Public Accounts Committee on Dec. 1st, 2020

[Karen Hogan]

I agree with you that a better solution would be to ensure that they are well educated on financial obligations and what they have agreed to when they enter the student loans program.

An item to note is that, for the first six months post education, there is no expectation of payments. Then, if payments do not begin, a loan is delinquent after that six-month period. During the delinquent period, they are reported to the credit bureau.

If it extends beyond that, I think it's about nine months after—

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Yes, it's 170 days.

[Karen Hogan]

—they would be considered in default; and then in default, they're no longer reported to the credit bureau.

We were looking for some consistency in the treatment, but as you say, financial literacy education is the best place for the government to start.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Thank you for that.

Next, then, I have two questions for the FCAC.

First, what progress can you report regarding providing ESDC with access to education materials for inclusion on the web portal?

My second question is a little more qualitative. What sense do you have that providing more information has led to better outcomes? Do you have any data on that front that would point to the default rate being lower, or the repayment rate higher, when students are provided with more of an informed choice as to what they're undertaking when they have these loans?

[Judith Robertson]

Thank you. I'm happy to respond to this question.

The first part is on the progress. We're actually very happy to report the progress that has been made, which has been made in stages. There are links to the various materials that we already have on our website, many of which are designed specifically for students.

In addition, one of the things I would point to that we think is quite pertinent to this population is the link to our budget planner, which is a tool that we introduced last year. It is a very simple and easy-to-use planning tool, really—I know that budgets tend to be a bit non-sexy—but it incorporates behavioural insights and prompts and nudges, so we're really looking forward to this as a way to see the—

[Greg Fergus, Liberal, Hull—Aylmer, QC]

I'm sorry to interrupt, but do you have any early data as to whether or not it has led to less of a default or delinquency in their paying back their loans?

[Judith Robertson]

Sorry, I don't have any specific data on the impact on the student loans, but evaluation is something that we do for all of our tools over time. As I said, this was just introduced a year ago, so we're looking forward to conducting those evaluations.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

My wife made me familiar with a great line that “in theory there is no difference between theory and practice, [but] in practice there is”. Do you have any data on other programs where you saw that, where people had informed themselves, they come from a certain population group and you've seen better results in terms of their being able to pay back the monies they owe?

[Judith Robertson]

We do. We had some really interesting research that we published last year and that we continue to build on. It's identifying specific behaviours that make a difference in what we call financial well-being. This is self-reported. A couple of behaviours really shone as making a difference, independent of the level of income. Of course, now we're not talking about subsistence. We're talking about people who do have incomes. Budgeting is one of the key ones. Those who planned for expenses and purchases and kept track really made a significant difference in their self-assessment. The second one is generating an emergency fund or a reserve fund, having some reserve to fall back on so that you aren't required to borrow in an unanticipated or unplanned way.

[The Chair, Conservative, Kelly Block]

Thank you very much for that.

We will now move on to Mr. Blanchette-Joncas.

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

Thank you, Madam Chair.

First, I would like to take some of my time to express the deep unease I felt earlier when my colleague Mr. Fergus began his speech in French and then stated: “Perhaps I should say it in English.” It is as if the French language is from another planet and it will be impossible for witnesses and committee members to understand.

Madam Chair, as a Quebecker, my official language is French. I want to make it clear that I have no qualms about speaking French, and I hope that my colleagues do not feel embarrassed or afraid to speak in one of Canada's two official languages. I just wanted to say this at the beginning of my speech, because I can absolutely—

[Greg Fergus, Liberal, Hull—Aylmer, QC]

I have a point of privilege, Madam Chair.

[The Chair, Conservative, Kelly Block]

A point of order, Mr. Fergus?

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Yes, Madam Chair.

The only reason I switched from French to English to make my comments is that I had read the English version of the document I was about to quote. As I was not able to provide a free translation, I changed the language. That's the only reason.

I have a very good relationship with Mr. Blanchette-Joncas, so I wanted to inform him that this was the only reason. I must admit that I felt a little hurt when he said that I did not respect the French language. The only reason I spoke in English was because I had the technical terms in English in mind.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Fergus. I—

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

Madam Chair, a point of order from me as well.

