Thank you, Madam Chair.
The report's recommendations align with our continuous work to strengthen the Canada student loans program, while making post-secondary education more affordable and accessible to all Canadians.
The government has made significant investments in recent years, including increasing Canada student grants and expanding its eligibility to make post-secondary education more affordable.
Since the onset of the pandemic, the government has taken measures to address the impacts of COVID-19 on students, which included temporarily suspending the repayment of student loans and applicable interest, and doubling Canada student grants for the current school year.
The government has also taken steps over the years to make student loan repayment more manageable. Most notable was in budget 2008, where the government announced the introduction of the repayment assistance plan, which was subsequently approved by Parliament and implemented in 2009.
RAP is a form of an income-contingent repayment system that allows student borrowers to repay only what they can reasonably afford given their income and family size. The government contributes to their payments such that the loan is paid off within 15 years of leaving school. In 2016, the government made it more generous by increasing the zero payment income threshold to $25,000. This is a benefit, effectively like a deferred grant, and should not be viewed as a loss. In fact, the department has made and continues to make efforts to raise awareness of RAP, so that eligible borrowers can take advantage of it while they're trying to integrate into the labour market, but do not have sufficient revenue.
Spending on the RAP is very different from the write-off loss due to default. Therefore, we report separately on the two on the public accounts. Parliament has chosen to use to grants to help students in financial need. The RAP is a means to assist students in precariously financial situations through the payment of their loan.
We agree with the OAG that we can improve on informing Parliament on program costs. We are already taking steps to do so. However, we intend to continue reporting program spending such as the RAP and write-off loss separately.
While we have made great strides, we know that there is still more work to do. We acknowledge the longer-term issues raised by the Office of the Auditor General. We agree with their recommendations, and we are taking action to address them.
Student loan repayment continues to be one of the priorities for the Canada student loans program. Our efforts in this area need to be coordinated with the provinces and other delivery partners.
Given the work that the department has already undertaken, we are confident that we will be able to implement our action plan, though some of the timelines may need to be reassessed due to the pandemic.
With respect to student financial literacy, we agree with the Office of the Auditor General that more needs to be done to improve financial literacy among young Canadians.
To this end, Employment and Social Development Canada, in consultation with the Financial Consumer Agency of Canada, developed a financial literacy plan in 2017 to inform borrowers of their repayment obligations and provide them with financial literacy tools.
The department has already launched a virtual repayment counsellor on the National Student Loans Service Centre web portal. New financial literacy content continues to be added on repayment options and obligations.
The department also has a plan to consult with provincial partners and external stakeholders on mandatory financial counselling for borrowers.
Finally, the OAG has recommended a comprehensive evaluation of both the Canada student loan program and the Canada education savings program.
While our ongoing evaluation work has focused on the impact of the two programs individually, the department has been working with Statistics Canada for several years now on developing appropriate data sets that would allow us to do a comprehensive evaluation to examine the interaction between the two programs.
After much technology and privacy work to link those data sets, that has now been completed. Our first evaluation of the interactions between the education savings program and the Canada student loan program is underway. With better understanding we will be able to take appropriate steps to reduce financial barriers to students.
All of the efforts we have been undertaking have ensured that the default rate on student loans continues to decline, from a high of 28% in 2003-04 to its current all-time low of 8%.
Some of this success can be attributed to the repayment assistance program, which provides support to borrowers in financial difficulty so that they can get back on their feet and focus on their careers. The use of this model—