify all areas of concern.

There's no question, we'll be working under severe time constraints as the strategy is developed. However, we believe all stakeholders are committed to reaching a consensus on the strategy and its implementation.

Thank you.

The Chair: Tom, thank you very much for being here again. I do recall that at our last meeting, towards the end, you gave us a very useful piece of information. We're glad to see you again.

Paul Kitchin.

Mr. Paul Kitchin (Executive Director, National Association of Career Colleges): Thank you, Mr. Chair.

My name is Paul Kitchin. I'm executive director for the National Association of Career Colleges, representing the private post-secondary institutions in the country, and indirectly the students who attend those institutions, as they do not have their own formal organization. It's a privilege for me to be here and participate in the roundtable discussions.

As many of our member institutions offer programs with start dates that are all around the calendar, the month of March has been extremely critical for our sector, as the rollout of the new program has taken place. I, along with our association, have been pleased to be able to work very closely with BDP, the service provider for our sector.

I must say we're very pleased with the kind of service we've received through that organization, and the quick response time we've had. Many times we've raised an issue that has come up in the early weeks of March, and within 24 hours we get a call back and most times with a solution to it. So we're quite pleased. We're quite enthusiastic about the move to direct financing and the service provider model. We think it's going to go a long way towards increasing better service to students, to better managing debt and hopefully reducing the incidence of defaults.

I would like to echo the comments of some of the other witnesses about the definition of default. That needs to be extended to at least 270 days. I think that's a very important issue.

During the rollout we have run into a couple of problems dealing with the post offices, where in some cases they appeared not to understand that they were part of the program. Again, within a very short period of time after raising that issue with BDP, there were solutions to the situation.

Some of our institutions are located in fairly remote areas. I had an example raised with me just two days ago in Springdale, Newfoundland, which is about halfway between Corner Brook and Grand Falls. There's an institution there with a hundred students, but the nearest post office is an hour and a half drive away. BDP is trying to work with us to find a solution to that. Those are some of the things we're finding in the early rollout of the program.

I would like to conclude by saying, though, that I think this is a very positive step. We need to continue the efforts to harmonize the loan products with the provinces. We need to continue to have excellent communications with the students. We need to continue to understand that all stakeholders around this table have a role to play in providing good service to students.

I would like to thank you, Mr. Chair.

The Chair: The college you mentioned, is it the one that does the oil rig training?

Mr. Paul Kitchin: No. They're based out of St. John's, Newfoundland.

The Chair: Thank you.

Jim Turk.

Dr. James L. Turk (Executive Director, Canadian Association of University Teachers): My name is Jim Turk. I'm the executive director for the Canadian Association of University Teachers, which represents 30,000 faculty at more than 60 universities across the country. On behalf of them, I'd like to make five points in my two minutes.

First, I want to congratulate HRDC on the smooth transition and the enormous work that's gone into it. And while we realize the big bulk is yet to come, we're hopeful that this sets a precedent for how the larger numbers will happen in the future.

Secondly, I want to express concern that the committee monitor carefully the role service providers are allowed to play so that they cannot assume the power the banks formerly had to influence public policy. We're concerned, for example, about the aggressive campaign by EDULINX's partner in the United States to get rid of the direct student loan program.

Third, in terms of changes, we too feel that the definition of default should be extended at least to 270 days, if not 365.

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Fourth, we still find it appalling that I can get a loan, lose $50,000 at the Hull casino, and declare bankruptcy, but if I get a loan and spend the $50,000 on a university education and cannot meet the debt, I cannot declare bankruptcy. We think that is appalling and needs to be rescinded.

Finally, we'd like to draw to the committee's attention that there is a larger issue to which the Canada student loans program is an inadequate remedy; that is, the significant increase in tuition fees, which is having a growing impact on accessibility to our post-secondary educational institutions.

In 1986 the participation rate of lower socio-economic status families and of students from middle socio-economic status families was about the same. By 1994 the gap had grown to a significant proportion, and that was before the most significant tuition increases had been introduced. We don't have more recent data than that.

In the household survey done by Statistics Canada is another indicator. The poorest 20% of Canadian families spent 11% of their disposable income on post-secondary educational tuition fees in 1992. That went from 11% to 19% in 1998. This is having a serious impact on the ability of your constituents' children to attend post-secondary education. It has to be remedied. We don't think it can be remedied unless and until the federal government plays a more significant role in providing core funding to the institutions. In the absence of that, the institutions' only option is to increase tuition, and the cost is borne by the children of this country.

Thank you.

The Chair: Jim, thank you very much for that.

As this will be going out nationwide, you do represent college faculty in B.C. as well as university faculty.

Dr. James Turk: That's correct.

The Chair: That's right. Thank you.

Michael.

Mr. Michael Conlon (National Chairperson, Canadian Federation of Students): Thank you.

My name is Michael Conlon. I'm the national chairperson of the Canadian Federation of Students. The Canadian Federation of Students represents 60 colleges and universities across Canada, from St. John's to Victoria, and over 400,000 students.

This morning I'd like to first of all thank the committee for the invitation to appear, and reiterate the Canadian Federation of Students' approval of the transfer of the responsibility for both jurisdiction and logistics of the program back to the federal government, and out of the hands of Canada's banks.

From the standpoint of the Canadian Federation of Students, this presents us with a dual opportunity and dual challenges. The first set of opportunities and challenges are logistical, and the second set are policy-related.

On the logistical side, I'd like to echo the comments already stated. I suspect that will be a phrase you'll hear a few times in my remarks here, given that I'm going last. The communications between stakeholders and HRDC have improved greatly since the collapse of the risk-sharing agreements, and I'd like to take this opportunity to congratulate HRDC on that.

However, our organization also remains concerned about several very important upcoming dates. The first one is September. I think September will be the true test of where the program is at, and will give us a much better opportunity to assess where we're at as a group.

The second date—it's more nefarious but I think will actually be more important—is the consolidation date of many of these new loans. As has already been pointed out, there's a possibility that students will be consolidating a loan in six different environments, which creates logistical nightmares of its own. I think time will tell whether or not the logistical tools are in place to ensure a smooth transition.

In terms of the policy issues, I would like to outline a few. Most of them have already been mentioned, but I would like to amplify at the very least. The first is that in the national advisory group and student financial assistance, there's a general consensus that the $600 in-study allowance is both unrealistic and unhelpful, given that tuition fees now average out at about $4,000. Over 80% of our membership work, and over 50% of that membership work more than 20 hours a week.

The second issue, which has already been mentioned, is part-time loans. I think the government needs to re-examine part-time loans, given its commitment in the recent throne speech to lifelong learning. I'd be happy to enter into more discussion about that. The definition of default has already been mentioned.

I'd like to close with two remarks that I think go straight to the heart of the mandate of this program and go beyond purely logistical or service concerns, as they're sometimes called. I do not want to minimize those concerns, but two policy concerns remain of issue to us.

The first concern is the bankruptcy legislation. We have, from the moment this law was introduced, condemned it as a reprehensible law. To our mind, it remains a black mark on the record of this government. We have consistently asked for data from both HRDC and Industry Canada, where the legislative authority for the law is lodged, for justification for this law's introduction. We have provided both hard data and anecdotal evidence about the devastating social effects this law has had. This law has done absolutely no social good, and has created a cultural change in the Canada student loans program, and changed the way many of our members look at the law.

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I would urge this committee to delve much deeper than it has into this law, into the justification for this law, and its eventual revision.

