Madam Speaker, it is appropriate that I am here to introduce the bill on education and student loans at a time when we have such a youthful audience in our gallery.
Madam Speaker, it is a great privilege for me to speak today on the reform of the student loans program.
As you know, we were elected to create jobs, help the economic recovery and give young Canadians hope again. That is why I announced a youth employment and training strategy a few weeks ago. I can tell you that we are moving ahead very quickly.
Recently, senior provincial and federal officials met to discuss the trainee program. We hope to announce the first initiatives very soon, which will give 60,000 young people job training in business within three years.
As members of the House would also know-I have certainly had many representations in this regard-we will be creating over 60,000 jobs for young Canadians this summer. That will be an increase of 20 per cent over last year. This program has always been well received and is particularly appropriate for young people.
Just last Friday in Winnipeg I announced the first 37 lead sites under the youth service corps. We are already engaged in a number of initiatives to try to give some new sense of hope and aspiration to young Canadians.
Today I want to address the House on another very central or key priority in the youth employment strategy and the major reforms we propose for the Canada student loans program.
Over the years the Canada student loans program has been a fundamental foundation of the entire higher education system. We rank among the top countries in the level of public assistance for university and community college students. We are certainly much more generous and extensive than many other countries in the OECD. Over 900,000 full time and more than half a million part time students are pursuing post-secondary education to make their futures brighter and to give them some sense of the skills they will need for the future.
However, like many other social and educational training programs sponsored at the federal level, our student loans are no longer designed to meet today's needs. There are very serious gaps in the programs which allow young people to fall between the cracks or put barriers or disincentives in their way.
There are rigidities in the system which do not allow us to provide for the flexibility that today's education requires. Young Canadians, their families, the educational community and student groups have repeatedly called for fundamental reform in the area of student loans. The bill is the first attempt in more than 30 years to try to come to grips with these necessary changes.
We propose in the legislation a much broader and more inclusive system that will bring people in from the margins and help those most in need. The result will be a system with various components and greater access to funding. Support in school and after school will facilitate employment, security and opportunities for learning. In short, it will give young Canadians the tools they need to achieve educational goals.
I tell members of the House that in preparing for the legislation we consulted with a wide variety of people: the Canadian Federation of Students, the National Educational Association, disabled students, the Association of Universities and Colleges, and the provinces. We all agree there are at least three main reasons change is required.
First, the Canada student loans program has been greatly underfunded. Full time loans have been frozen at a level of $105 per week since 1984. Yet education costs during that same period have jumped by over 58 per cent. Every member of Parliament has encountered students and former students who have had problems obtaining enough resources to continue their studies or who had difficulty repaying their loans. The proposed bill would address both these problems by substantially increasing the aid to students and by introducing measures that would ease the problems of repayment.
A second major reason for the change is the changing requirements of the labour market. The majority of jobs created by the year 2000 will require a minimum of 17 years of schooling. Yet approximately 60 per cent of our young people currently enter the workforce directly from high school with no further structured education or training. The great tragedy is that close to 30 per cent of young people drop out of school before they even reach the high school level. I do not think there is any greater argument or any greater reason that we must substantially improve access to our post-secondary education system.
There are also very important changes taking place in the population, especially with respect to those using our schools and universities. Although the majority of students are young people under the age of 25, increasingly Canadians born in the fifties and sixties are also returning to school. There has been a remarkable increase in the number of people who want to come back to school. This means that we must provide substantially better support for part time students or for adult returning students. Let me now present what in concrete terms we propose to do in the legislation.
First, we will increase the loan limits by 57 per cent or to the same level they would have been if there had not been a 10-year freeze imposed by the previous government. As a result full time loans will increase to $165 a week from $105 a week.
Second, the proposed act works for students with disabilities whose numbers in colleges and universities do not come close to reflecting their proportion of people in the population. Students with disabilities confront many obstacles to full participation in our economic mainstream. Learning should not be one of them. It is believed that fewer than 3 per cent of Canada's full time university and college students are those with disabilities.
