Public Accounts Committee on Dec. 1st, 2020

[Philippe Le Goff]

Madam Chair, I can assure you that we have no concerns as to the collaboration between the federal government and the provinces that participate in the program.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you.

[The Chair, Conservative, Kelly Block]

Thank you very much for that.

Mr. Green, take six minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you very much, Madam Chair.

I have to share that reading this report was actually a pretty difficult thing for me to do. I think back to the briefing we had with the Canadian Audit and Accountability Foundation. I'm really struggling with whether we're even asking the right questions here.

So far we've heard about the individual responsibility of students, about whether or not they're able to plan for their expenses, about their ability to budget, and I'm wondering, when we look at the information on the supports for students on financial assistance, whether this report is fundamentally answering the right questions.

Through you, then, let me ask a general question, and forgive me for taking a shot in the dark here. What analysis went to the flip side of this, to the rising costs of tuition, the rising costs of rent, the rising cost of living relative to previous generations' ability to pay?

Also, was there any analysis put to the ongoing cuts and continued profitability from the financialization of education in Canada?

[The Chair, Conservative, Kelly Block]

Are you asking that question of Ms. Hogan?

[Matthew Green, NDP, Hamilton Centre, ON]

No, I guess it would be addressed to people from ESDC or any of the other staffers who are here. It's more a policy question. I know that Ms. Hogan is responsible only for answering the questions that are provided for in the particular study.

But Madam Chair, when we look at the default rates and we're positioning this as though somehow this is about students' ability to pay, for me the biggest elephant in the room is COVID. If we think this 2019-20 report is bad, I promise you, wait for the defaults in the years to come.

I am wondering, then, whether there has been a shift, in policy discussion, about how to adequately prepare for this.

[Graham Flack]

Maybe, Madam Chair, I can take that one.

[The Chair, Conservative, Kelly Block]

Thank you very much.

[Graham Flack]

Indeed, the program has evolved over time in response to the changes you've described, and the most significant change in the evolution was the introduction of the repayment assistance program.

Effectively, there are two ways you could have come at this at the front end, because, as you know, the dominant principle behind this program is to ensure a level playing field between students coming from lower-income families and those from families with means.

If those from families with means get into trouble a little bit into their career; if they get an illness and can't repay the loan, they are going to have parental support that will ensure that this doesn't affect their credit.

Low-income families, however, don't have that fall-back to turn to. There is, then, a high risk, if you just have a loan program, that those individuals will not go to university or to higher education because they think they will be taking too much risk.

[Matthew Green, NDP, Hamilton Centre, ON]

Can we pause right there? On the loan program, what is the typical average interest rate?

[Graham Flack]

Atiq, can you give the new numbers?

[Atiq Rahman]

Yes, the interest rate right now is prime. It used to be prime plus 2.5% in 2009; then it was reduced to prime.

[Matthew Green, NDP, Hamilton Centre, ON]

So that would be right now, for the people who might be tuning in...?

[Atiq Rahman]

That is right now. The latest on it is that the fall economic statement yesterday announced that interest will be eliminated for the next year on Canada student loans.

[Matthew Green, NDP, Hamilton Centre, ON]

That's a temporary pause, right? That came out in the fall economic statement, but we know that when that resumes, it will go back up.

I guess my point is that when we have the financialization of education, we're going to have a section that is going to default, likely within private sector financialization in particular. These are secondary loans that are covered for the cost of the duration of your education. There's profitability in that. Do we have any idea of what the financial sector profits from when it comes to the student loan programs?

[Graham Flack]

There is always an option, I guess, for individuals to go to private sector institutions to seek funding, but I think the way the student loan program is designed means that the vast majority of students will come in through the student loan program because of its favourable terms.

Just to get back to the repayment assistance program, the reason it's so key, particularly for low-income students, is that it takes out that risk. If it turns out that you're unable to get a job that pays more than $25,000, or if it turns out that you develop an illness or lose a job, you are going to have the government provide you effectively with a deferred grant to cover the cost of interest—and principal, eventually, if necessary.

This is one of the most important features that has evolved over time. I point out that, on the thousands of people who would be in the repayment assistance program, far from viewing that a negative factor, we in fact view that as the implementation of Parliament's explicit design. We want to ensure that for those individuals who don't have that income, we do not require them to repay as long as they don't have that income. That's one of those features that I think has been critical in ensuring that burden of debt. Individuals' fear that they're going to lose their credit rating if they don't get a job that pays well or if they lose their job is taken out of play. That's one of the most important features of the program, which is why—

[Matthew Green, NDP, Hamilton Centre, ON]

Have there been any policy discussions about how to lower the cost of tuition nationally?

[The Chair, Conservative, Kelly Block]

Please give us just a very short answer, Mr. Flack. Thank you.

[Graham Flack]

Tuition levels would be at the provincial level, but as the honourable member would know, in the context of COVID, there have been discussions around many things, including the fact that during COVID we doubled the grants, increased the loan levels people could take. Those discussions remain alive, yes.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Green.

We will now go to our second round of questioning, starting with Mr. Kent.

Welcome, Mr. Kent, to the committee. You have five minutes.

[Peter Kent, Conservative, Thornhill, ON]

Thank you, Chair. I'm delighted to sit in today.

Thank you to all of our witnesses.

Mr. Flack, continuing from your last answer and given the various extensions, this is a question that we discussed at the human resources committee, but given those who may be watching this committee meeting—students, families, the general public—it is continues to be relevant. Given the various extensions and deferrals of so many government programs, why has ESDC resumed its collection activities of Canada student loans?

I've had constituents ask me if there is data showing that student loan borrowers are in a better position than other Canadians to make repayments now than they might be in September 2021.

[Graham Flack]

It's a question of government policy, so I'll tread delicately because that would ultimately be for Parliament and the government to decide. What I can say is that the mechanism that has historically been in place to deal with individuals who, whether on an individual basis or on a systemic basis because of a recession, are unable to make their payments has been the repayment assistance program.

There was an agreement we were able to reach with the provinces for the first six months of the pandemic, which they supported because we co-deliver the program with them, to freeze that for that period of time.

I would point out that there are a number of provinces that have expressed to us the fact that they would not be interested in extending that, and that it would greatly complicate the delivery of this because it's an integrated program on a single platform, but that would ultimately be a policy decision for government.

As Atiq indicated, the government has announced in the fall economic update that it will freeze interest for all borrowers in 2021-22.

[Peter Kent, Conservative, Thornhill, ON]

Certainly, to encourage repayment, it would help if the National Student Loans Service Centre phone line was more capable and had greater capacity.

You've seen the news stories. There have been anecdotal complaints of calls being made about unauthorized bank withdrawals, statements showing mispayments, no answers about repayment assistance, and very long wait times.

What is being done to increase the capacity of that phone assistance service?

[Graham Flack]

Atiq can talk about the fact that he has managed to double the capacity. I think we have wait times down to 13 or 14 minutes.

For the honourable member, the key thing that hit us is that November is usually the time when we have more people coming in. You start paying your loan six months after graduation, so it's normally a peak time.

As you will recall, the added thing was that there were cyber-attacks on a number of government systems. They did not directly affect the Canada student loans program, but we were concerned that they could affect the system. As a result of our putting additional security measures in place, a considerable number of our clients had to call in to authenticate their accounts. That greatly increased the volume, but we thought it was the prudent thing to do, given the risk that their accounts, in principle, could have been hacked using similar tools.

Atiq, can you give an update on where we are on wait times and your efforts to reduce them?