The next issue, which has already been referred to as a much more macro issue, is the alarming level of student debt. Student debt still remains alarmingly high. We were disturbed, as I hope most people on the committee were disturbed, by a recent quarterly report by Statistics Canada that finally put some hard data to much of the anecdotal evidence that you've heard. Participation rates among those with family incomes of less than $50,000 began to stagnate in the early 1990s as tuition fees increased, and have now in fact begun to decline. From our standpoint, that is the real challenge and threat to the original mandate of the Canada student loans program, which was to provide opportunity to Canadians who didn't have the up-front means to afford the cost of post-secondary education.

I would like to see this committee evaluate the program both in that area as well as in the logistical area that it has shown a desire to do.

Thank you.

The Chair: Thank you very much.

Colleagues, I would ask the MPs to give our names and our ridings so that we complete this process. Keep it very short.

Greg Thompson.

Mr. Greg Thompson (New Brunswick Southwest, PC): Thank you, Mr. Chairman.

Greg Thompson, member of Parliament from New Brunswick, former educator myself.

I was intrigued by your testimony. I have to leave to go to another meeting, but I did want to hear the testimony as provided.

Thank you, Chairman, for the opportunity to be here this morning to share this information.

[Translation]

Mr. Robert Lanctôt (Châteauguay, BQ): Thank you, Mr. Chairman.

My name is Robert Lanctôt et I am the Bloc Québécois critic for amateur sport and youth.

I want to thank you all for your opening comments. They were certainly enlightening. I will obviously have a number of questions for you later on, but I must say I'm surprised to see that this panel does not include representatives of organizations such as the Association nationale des étudiants et étudiantes du Québec. I will have some questions and comments a little later.

Thank you.

The Chair: Thank you, Mr. Lanctôt.

Ms. Davies.

[English]

Ms. Libby Davies (Vancouver East, NDP): Libby Davies, Vancouver East, and spokesperson for the NDP on youth and post-secondary education, among other things.

Thank you for your presentations. They were excellent.

Ms. Val Meredith (South Surrey—White Rock—Langley, CA): Val Meredith, Canadian Alliance critic for human resources and new to this field of study.

Thank you very much for your presentations, which make it much clearer in my own mind what the issue around student loans is.

[Translation]

The Chair: I am the federal Member for the riding of Peterborough.

[English]

I'm also chair of the government caucus on post-secondary education and research.

[Translation]

Raymonde Folco.

Ms. Raymonde Folco (Laval West, Lib.): My name is Raymonde Folco. I am the Member for Laval West and Parliamentary Secretary for the Minister of Human Resources Development.

The Chair: Jeannot Castonguay.

Mr. Jeannot Castonguay (Madawaska—Restigouche, Lib.): My name is Jeannot Castonguay and I am a Member from New Brunswick. I worked as a surgeon for my entire life. I am new here, but I have had and continue to enjoy the privilege of serving on the Board of Governors of the University of Moncton. I hope to be able to help the youth of this country achieve better access to postsecondary education.

[English]

The Chair: Anita Neville.

Ms. Anita Neville (Winnipeg South Centre, Lib.): I'm Anita Neville. I'm the member of Parliament for Winnipeg South Centre.

While I am new to this process, I have a professional background in post-secondary education and adult education. I'm familiar with some of your issues, and I'm very pleased to be part of the discussion today.

Mr. Alan Tonks (York South—Weston, Lib.): Alan Tonks, député de York South—Weston. I have two of my boys in post-secondary institutions. I can tell you that with my own level of income being depleted as a result of them being in the system, I'm very interested in how they are able to fit in, and other students across the country.

I thank you for your deputations here today.

The Chair: Thank you, Alan.

I want to thank you all for the material. Already, I think you can tell from the spectrum we have that we have very useful information.

I want to point out to Robert that we did invite the Fédération étudiante de l'Université du Québec, but they were unable to send anyone at this time. We would be glad to invite them to future meetings.

I'll go to my list. I'll mention, as I said before, that I'll try to intersperse short questions or comments from you into the list of MPs. I would urge the MPs to keep the exchanges short.

I have Val Meredith, Anita Neville, Libby Davies, Raymonde Folco, Robert Lanctôt, Alan Tonks, and I see Greg Thompson was here.

Val Meredith.

Ms. Val Meredith: Thank you, Mr. Chair.

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To clarify in my own mind, I need to understand why there's a division between the public and private sectors as far as the service providers are concerned. I ask you whether or not the requirements from HRDC are the same, and whether your access to the student body is the same, so that the communication between you, the service provider, and the student, whether public or private, is ultimately the same.

The Chair: Thomas Townsend.

Mr. Thomas Townsend: Perhaps I could answer the first part of the question with respect to the reason the government divided the portfolio. It was our view that the predominant nature of the programs with respect to the private institutions is to be shorter in length. So the loans go into repayment quite quickly after they're issued. The needs in respect of the borrowers are somewhat different compared with the public institutions, as a general point of reference. Our view was that those differences were significant enough that we wanted the service providers to specialize on those two client groups.

Ms. Val Meredith: To follow up, is a private university not considered to have the same length of duration in a student body as a public university?

Mr. Thomas Townsend: This is a question that relates as well to a comment Bob Best made earlier. We've used the designations “public” and “private” as the provinces indicate for the educational institutions. So you do have some instances where a private university would have a longer, perhaps four-year, baccalaureate program that would still fall within the private group as we've defined it. The way in which we've done it isn't perfect, but we felt that it worked best for the majority of the students and respected our long-standing arrangements with the provinces in designation of institutions.

Ms. Val Meredith: Are the reporting—

The Chair: Sorry. Paul Kitchin, is there anything you would like to add? Please indicate if there is anything you would like to add, as this is going on.

Val Meredith.

Ms. Val Meredith: I wanted to know if the reporting mechanisms are the same for both systems, and whether the contact with the students is the same with both systems. Or are there differences we should be aware of?

Mr. Thomas Townsend: Again, I would answer briefly, because I know both contracts. The treatment of the student borrowers is to be equal, although the way in which the organizations may arrange that is to be tailored to the student groups. The reporting is the same. The services available to the student borrowers are to be identical with both organizations.

The Chair: Paul.

Mr. Paul Kitchin: Our organization represents the private college system. We do not have membership of private universities. So that really isn't something I can comment on.

The Chair: Okay. That's fine. Thank you.

Val Meredith.

Ms. Val Meredith: My understanding—and I may be wrong here—is that there is a different requirement from the private sector, that they are actually accountable for the default dollars of student loans, where the public system is not. They are liable, to a certain extent, for the repayment of the default loans, where the public system is not. Am I misinformed here?

Mr. Thomas Townsend: There's no liability with respect to the Canada student loan program on educational institutions, either public or private, for the loans that are issued. You may be referring to the way in which Ontario manages its program. There, if an institution—and that again is either public or private—exceeds the default threshold the province has set, a bond needs to be posted with respect to the student loans. But that's for the Ontario program.

Ms. Val Meredith: So that's not Canada student loans, but something else. Okay. Thank you very much.

The Chair: Anita Neville.

Ms. Anita Neville: Thank you, Mr. Chairman.

Thank you all for your presentations today. I found them very helpful.

I have a number of questions. At least three, if I remember correctly, of the presenters here spoke to the issue of the assessment for students and the aim of increasing the income students can earn from $600—I know the chair has written to the department, and the figure $1,500 has been raised, and I've heard $3,000 today. I'm curious to know from HRDC where this matter stands at the moment and what discussions and recommendations you're considering.

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Mr. Thomas Townsend: With respect to the needs assessment, the participating provinces and the federal government both agree on the use of the same needs assessment, so that when we change the needs assessment, we need to consult with the provincial governments participating in the program and the Yukon.