The bill will deal directly with those situations by reducing the barriers. A survey by the National Educational Association of Disabled Students reported that taken together federal and provincial aid to students is totally inadequate. It also reported that $3,000 or less annually would help to meet the shortfall.
As a result we are providing in the legislation permission for students with permanent disabilities to qualify for grants up to $3,000 a year. This means that for the first time we will open the doors for those with disabilities in a very major way. It means that they will have more flexibility in their programs. They can take fewer courses and have more time to complete their studies. Students with permanent disabilities will also continue to be eligible to apply for forgiveness of the loans if they run into difficulties with repayment.
As many members of the Chamber will recognize, there are inequities for women in higher education. Current imbalances must be addressed. Although women are now well represented at the undergraduate level of universities and colleges, they are substantially under-represented in areas of post graduate studies. One-third of doctoral degrees are awarded to women. Only 9 per cent of doctoral degrees in areas like engineering and applied sciences go to women and only 17 per cent of those are in mathematics and physical sciences. This is a situation in which positive intervention on the part of government can help to correct these inequalities. Special opportunity grants of up to $3,000 a year will be available to women taking doctoral programs. Through this we will be able to substantially increase their access to fields like engineering, physical sciences and applied mathematics.
A third area of major change is the need to cope with the increasing number of people coming in as part time students. Part time students presently make up over one-third of all college and university enrolments in Canada. Many of them are helped by employers or work to finance their own studies. Clearly they do not need a large amount of government support, but there is a substantial minority of part time students who need financial assistance to continue in school. Student groups and educational associations have called for improvements in the part time loans program.
As Canadians go through the cycle of lifelong learning there will no longer be a question of simply being able to go to school as a young person, graduate and work for the same employer year after year. We are now in a situation in which they will be changing their workplace perhaps four or five times during their
working careers. To do so they will constantly have to go back to school to improve skills, upgrade education and substantially enhance their educational opportunities.
As a result we are proposing to raise the maximum loan for part time students by almost 60 per cent from $2,500 to $4,000. In addition under the new financing arrangements the repayment burden on part time students would be reduced by allowing them to pay only the interest on the loans while they are studying.
We also recognize that students who are single parents or people on income support assistance may not be able to meet the eligibility requirements for full time loans. These students need special attention to top up their resources, and the bill will provide it. Therefore special opportunity grants of up to $1,200 a year will be available to part time students with high financial needs. That will allow the single parent with children a substantial opportunity to go back to school. These grants will be used for direct costs of education such as tuition, books, local transportation and child care. It will provide a new foundation for part time students, especially single mothers, to go back to school.
At the present time the average student loan is around $6,000. However about 7 per cent of students graduate with debts of more than $15,000. Several provinces have recognized that very heavy debt burden and have implemented systems of deferred grants or loan forgiveness linked to the completion of studies.
In consultations on the reforms it became obvious that increasing loan levels would also increase debt levels. To ease the debt burden of high need borrowers we are creating a system of deferred grants to equalize and put them on a parallel with less needy students. Under the revised program individuals with Canadian student loans in excess of $16,000 on graduation would be eligible for a deferred grant. Under the new provisions we estimate that up to 21,000 students beginning studies in 1995-96 would be eligible for deferred grants when they graduate at the end of the decade.
Easing the transition from school to work makes eminent good sense. Canada wants and needs young people to pursue higher education. We are also urging all other Canadians, middle aged or old, to improve their abilities through lifelong learning. We cannot point to education as a key to success and then deny support to people who want to go back to school. The transition from school to work can be very difficult. Therefore the deferred grants will substantially help students with high financial need.
Under the present system the federal government can pay the interest on loans for up to 18 months. Their unemployment may be either as a result of their inability to find employment or because of a temporary disability or illness. This interest relief provision is effective in reducing the number of borrowers who default after leaving studies. However former students in low paying jobs cannot obtain this benefit. We intend to extend interest relief to include those in part time or low paying work. In other words, we will not penalize people for working at entry level jobs which allow them to gain experience and show employers what they can do.