I would like to tell my colleague that I did not suggest any ill intentions on his part. I never clearly stated that he did not respect the French language. I simply expressed the discomfort I felt at the beginning of his speech. I welcome his clarifications. However, I find it more difficult when people suggest that I said things I did not say or, even worse, when people claim that I said things I did not say. At any rate, I thank my colleague for his clarification.

Madam Chair, while I have the floor, let me continue on the topic that brings us together today, which is the Auditor General's report.

Good morning, Ms. Hogan, distinguished witnesses.

Of course, we notice—

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Blanchette-Joncas. I've been able to confer with the clerk, and these are not points of order. I appreciate that you have expressed your opinions. As you appear to be ready to do so, we will move back to the questioning. We did stop the clock, so we will start the clock now.

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

That is excellent, Madam Chair. My thanks to you and to the clerk for that clarification.

So let's come back to the main topic, that is, the Auditor General's report.

Of course, Quebec has its own student financial assistance program. So the federal student financial assistance program supports students from other provinces. In its report, the Office of the Auditor General showed some gaps in the management of this program, in terms of debt recovery. The reality is that students do not understand their financial obligations. The Auditor General reported that $2.4 billion in debt was outstanding. While this does not directly affect Quebec students, it does affect Quebec and Canadian taxpayers. Actually, if students in the rest of the country don't pay their student debts, ultimately, all taxpayers will have to pay them.

Ms. Hogan, looking at your speaking notes, I stopped at paragraph 6. You say that the department has known about the integrity problem and about the risk that ineligible students might participate in the plan since 2015. On the loan side of student financial assistance programs, you say that the department does not properly check the information on applications to the repayment assistance plan, because it has no way of checking the accuracy.

At the time of the audit, did the Canada Revenue Agency not have the information to check the income of applicants? This was a well-known practice in other provinces, particularly in Quebec.

Can you tell us in more detail what measures the Canada Revenue Agency should put in place to properly check the applications?

[Karen Hogan]

Thank you for the question.

There is a threshold for the income that a borrower can have to qualify for the repayment assistance plan. The department had noticed, as we did later on, that a number of borrowers had incomes above the threshold. There was a lack of information on that. We therefore encouraged the exchange of information between the department and the Canada Revenue Agency. As the other witnesses mentioned, we are in the process of reviewing that. For example, the audit could be done by looking at previous years' tax returns. There could also be more information when determining people's eligibility. In addition, there should be ongoing monitoring while people are taking part in the repayment assistance plan.

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

Thank you, Ms. Hogan.

Let me make an observation. We know that education is an area of provincial jurisdiction under the Constitution, particularly in Quebec. Logically, student assistance programs should therefore be the responsibility of the provinces. In Quebec, we have known that for more than 50 years, even since Daniel Johnson.

Would you not say that there are simply too many levels of bureaucracy that unduly complicate matters and that mean that we end up in situations such as the ones you describe in your report?

[Karen Hogan]

It is difficult to answer that question. Determining who runs a student loan program is really a political matter.

I feel that ESDC could benefit from more information in order to understand why borrowers in the repayment assistance plan are not paying their loans back. It would involve doing a more in-depth evaluation of the program, as well as the way in which it interacts with the Canada education savings program.

Regardless of whether the assistance comes from a province or from the federal government, the goal is to increase the number of students in Canada. Deciding which level of government it should come from is really a political matter. I will leave that decision to those in Parliament.

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

Thank you, Ms. Hogan. I did not want to make you uncomfortable, not at all. I just wanted you to tell me your observations about the levels of bureaucracy, with a view to improving the efficiency and effectiveness of the whole.

In your report, were you able to determine whether communication flows easily and effectively between the provinces and the federal government? The latter runs the study programs for the students but, in reality, the provinces run the schools and communicate with the students, to a certain extent.

Did you feel that it was effective and that communication and management flowed easily?

[Karen Hogan]

Our audit did not focus on the communication between the provinces and the federal government. We just looked at how the government was running the education savings program and the loans program.

I don't know if one of my colleagues could give you an answer.

Mr. Le Goff, did you notice whether communication flowed or did not flow between the levels of government?

[Philippe Le Goff, Principal, Office of the Auditor General]

Good morning, Madam Chair.

Listen, I can tell you that—

[The Chair, Conservative, Kelly Block]

Good morning. Give just a very short answer, please.