There is not a uniformity of view on the part of the provinces. We have done the consultation. We are considering at this point whether there is a possibility of working with those provinces that feel more comfortable in moving forward with this. Those would be Alberta and Ontario in particular, which actually initiated the recommendation that has been made in this forum and have increased the amount of work. We would prefer to be able to move forward with all the participating provinces and territories in an amendment to the needs assessment. It's unlikely that we will be able to do that, so we're considering an alternative, to move where we might be able to.

Ms. Anita Neville: Can I follow up, Mr. Chair?

Can you project any timelines? This is, I think, an issue of some urgency, and I'm also interested in being parochial, as to what the position of Manitoba is on this.

Mr. Thomas Townsend: It is unlikely we would be able to effect a change prior to August 1, 2002. This is simply because of the need to complete the consultative process to amend the regulations to go before the special committee of cabinet on regulatory change.

With respect to Manitoba, in honesty, I can't remember exactly what its position is on this, but I could certainly check for you.

Ms. Anita Neville: Thank you.

The Chair: So it's Libby Davies, and then Robert Lanctôt. I'm sorry, Brad Wuetherick.

Mr. Brad Wuetherick: I wonder if I could add one point. Correct me if I'm wrong, Thomas, but Alberta has the highest allowable income right now. The way they work it is $225 per month, which amounts, if you're a student for 12 months a year, to $2,700. That's still $1,400 less than the tuition at some Alberta institutions. So it's something that needs to be addressed in a big way. Alberta, being the highest, is still considerably lower than it should be.

The Chair: Thank you very much for that.

So it's Libby Davies, then Raymonde Folco, Robert Lanctôt, Alan Tonks.

Ms. Libby Davies: Thank you, Chairperson.

First, I realize we're barely scratching the surface today for some very significant problems we're facing in post-secondary education. We've had the information today from StatsCan about low-income families having to pay a heck of a lot more to send their children to school, or students themselves. Second, that there is less and less accessibility should be a very loud warning bell that we're really in a crisis.

In respect of the direct service regime, when the committee sent its letter last June—a very good letter—we made a very important point about needing to have clear and enforceable performance standards and information sharing. In the presentation from HRDC today we've heard there are two levels of payment, and one of the levels of payment to these providers is based on incentives. In your brief you've outlined what some of these performance incentives are, which look more or less reasonable, on page 6. But how do you monitor that they don't, in effect, become almost forms of harassment?

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If incentives include rehabilitated loans that are brought back minimizing the number of defaults, consolidation, these all imply that the pressure is going to be on the service provider to get through to those students, get these payments coming in. To me, the committee was ensuring students had a fair deal and very clear information based on standards. I'd like you to explain that a little bit more.

And secondly, to focus on one issue that was raised—on the bankruptcies—we've really had no information about the impact of the very significant changes to the Bankruptcy Act on students. What data gathering do you do that we can disclose here at the committee? Could this information be brought back, so we can begin to get a handle on what the impact of the changes in the act has been since 1998, three years, almost.

Could you answer those two questions?

The Chair: Mr. Thomas Townsend.

Mr. Thomas Townsend: Let me use the service standards as an example, the incentive around active consolidations. I'll try to describe what this does to meet the committee's concern about providing increased contact and information to borrowers, and outline as well the safeguards borrowers would have for a service provider who was undertaking too aggressive an approach with respect to a student borrower.

In the first instance, one of the most significant pieces of feedback we've received from student borrowers is on how their loans could go into repayment without any contact having been made directly with them, contact which would have allowed them the opportunity to ask questions about payment periods, rates of interest, monthly amounts, as well as to obtain information on government programs available to them should they be having difficulty repaying.

We feel this is a critical time for most students. Many students, six months after they've graduated, may not have started their first job, so it's absolutely critical they have all of the information and take advantage of the government programs. That's why we've made it our focus.

Between 50% and 70% in the first year would be considered standard service, remembering again that less than half of student borrowers were actively consolidating. The incentive is for 70% or more. This is where the service providers are making contact, explaining things to the student borrower, and the loan is being put into repayment in a way in which the student has had some influence.

Ms. Libby Davies: Could you clarify—do 70% have to be contacted, or do 70% of the loans have to be consolidated, or some other mechanism?

Mr. Thomas Townsend: They have to have been consolidated in fact with contact with the students, so we have some indication that they have...

We would like this to be very much higher, but we're starting with a situation right now which is not good, as I said. So we want incentives to encourage performance on the part of the service provider, but to still be reasonable. In subsequent years, the benchmark will be raised: it won't stay at 50% to 70%; in fact, it goes to 60% and 80%.

If a student borrower is unhappy with the service provider, there is a system of redress that each of the service providers must have. In addition to this, if they are not gaining satisfaction with the service provider, we have our own Government of Canada Canada student loan employees, who will receive a call or an e-mail or correspondence from a borrower and will advocate on the borrower's behalf. We keep records of this information as well, and there's a student satisfaction part of the performance too that would reflect on the student borrowers.

We feel we've given student borrowers a number of new vehicles to get to us. When we're having the problem with loan payments being deferred, we were able to take those calls, to work with the service provider, but students knew they could communicate with the Government of Canada directly and get satisfaction if they needed it.

Ms. Libby Davies: And the bankruptcy?

The Chair: I'm afraid that's it, Libby. We'll come round again and perhaps we can come back to it.

• 1230

I have Raymonde Folco, Robert Lanctôt, and Alan Tonks.

[Translation]

Ms. Raymonde Folco: Thank you, Mr. Chairman.

When some of us met in June of last year, it was suggested that the student loan default rate was in decline. This is a very general question I am putting to you. Is that still the case or not? My question is addressed to the official from Human Resources Development Canada.

Mr. Thomas Townsend: Yes, the rate continues to decline. Our most recent figures are for 1998-99, when the rate was 25 per cent. So, the rate has gone from about 28 per cent down to 25 per cent. We find that very encouraging.

Ms. Raymonde Folco: My question is this: I am hearing from student associations that more and more students are going into debt and that their debt loads are increasingly heavy. I am also hearing that there is a problem as regards students declaring bankruptcy.

Given the current situation in terms of students declaring bankruptcy and the fact that more and more of them have increasingly high levels of debt, I would like to be given some explanation of the correlation between that and the decline in the default rate. At first glance, it would seem that the higher students' debt levels are, the more students are likely to be in debt, and of course, the more financial hardship they find themselves in, the more difficult it becomes for them to repay their loans. That does not seem to be the case.

I would like to get a reaction from both Human Resources Development Canada and especially the student associations. Perhaps we could start with the students.

[English]

The Chair: Thomas Townsend.

Okay, Mike Conlon.

Mr. Michael Conlon: There are a couple of factors here from our standpoint.

The default rate has come down slightly in most of the data we've seen as well. There are a couple of different reasons for that. In the early 1990s the youth unemployment rate was running at close to 20%, and it actually has come down. That has had a demonstrable effect. Improving the economic situation addresses the issue of your question, as much as anything does.

But to present a more intriguing answer, it's almost impossible to measure the how, the why, and the numbers of students who don't attend post-secondary institutions. I suspect one reasonable answer to your question might be that you have a declining rate of participation among those families earning less than $50,000 a year. That, more than anything, might explain the drop in default rates, because students from working-class families are not attending in the same numbers they once did. You have students coming from families of means, where the default rate actually drops.

I suspect there's a good empirical argument to be made for this.

The Chair: Tom Lumsden.