A major problem with the existing program that has been highlighted by the Auditor General is the default issue. The bill would address the problem by authorizing agreements with lenders based on the risk sharing approach. Under the new arrangements the existing 100 per cent government guarantee would be removed and lenders would assume the liability for loans that must be repaid. Many loan defaults under the current loan program occur because lenders do not have the incentive to be diligent in servicing and collecting student loans.
The new financing arrangements are designed to provide incentives for lenders to give better services to students and for students to succeed in their studies. Lenders will help prevent defaults by offering income sensitive terms of repayment. The loan package was designed to meet the needs of students and to ensure that each student is treated as an individual, not simply as a number.
Let me stress that these new financing arrangements will not limit the access of students to loans. The basic objective of the program is to ensure students the credit and access they need to pursue their studies. That is why governments have a role to play in student assistance. The underlying objective of the student loans program will remain and all eligible students will continue to receive their loans.
I am sure there is a number of other major initiatives in the bill that my colleagues on this side of the House will address.
I would like to make two additional comments which I think provide some new flexibility. First, as it deals with provinces.
For example, as hon. members know, Quebec has its own student loans system. Unfortunately, under the old system, there was no cost sharing for students with special needs, as I said in my speech. Under the new system, loans for students with special needs in Quebec will increase. Also, there will be a new cost sharing for student loans in Quebec.
I think that this is another example of co-operation between the provinces and the federal government in this important system for students and for education.
I would like to point out another feature which I personally think is very crucial. We are in a world where we have to rethink much of what we are doing in education. In particular we have to begin to look at how we can substantially increase private participation, private investment in education. I said earlier that in Canada we spend perhaps the highest percentage of public moneys to assist in higher education but we have one of the lowest records of private involvement, private participation, private investment.
In order to ensure a brand new system of learning that will encompass opportunities at all stages and all levels of life and learning, we are going to have to give more incentive back to individuals to invest in their own educational opportunities.
One way that has been explored in a few countries such as New Zealand and Australia has been the notion of income contingency repayment. It allows students who take a loan to repay at the level of their income as opposed to a flat rate so that the deterrent of having a loan or a debt at the end of your regime does not provide a barrier.
We are proposing in this legislation to introduce an opportunity to work with individual provinces to set up a series of pilot projects to test out the notion of income contingency repayment. I can say to members of the House that I have already had several conversations with provincial ministers of education who have shown an interest in this program. It will substantially rewrite the way that we provide incentives for individuals to invest in their own education without the fear of having serious debts at the end. It will provide a scaled down portion of repayment.
I think this is a sign of the future. It is the kind of building block that we can put in place to make a new revision and reform and renewal of our broad based higher educational programs. I hope members of the House will take a look at these innovations that we have brought in to provide these new opportunities and see how they can act as a new framework through which we can rewrite the blueprint for higher education in Canada.
I very much appreciate the attention of the House in introducing this important legislation. I believe it will be a very major step forward in the immediate opportunity for improvements in the level of loans. It will give a substantial increase in opportunity for students with disabilities, women attending graduate school and students of high financial need. It will provide much broader access and will be new ground in the notion of the income contingency repayment and a new system of providing a lender based system using our banks and financial institutions to provide the capital while we provide the backup guarantee.
I do not pretend that this is the end of the reform. As members of this House will know we embarked on a much broader process of social reform in the country. I hope to be able to table for members in several weeks the broad framework of what we propose. This is a very important element. I think we all recognize how crucial the necessity for better learning, for better education, for better understanding of one's skills and abilities will be. We are going to be a society based upon high education and high skilled information technology. Therefore we have to ensure that our educational system keeps pace and stays relevant to those needs.
With this I strongly recommend to the House the passage of this legislation. I look forward to the discussions in committee. I hope that we can have fairly quick and speedy assessment by members so that this new program can be up and ready for students by the school year beginning this fall. If we can do that, I think this Parliament will make a very important statement to all Canadians that we are concerned and committed to their future.