Mr. Tom Lumsden: The statistical information, and we're it seeing as well, tends to echo Michael's remarks about the state of the economy. But there's also a higher number of students taking advantage of the debt management programs available through HRDC, such as interest relief.

As for those numbers, we don't know what those loans are going to do. They extended the period of interest relief, so there is a program available to help them through times of need. We don't know what the final outcome of those loans is going to be. I think that's another reason why you're seeing declining statistics.

We do know, though—somewhat intuitively—that the longer they stay engaged and have assistance, the more likely they are to repay. So they're good programs.

The Chair: Raymonde Folco.

[Translation]

Ms. Raymonde Folco: Does the Department have anything to add to those two answers?

Mr. Thomas Townsend: With respect to the fact that the economy has improved, I must say I completely agree with Michael. Is that a result of the fact that students now come from families with greater financial means? I have to say I don't agree, because the needs assessment shows that the family income of student loan recipients did not change during that period. So, we know that the program is still targeting those most in need.

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I can't agree more with Mr. Lumsden, who was saying that debt management programs have improved in recent years. We have a lot of statistics on our Web site. They show that every year, approximately 20 per cent more students avail themselves of the program through which the Government of Canada pays interest for persons in financial difficulty. We know that in 1996, 100 000 people made use of the program, and that in 1998-99, that number rose to 150 000. So, we're talking about a significant increase.

[English]

The Chair: Okay, Raymonde. We have one other reply and then we should wind it up.

Jim Turk.

Dr. James Turk: Mr. Townsend, you made reference to a statistic we don't have access to. Did you say that the average family income of student loan recipients hasn't changed?

Mr. Thomas Townsend: That's because the thresholds used for family income have not been adjusted. We know that individuals receiving student loans have family incomes below those thresholds, and that's remained constant since 1995.

Actually, the argument would almost go the other way. Because there has been some small inflation and we haven't adjusted the thresholds, lower-middle-income people, those with family incomes slightly above $50,000, are probably stressed a little bit more. But in terms of those individuals most in need, the program remained equally accessible throughout that period.

I can't speak for issues around debt aversion, individuals choosing not to go because they would be afraid of acquiring debt. That's an issue requiring more study. There's very little known on it.

The Chair: Robert Lanctôt and then Alan Tonks.

[Translation]

Mr. Robert Lanctôt: Thank you very much, Mr. Chairman.

I want to begin thanking our panel members. You have raised a number of issues of relevance to students in Quebec. We have talked about loans for part-time students, the Bankruptcy Act and student debt levels, but one of the most important issues is probably harmonization. I would be interested in getting your feedback.

As you know, the Bloc Québécois and the Quebec Government agree that Quebec has a better system of education, as well as a better loans and grants regime. Indeed, we wonder why the rest of the country doesn't take its inspiration from the Quebec experience.

I am not sure to what extent your associations represent students in Quebec. I do have one question, though. All of you made some reference to the issue of harmonization. Why get involved in something like harmonization when there are comprehensive systems already in place, such as in Quebec, that we have always said require more money to resolve funding and loan issues? It's simply a matter of investing the money in the right place.

I would like your feedback on that.

[English]

Mr. Michael Conlon: In response to your question, in terms of the relationship between the organizations, our organization represents the undergraduate and graduate students at Concordia and McGill, and l'FEUQ represents primarily the francophone students in Quebec.

I've two points to make in terms of your comments, the first about harmonization and the second about national comparisons. Our organization has held, and the research we've done has shown, that Quebec and British Columbia are generally ranked number one and number two on a whole set of criteria, but the most important ones from our standpoint are level of student debt and the existence of grants programs.

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This is really not rocket science. Quebec and British Columbia are the only two provinces that still have real programs of grants, and grants really are the only proven way of reducing student debt. I think interest relief helps, but compared to up-front grants, it's a band-aid solution.

Participation rates of women in post secondary institutions in Canada cause no surprise. Quebec is number one and British Columbia is number two. So the data on those kinds of things, I think, is very compelling, which leads me to my second point about harmonization.

When we talk to our members about harmonization, we talk about it in two ways. The first is that from a logistical standpoint, “one student, one loan” is a good idea, and I don't think there's any use arguing that it's not. The second thing we say about harmonization is that it's generally a race to the middle, which means that the federal program is at about the mid-range of the various provincial programs. When the federal government enters into negotiations with the provinces, they force the provinces to give up those parts of their programs that are generally better than the federal government's. At least that's the position as it's been explained to us.

British Columbia, for instance, had a fairly substantial disagreement with the government about running credit checks on student loans. They took a position that they ought not to be run, whereas the federal government has instituted a program of student checks. On the other side of the equation, when harmonization occurred in New Brunswick, New Brunswick defined the split between part-time and full-time at 80% course load, whereas federally it's defined at 60%. So in an area where New Brunswick was doing more poorly than the federal government it was actually of benefit to students. But my sense is that Quebec students and the Province of Quebec would have absolutely nothing to gain by harmonization, nor would the Province of British Columbia.

The Chair: Anyone else? Yes.

Ms. Terry-Anne Boyles: On the point of harmonization, in our document, looking at the bigger policy picture, we name a number of other programs. About 55% of the students are in the federal and provincial loan programs. The other students are funded through a variety of other mechanisms, and those include Indian Affairs, Employment Insurance, social assistance programs, Veterans Affairs—a whole plethora of other programs. Our concern, certainly within the college student body—we have 800,000 full-time students and 1.5 million part-time students—is with the confusion, complexity, and lack of harmonization relative to those other programs, many of which are within the federal domain and could be harmonized to some degree. We have a number of points to make on that, which we believe are very important.

The other thing concerns all those people who are no longer able to come, who are only maybe having one family member come, because of the saving patterns they need to adopt in order to come into post-secondary education. Very little is known about that, and we believe it's a major social policy issue for the country.

The Chair: Robert.

[Translation]

Mr. Robert Lanctôt: I very much appreciate comments such as the one I just heard. We now feel a need to harmonize student programs based on those that were just mentioned, such as programs through Indian Affairs, insurance for veterans, and so on. However, my view is that we are already devoting a great deal of money to something that really amounts to duplication. I'm not referring here to harmonization of federal programs. That is ongoing and I agree they need to be harmonized.

What is less satisfactory, however, is that we are now engaging in even more duplication. You say that you have a lot of Francophone students among your membership. I'm sure you consult them. Those students in Quebec already have a system in place and they can see that this kind of duplication is going to cost them. Why not take that money and invest it in a system that is already operational? The result would probably be a lot more money for Quebec students.

[English]

Mr. Michael Conlon: If the desire is to realize economic efficiencies, there's no arguing with the point. But the question would be whether Quebec and other provinces are willing to make policy sacrifices for those savings. The reality is that there are policy implications to harmonization—it's not just an issue of duplication.

The Chair: I'd like to proceed. It's now Alan Tonks.

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Mr. Alan Tonks: Thank you, Mr. Chairman.

I want to follow up on the comments made by Mr. Lanctôt regarding the harmonization issue, and I'd like to address the comments more to our HRDC people. At the round table that was held on June 13 we had a number of organizations who came in and talked about these very issues. From a strategic planning perspective, we asked HRDC if, with this whole issue of harmonization, other models would in fact be reported out, in the interest of pursuing a more simplified Canada student loan program across the country.

We also know that different provinces, as we've heard here, are approaching it from different perspectives. British Columbia's moving towards its own system of direct lending. Saskatchewan appears to be considering an integrated program using EDULINX and BDP, the same service providers the feds use. Other provinces have maintained relationships with the banks.

So to have a full-court press, from the perspective Mr. Lanctôt has taken, notwithstanding this issue of grants versus loans that seems to be coming into it, could we get an idea of where the ministry sees this moving and the timetable with respect to harmonization?

My other question is of a more general nature. What is the single most important short-term and long-term change that stakeholders who have been involved in the process thus far would like to see in that type of report?

The Chair: Thomas Townsend.

Mr. Thomas Townsend: I'll speak to our work with the provinces with regard to both the short term and the long term.

On the short term, the rational for harmonization was that different jurisdictions had implemented different pieces of policy affecting loans. A good example would be that the interest relief program on the federal side would be different from the interest relief program on a provincial loan. This would cause confusion to the student borrower. You would have loans defaulted on for no other reason than that the borrower thought they were covered by both programs, when they had applied for one. Our intent, with the participating provinces, was to stop that duplication by having a single window for borrowers, having the adjudication done along similar policy rules.

Integration actually takes that one step further. It says that in the repayment, by using the same service provider, while the provinces and Canada participate in the loans program, from the borrower's perspective, it looks like a single loan, so that again further reduces of inefficiencies. So we believe in the short run this is good government practice, and we will be working towards that. How long will it take? We're trying to do it as quickly as possible with a number of jurisdictions. We're looking at implementation prior to August 1 of this year, so that's very quick.

On the longer term, there's a recognition at our level and with the provinces that we need to be thinking about a program that's been around for 36 years with a relatively small number of changes. So increasingly there are discussions occurring between us and provinces on how we can better adapt the programs, the federal program and the provincial program, to meet the needs of borrowers going forward. In fact, the colleague from the provinces who couldn't be with us is attending the council of ministers of education meetings, and one of the items of business is looking at an agreement from the council of ministers to engage in discussions much more fully with the federal government on what we would be doing three years out, five years out with the programs to make them better and more responsive to borrowers.

Mr. Alan Tonks: That's fine. Would anybody else like to make a comment with respect to any single change, short or long term, that could enter into that particular discussion with the ministers?

The Chair: Yes, Terry-Anne.

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Ms. Terry-Anne Boyles: Just to build on that, our position is that any new program, any expansion or harmonization, must include a significant grant component.

The Chair: Okay. Is that fine with you?

It's Libby Davies, Jeannot Castonguay, the chair, Robert Lanctôt, and then Anita Neville.

I'll just say to you all, including the people in the audience, there is now food at the back. I think there is plenty for all, but some of the MPs have to go directly to other committees where there may not be food. I'd just mention that fact. But perhaps from time to time you could slide away and get something and bring it back. And the same for members of the audience. But please do bear us in mind. I for one am very hungry, and I won't be able to eat until the very end.

The food is there. Please help yourselves.

Libby Davies.

Ms. Libby Davies: Well, in that case, we should definitely let the chair go first. He's very hungry.

Maybe I could get a brief response to my question on the bankruptcy—what HRDC is doing to assess the impact of changes and what information can be brought back to the committee.

Secondly, I'd like some of the participants to respond to the issue of needing to have some set of overriding principles in whatever changes are made around post-secondary education. The college association has actually listed some in their brief: universality, responsibility, portability, simplicity, rationality, flexibility, and adaptability. I would also add affordability. I know that CAUT has also developed a sort of draft bill in regard to standards and principles around accessibility and so on. Maybe some of the participants might comment on what we need to be doing to look at that issue, but first, could we get a brief response to the bankruptcy issue?

Mr. Thomas Townsend: Yes.

Since the changes in the bankruptcy provisions we have tended to view the situation from the perspective of individuals taking advantage of the debt management mechanisms that were made available in the changes implemented through the 1998 budget. What we have noted there, as I mentioned earlier, is that there has been a significant increase in the use of those debt management measures. They're available to individuals for a long period of time. So from that side, the alternatives that the government has made available in terms of managing the loan and keeping it in good standing appear to be well used.

We have been open to and have received information from various organizations that have followed the bankruptcy provisions. These include, as Michael mentioned, the Canadian Federation of Students, which has provided information to us, as well as a number of the debt counselling organizations in Canada.

The position of the Government of Canada remains that the mechanisms that are put in place to manage the debt provide sufficient coverage for individuals who are having trouble repaying and maintaining their loan in good standing, so that they should not need to take recourse to bankruptcy.

Ms. Libby Davies: So what you're saying in effect is that other than referring people to other programs that they may or may not be able to take advantage of, there's no real monitoring or data that are telling us what the impact is of having changed the bankruptcy time from two years to ten years, or even to know how many students are coming forward and raising the issue as a complaint, such as “I could declare bankruptcy before, now I cannot”. Surely there must be some monitoring of the impact of that change. I find it incredible that there isn't.

Mr. Thomas Townsend: As I indicated, what is observable to us are the debt management programs run by the Canada student loans program that I'm referring to, so we're able to observe on borrowers who are having difficulty in repayment and we can look at the ability of those debt management programs to provide debt relief. I would judge that to be the most critical factor to be monitoring.

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The Chair: Michael Conlon.

Mr. Michael Conlon: I just want to add, in terms of the position of our organization, we find it startling that given the punitive nature of this law, the absolute lack of data...

Just to put this in context a bit for the committee members, there was a process that was undertaken by Industry Canada—because the law is obviously lodged there—in 1997. Our organization presented a brief. Bankruptcy and insolvency officials from across the country presented briefs. Dr. Saul Schwartz, who is an expert in the field of bankruptcy and its social effects, presented a brief. Everyone at the time told the government that changing the law to introduce the two-year prohibition was a bad idea, but despite this consultation, the change went forward.

What is even more startling to us is that less than ten months later, in the education budget, that two-year prohibition was changed to ten years, with absolutely no consultation, nor data about what the effect of the two-year prohibition had been and what the possible effect of the ten-year prohibition would be.

I can tell you that in terms of my job, if for no other reason than to not have to listen to the very difficult and sad stories that our office gets on a regular basis... When I say regular, I mean two or three people a day calling up, testifying to the very detrimental effects this law has had. If for no other reason than that, we're calling for this law to be repealed.

I presented to HRDC, and I'm happy to present to this committee, both the anecdotal and statistical evidence of the kinds of people this law affects and the kind of effect it's having.

The Chair: We would be glad to have that.

Briefly, Libby.

Ms. Libby Davies: Chairperson, I think it's very important that we have a further debate. If Mr. Conlon or others are able to provide any information they have about the impact of those changes, I think the committee should take that information and try to make some sense of it.

The Chair: Jeannot Castonguay, the chair, Robert Lanctôt, and then Anita Neville.

[Translation]

Mr. Jeannot Castonguay: Thank you, Mr. Chairman.

There is no doubt that one of our main concerns is ensuring that Canadians have access to postsecondary education and graduate studies. I very much support that.

I do hope people realize that student needs go beyond tuition fees, and that there are people for whom university remains out of reach. That is the reality. Also, they have to get through it all.

As I understand it, there seems to be some difficulty assessing students' financial needs. There also seems to be some difficulty reaching a consensus with the provinces, which have widely varying opinions. That is at least what I understood from earlier comments.

Is any data available that would allow us to compare student debt levels across the provinces after graduation from a four-year program, say? Would that not be a good indicator to use for determining student's needs? And isn't that preferable to waiting for the provinces to reach a consensus that can sometimes be difficult to achieve? I would be interested in hearing your comments on that.

Mr. Thomas Townsend: We do have data on accumulated student debt. In some cases, we have information on debt accumulated not only under the Canada Student Loans Program but under provincial programs as well. We have that information with us today, on paper. I can certainly provide it to the Clerk.

Data is one thing, but it's important to remember that we cannot consider debt without considering an individual's ability to repay that debt. For someone with an engineering degree making 60 000 $ a year, a debt of 15 000 $ to 20 000 $ can be very reasonable. However, someone who has a debt of 20 000 $ and is only making a salary of 20 000 $ can find it very difficult to make loan payments. So, it is that debt analysis based on an individual's ability to pay that is more complex. Certain groups of professionals, such as lawyers and doctors, ask to be loaned more money, because their tuition fees are higher. They will be able to afford to repay their debt.

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There are other professions, however, where it can be very difficult for individuals to repay the debt they accumulate now in order to become certified in their area of expertise after graduation.

Those are all factors to be considered. As for the data themselves, they show that the average debt level is on the rise. I have the figures here. We know that the percentage of graduates with a debt of more than 15 000 $ or 20 000 $ has been increasing over the years. It is difficult for us to say whether that percentage is too high, or to say under what circumstances we might consider it to be too high.

The Chair: Jeannot.

Mr. Jeannot Castonguay: Mr. Chairman, I obviously realize that if someone ultimately finds employment, that individual will be in a position to pay back his debt. However, one cannot assume that an engineer will find a job. The reality today is quite different. What I want to know if whether or not it would be possible to make comparisons across provinces using available data on students that accumulate debt. What kind of a debt might they have accumulated after four years, say, but without necessarily assuming they will be able to repay their debts? I'm not talking about repayment now, but about basic needs. Telling people they can deduct so much per month from their income tax seems a little ridiculous.

I had children who pursued their education. The allowable deductions for children like mine pursuing their education were absolutely ridiculous. They have been improved since, but I am not sure they have improved enough to really be meaningful, given current student debt levels. When I talk about debt levels, I'm not only talking about how they're going to pay back their debt. That is important, of course, but it is even more important to ensure they have access to education and to recognize that they will accumulate a minimum amount of debt. Can that be established from available data?

Mr. Thomas Townsend: I think I understood your question. Data are available and I can certainly provide them to the clerk.

You raised the matter of whether or not going into debt may discourage some people from pursuing an education. We have very little information about that. This is something that is often raised because economic studies frequently show that people with a low income are more debt averse than people with large incomes. So, access to postsecondary education for people with few financial means is a very important issue. But I must say that based on all the research I've seen, there is very little information available in that area. One study by the Maritime Higher Education Commission does touch on this somewhat, but unfortunately, it comes to no definitive conclusion in that regard.

The Chair: Brad Wuetherick.

[English]

Mr. Brad Wuetherick: I just want to add one thing. While I appreciate the basic needs aspect of the question that you asked, I think it's important to get beyond comparing provinces, because even within one province, there could be a big difference in the needs. Living in Toronto is quite a lot more expensive than living in Thunder Bay, for example. Living in Toronto is a lot more expensive than living in Edmonton. So you have to get an even more realistic needs assessment beyond just provinces.

[Translation]

The Chair: Is that it, Jeannot?

Mr. Jeannot Castonguay: Yes.

[English]

The Chair: I wonder if I could ask a couple of things.

One thing I'm interested in is the place the banks still have in this system. I know there's been a change and we've been following the transition and so on. By the way, we've heard some indication, I think, in the answers so far that the banks clearly are still involved. This would include some thought about who the principals are in EDULINX and BDP. So I don't know where I should look. I tend to look at Tom for these things, perhaps, or Lawrence, or Thomas Townsend. In fact, we have three people here called Tom, basically.

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Would someone care to respond to that? The question is what is the current role of the banks in the system?

Tom Lumsden.

Mr. Tom Lumsden: I'll try the first part of that.

From the bank's perspective we're interested primarily because we have the existing portfolios that need to run off. Most of these loans have a ten-year amortization period. It's a long period of time, so we've continued to manage those portfolios. That's our primary interest. But there are no new dispersement processes taking place from the banks. Our interest is purely the runoff of existing portfolios.

The Chair: Thomas Townsend.

Mr. Thomas Townsend: The federal government has an interest in two regards. The first is that there are about $8 billion in loans held by the banks that will go into consolidation. The Government of Canada has contracts with the financial institutions that will in fact need to be enforced through the life of all of those loans. Although the loan is with the bank, those student borrowers remain part of the Canada student loans program, and there is a contract that covers them during the entirety of their loan.

The second interest is one that many stakeholders here have mentioned. Because there will be individuals who will have bank loans and direct loans, there's going to be a period when there is a greater potential for confusion on the part of the borrowers. There will be a greater need for us to be working closely with the financial institutions to ensure that, for instance, if a borrower is having difficulty repaying, the adjudication of an application for interest relief will apply to both the bank loan and the direct loan.

So the federal government and the financial institutions will remain involved in that portion of the portfolio for as long as 15 years, actually.

The Chair: About the service deliverers, again, my interest is in the banks. Are banks involved in either of your operations?

Mr. Tom Mellish: EDULINX share ownership is such that CIBC is the majority shareholder in EDULINX, and USA Education, the holding company for Sallie Mae, is the other shareholder in EDULINX.

The Chair: Mr. Zimmering.

Mr. Lawrence Zimmering: We do not have banks involved in our operation. We're 100% Canadian-owned by public shareholders, in effect. We do, however, run the student loan portfolio for the Bank of Nova Scotia. As Tom Lumsden said, this portfolio is currently in a runoff situation.

The Chair: Okay. Thank you very much.

Thomas, we've gathered a good deal of information already, and a good deal of information is going to come to us. I do know that. For example, regarding bankruptcies and the need for information, whatever information there is, on changes in bankruptcy rates and the information on student satisfaction that was mentioned, can we assume that included in your plans and priorities report—in addition, obviously, to the financial information, which is very important in this operation—will be whatever is available on such things?

Mr. Thomas Townsend: The short answer, Chair, is yes. In addition to the plans and priorities report, this committee recommended to HRDC on its committee report that HRDC publish annually a report on the program, which we do.

The information that we will be receiving, which is significantly more than we've had available to us, will also be part of that report. That report will need to be recast as a result of the direct loans, so that there's an opportunity for us to identify those areas of reporting that will be most useful to policy makers and to stakeholders. So we will be in fact consulting with stakeholders.

I would invite the committee to give us ideas in terms of the kind of information that would be most useful to you in that report. Some of it we've already received from the previous committee report, but any additional information we'd be happy to receive.

The Chair: I appreciate that.

Bob Best and then Tony Norrad.

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Mr. Robert Best: Thank you, Mr. Chairman.

My question goes to the matter of information and to the fact that we really have three types of loans out there.

Quite a few of the groups around the table, of course, mentioned the 270 days—our preference for at least the 270-day figure for the definition of default. I was hoping we might get confirmation from you that in fact this is the guideline that will be used for the direct loans. If it is, then would a similar kind of measure be employed for defaults in the guaranteed loans and risk-shared loans? Otherwise there's the potential for quite different default rates over time.

Mr. Thomas Townsend: First of all, in terms of the 270 days, the Government of Canada's interest in focusing the service providers' attention is on keeping the loans in good standing.

One of the things we've chosen to do is not to have collections done by the service provider. So their job is to keep loans in good standing. From the time that a loan is distressed—there's a payment missed—they have 270 days to get that loan back into good standing. So that gives them an adequate amount of time to do that. If they're unable to do that, the loan would be passed over to HRDC and then would go into collections, which is, as people here will appreciate, a different kind of process.

With respect to Bob's question on the bank-held loans—with respect to the guaranteed loans—the 90-day period or the three payments is defined by the contract as the bank's ability to make claim to the federal government for the face value of that loan. I would be extremely surprised if the banks would wish to change that.

With respect to the risk premium loans, the banks would have their internal policies in terms of when they would put a loan into collections, and they have the right under their contract to exercise that.

The Chair: Tony Norrad.

Mr. Tony Norrad: Thank you, Mr. Chairman.

I just want to make a comment to your first question in relation to the responsibilities, the banks and the process. I think this is leading back to the reality that we have multiple loan programs currently with which students are involved. It's very important that there is good communication between the service providers—the banks that hold the risk-shared loans—as well as HRDC. I'll give you the example that I highlighted earlier: it would not be uncommon today for students to have six different types of loans and to deal with four different contacts between service providers and financial institutions, depending on where those loans may be held.

I think this leads into our comment and our recommendation of looking at some form of clearing house that the federal government as well as the provincial government would enter into for the dissemination of information. That would be one of the examples of what a national clearing house would do. Educational institutions would provide confirmations of enrolments to the clearing house, and then the clearing house in turn would disseminate that information to all of those organizations that hold direct loans—risk-shared loans or guaranteed loans—of the particular student.

I think we really need to look at ways in which we can decrease the level of complexity for the student in this particular loan program.

The Chair: Tony, thank you for that.

I've broken my own rule here, because that was my question and I've gone overtime on my own question. As I have it, colleagues, at the moment it's Robert Lanctôt, Anita Neville, Libby Davies, and Raymonde Folco. Is that okay? If we could just keep that moving, then I'll draw a line to it, unless we have other comments.

Robert.

[Translation]

Mr. Robert Lanctôt: Thank you, Mr. Chairman.

I will confine myself to two questions. Just to follow up on Mr. Tonks' question, I think it's very important that you at least give the Committee an answer. Don't forget that the Committee is here to help you and to examine any suggestions you may wish to make. It seems to me that talking about the timetable for harmonization is a very important issue.

Why did the response focus on the short or long term? How is this viewed? Is there an alternative? I think it's important to remember that if we are facing a problem or are anticipating problems—and my feeling is there will surely be harmonization problems with the provinces, including Quebec—it's important that we get an answer. I would like to know what the associations and federations see as an appropriate timetable for harmonization and what you see, in the short or long term, as issues that can be resolved?

I don't think we were given a real answer to Mr. Tonks' question, yet it's a very important question. There is already a suggestion that there might be problems. Are there any alternatives? Will the money be handed over to the provinces—such as Quebec, which already has its own program—to be managed? It's important that we know whether those options are available or not. There is no point in turning a blind eye to the problems.

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In another connection, I would like some clarification with respect to the following: When an individual is eligible for a student loan both federally and provincially, such as in Quebec, what I want to know is whether it's cumulative, and if so, how does that work? Let me give you an example. A Quebec student eligible for a student loan both in Quebec and at the federal level makes an application and is granted a loan in Quebec. I don't know what the allowable amounts are for loans issued federally or in Quebec. This person applies in Quebec, is issued a loan and receives money. Just to use a hypothetical example, supposing the loan amount is higher federally; is the amount decreased or is the Canada Student Loan portion only equal to the difference between the two amounts?

If that's the case, Quebec does not receive the overall amount the student is to receive because it has been given less money and Quebec money has been used, right? That's my second question.

The Chair: Thomas Townsend.

Mr. Thomas Townsend: If I understood your question, the situation in Quebec is quite different from the other provinces. Starting in 1964, when the student loan program was introduced, Prime Minister Pearson and Premier Lesage concluded an agreement under which Quebec set up its own loans and grants program. The Canada Student Loans Program therefore transfers resources to Quebec for those components of the Quebec program that are similar to student loan programs in other provinces.

So, Quebec receives its share through a federal transfer to the Quebec loans and grants program. In Quebec, there is only one program, and it is supported by the federal government through a transfer. We have exact figures for each year, but between $120 and $150 million a year are transferred to Quebec for that program.

Mr. Robert Lanctôt: I see. So it wouldn't be possible for there to be a payment...

Mr. Thomas Townsend: No situation such as the one you have described could arise.

Mr. Robert Lanctôt: So, that would be impossible except for grants, right?

Mr. Thomas Townsend: No. Are you referring to the Millennium Scholarship Program?

Mr. Robert Lanctôt: Yes.

Mr. Thomas Townsend: In the case of the Millennium Scholarship Program, the agreement with Quebec, Quebec student associations and educational institutions in that province provides that these scholarships are to be granted to individuals identified through the Quebec loans and grants program. That is then confirmed by the Millennium Scholarship Program and because the Quebec program is generous and there are some savings in Quebec, those savings are reinvested to help all students receiving loans and grants in Quebec. Another portion goes directly to the institutions to improve student services. This is all done under an agreement negotiated between the Government of Canada and the Government of Quebec.

I had the honour of participating in those negotiations with my colleagues from the Quebec loans and grants program. To my knowledge, this arrangement was acceptable both to Quebec and to the Government of Canada, as well as the Millennium Scholarship Fund. So, everyone was very pleased with the resulting arrangement.

An Hon. Member: Good work!

The Chair: Excuse me.

[English]

Colleagues, we need to wind up to prepare for question period. Next it's Anita Neville, Libby Davies, and Raymonde Folco, but we do need to leave a little bit of time for our guests to respond if they wish.

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Ms. Anita Neville: Thank you, Mr. Chairman.

I've listened to all the comments, which have reinforced for me the complexity of the issue and all of the different dynamics that go into ensuring access and ensuring that young people have opportunities.

Now that the federal government has taken over the student loans program or the business of lending to students, what I would be interested in hearing from each of you—and some of you have touched on it, but we've heard so much—is what your primary short-term and long-term objectives would be if this program were to be revisited in its entirety or revamped.

We've heard about access and about loans, and we've heard about the interest rate for loans being reduced. I've also heard privately about issues related to tax credits on the loans. I'm curious to know what the priorities would be for each of you in looking at the whole program again—and I realize we're under time constraints.

The Chair: That was the concluding point that I was going to make, so we'll hear that, and then there will still be questions from people here.

Bob Best.

Mr. Robert Best: Thank you, Mr. Chairman.

In the short term, I would come back to the matter of the $600 limit. I must say, I'm frustrated to hear that the earliest we would see changes is the fall of 2002. This has been actively discussed for at least three to four years.

I can remember the department suggesting three to four years ago that they might be prepared to split that issue off and deal with it separately from the wider needs assessment review, and now we're told it could be no earlier than the fall of 2002. In the short term, quicker movement on that would be my goal.

Longer term, there have been some references to the need to have a look at student assistance. The federal government becoming the direct lender does provide an opportunity for us to have a look generally at student assistance to see if it meets the range of needs.

It's a much more complex post-secondary educational sector. It has a wide range of students. Is student assistance at large meeting the needs?

Thank you.

The Chair: Terry-Anne.

Ms. Terry-Anne Boyles: Short-term, I would agree with Bob Best. We fail to understand why the issue of the increase from $600 to a minimum of $3,000, recommended out of a round table of this committee in 1997, has not been addressed. The $3,000 amount recommended as a minimum then, in 1997, is probably way too low even now, but at least it's a start.

In the longer term, we do believe there's a need for a total new learner financial system in Canada that pulls in a lot more of various program funding mechanisms and looks at other programs such as EI, social assistance, veterans affairs, and so on, so that it's a less confusing environment for the learners. Also, the age of learners has changed dramatically.

The Chair: Thank you very much.

Lawrence Zimmering.

Mr. Lawrence Zimmering: Peter, it has been fascinating to sit here and listen to everyone's concerns and issues. There has been a lot of talk about communication. Val touched on that, and so did you.

What I find interesting is that the independent service provider can in fact deal with complexity. It remains for the government and HRDC to strike policy, but we have the tools in terms of the technology and the training of our staff to be able to deal with this.

The Chair: Thank you very much.

Tony Norrad.

Mr. Tony Norrad: Thank you, Mr. Chair.

I think in the short term our association is looking for a continuation of the community strategy that effectively—and I think that's the key word, effectively—informs student borrowers of their responsibilities not only in respect of their new direct student loans programs, but also their previous non-direct student loans, and that HRDC ensures there's flexibility in the program for those students who misunderstand what their responsibilities are in this new complex world of student loans, so that they can remedy the situations they fall into.

In the longer term, we want to push some form of national clearing house that will help in the sense of students' responsibilities and getting the information to where it needs to be. There is a comprehensive review required of our part-time student financial assistance programs for those learners. We also need to be looking at a federal work study program that could become an integral part of student financial assistance in this country.

Thank you.

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The Chair: Thank you very much.

Tom Mellish.

Mr. Tom Mellish: Yes, Mr. Chairman.

Also staying out of the policy domain, I think it was mentioned earlier that there are two upcoming large events, the fall disbursement period and the upcoming consolidation period that follows. The consolidation period represents the opportunity, or the potential at least, for some confusion. I would really support a collaboration between the lenders and the new service bureaus as we prepare for that particular consolidation period.

Secondly, in the long term, I think there is a tremendous opportunity to deploy more technology in the process. This business is still terribly paper-intensive, and that creates slower turnaround times and more errors. More automation, whether it be in the form of a clearing house, as was mentioned, or something else, will truly be for the benefit of all the stakeholders and improve student satisfaction.

The Chair: Thank you, Tom.

I'll jump past HRDC and go to Brad Wuetherick.

Mr. Brad Wuetherick: As far as the short term, there are several things. The two most important have to be communication between now and the two times we've mentioned, September 1 and the consolidation period, as well as a needs assessment and the allowable income.

In the long term, I think it's absolutely essential that a grants systems for high-need users be re-implemented into the Canada student loans program. I think it must happen.

The Chair: Thank you very much.

Mark Kissel.

Mr. Mark Kissel: Our association would think about interest rates on student loans. They're extremely high right now; they're at prime plus 5% and prime plus 2.5%. We'd like to see them lowered, if not eliminated, as they're really hampering students. That's inside the box.

Outside the box and thinking of long term, students in CASA believe solely in an initiative called an “income contingent loan remission program”. It is a combination of loans and grants based on income to help students down the road pay back loans.

The Chair: Okay.

Tom Lumsden.

Mr. Tom Lumsden: Of course, our goals are the short term or the fall consolidations in disbursements, making sure that's as orderly to the borrower as possible, without much confusion, and trying to eliminate some of the complexity in trying to manage the number of portfolios these kids with loan payments are going to be making. In the short term, we're looking for some solutions to the fall and making sure the proper communication and check points are in place.

The Chair: Thank you.

Paul Kitchin.

Mr. Paul Kitchin: I would reiterate the earlier comments about the in-study income. It is a concern. Many of our students are working part-time or full-time and that's a very important issue to them.

Communication, again, is critical to this process with work on harmonization with the provinces and the one student, one loan concept.

In terms of needs assessment, recent stats from the CSLP would show about 30% of the new borrowers every year are going into private institutions. Many are people of an older age who fit into the lifelong learning category. Our needs assessment really has to understand the unique needs of people who are 30 and 40 years old having to return to training. I don't think it is one size fits all.

Thank you.

The Chair: Thank you very much.

Jim Turk.

Dr. James Turk: I'm trying to do this properly, Mr. Chair.

The Chair: Excellent, excellent.

Dr. James Turk: Thank you.

I'm not sure of the definition of short term, having heard that the changes that were talked about, which I would have defined as modest, will take until August 2002. With that notion of short term, I'd suggest two short-term measures would be rescinding the bankruptcy legislation and shifting to more of a grant-based system.

In the long term, as I tried to say in my initial remarks, there is no solution apart from the federal government playing a more significant role in core funding of the institutions. The lack of core funding is what's driving institutions to pressure provincial governments to have the power to raise tuition fees. As tuition fees and other costs of being a student go up, we're going to continually be thrown back into this. That is the long-term solution.

I might add that on April 26 there are going to be faculty members and other academic staff from across the country, including our sister organizations the FQPPU and CAUT, meeting with as many MPs as possible, to put forward our proposals on how that could be done.

The Chair: Thank you very much.

Michael Conlon.

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Mr. Michael Conlon: In addition to the short-term logistical issues outlined by my colleagues that would have a real effect on our members, of the two short-term goals there is one that hasn't been mentioned yet. We need to find a way or devise a strategy for those students caught in the snare of risk-sharing loans. The data is very clear. Between 1990 and 1997, they're the students who are the worst off and have no access to any of the programs outlined. These are the people we're finding are the most traumatized by the bankruptcy law.

Some strategy needs to be developed for those students. The students have no access whatsoever to any of the programs Mr. Townsend outlined as a very unconvincing defence of the bankruptcy law. Of course we need to get rid of the law itself in the short term.

In the long term, despite the fact I welcome all the discussion here and think it has all been very useful, it seems almost beside the point to talk about the problems with the Canada student loans program in isolation from larger issues, like a national strategy on tuition fees, access, or skills and training.

In the long term, I'd like to see this discussion expanded so we're not talking about the student loan issue in isolation. It's as if, somehow in 1990, you had a more responsible cohort of students who didn't default on their loans. Then magically, eight years later, you have default rates that are tripled. Something happened, and that something is outside the purview of the Canada student loans program. I think we need to bring that into our discussion.

The Chair: Okay.

Anita Neville, you scooped me on that one, so I'll thank you.

I would ask our colleague, Libby Davies, to wind up rather than ask a question.

Ms. Libby Davies: Yes.

First of all, I think all of us on the committee really appreciate all of the presentations today. They've been really illuminating.

Obviously, we have some short-term issues to look at, Chairperson. I hope those can come back to us. I would certainly add my support for getting some information back on the impact of the bankruptcy changes.

I agree with many of the comments. Unless we understand the financial arrangements, if we look at the Canada student loans program in isolation from the funding arrangements, then we're really missing the picture and missing the boat.

I really hope the committee in its further deliberations will look at some of these larger policy questions. Otherwise, we really won't be responding to the concerns that have been put forward today.

The Chair: Thank you very much, Libby.

I would really like to thank Thomas Townsend and Margaret Biggs, in particular, for taking the time to be with us. We look forward to seeing you again, even if you don't look forward to seeing us again.

Like the others, I want to thank you all. I think you will all agree this is a very useful start.

As I mentioned at the outset, before the summer break there will be two more meetings. I'm not exactly sure when they will be yet, but they may well be relatively soon after we resume.

It's our hope, at the end of those meetings, to come up with anther report. It's our hope we will have received a response to the last report by that time. Anything you have in addition to the material you've provided us with today we would be most grateful to receive. It may well be that some of you will be invited back again, but we're not exactly sure how we're going to proceed in those two meetings.

I did mention there is food, and some of us at least will be staying. I know I will, and I would invite you to join us for lunch.

The meeting is adjourned at the call of the chair.