Mr. Speaker, it would be an understatement to say that the federal government recognizes the importance of expanding access to post-secondary education. There are significant benefits to individuals, to the economy and to society.
A cornerstone of the government's efforts is the Canada student loans program. From its inception in 1964 to March 2001 the program has assisted 4.5 million full time students by providing a total of nearly $20 billion in subsidized loans. I happen to be one of the first ones who entered into the program. I appreciated this assistance. It allows for needy students to access the knowledge, skills and learning they need in order to obtain better jobs and to attain a better standard of living for themselves and for their families.
Not only does the Canada student loans program provide loans to needy students, it also provides additional assistance to students in school and provides help to graduates to deal with the problems of high student debt levels. Many of these measures were key components of the Canadian opportunities strategy announced in the 1998 budget. Specifically the federal government assists those students in school and in financial need by the following approaches.
It provides them with access to Canada student loans of up to $5,610 in loans per year to help them with their financial needs. Provinces supplement Canada student loans with their own student financial assistance programs.
It fully subsidizes the cost of interest on the loans while the students are in full time studies at an annual cost to the government of nearly $250 million.
It assists students with special needs through grants to supplement their student loans. There are grants for students with dependants, students with disabilities, high need part time students, and women pursuing doctoral studies. In the recent December 2001 budget the federal government increased by $10 million a year the assistance available for students with disabilities.
In addition, the Canada Millennium Scholarship Foundation, which was established and funded by the federal government, provides bursaries averaging $3,000 to over 90,000 needy students annually to help reduce the debt they would otherwise incur.
In recognition of the problems caused by increasing student debt loads, the federal government also provides significant additional assistance for graduates experiencing financial difficulties in repaying their student loans, such as the following.
Graduates experiencing financial difficulty in repaying their loans are eligible for interest free periods on their loan for up to 54 months after graduation. During these periods of interest relief, the government pays interest on the loan so that it is kept in good standing.
Also, if the graduate is still experiencing financial difficulty after interest relief has been exhausted, the loan repayment period can be extended from 10 to 15 years, reducing monthly payments by up to 25%. If there are still problems, debt reduction is available. The maximum amount of assistance is the lesser of 50% of the loan or $10,000.
In addition, there is a tax credit for interest paid on federal and provincial student debt. On Canada student loans the tax credit reduces the effective interest rate on the loan to slightly above prime.
Together these measures provide an insurance policy for graduates in repayment. They ensure that those having difficulty repaying their student loans will not have to go into default. Those with the most serious problems will have their debt reduced, unlike the member's proposal for a tax credit for principal paid on student loans. These measures target federal assistance to those who need the help the most. These are examples of what we think is smart spending.
In summary, the Canada student loans program currently disburses over $1.5 billion in loans annually to nearly 400,000 students, and up to $120 million in Canada study grants. Annually the program assists over 30% of all Canadian post-secondary students.
The cost to the government of the program is expected to be nearly $925 million in 2002-03. There is little doubt that the Canada student loan program has been an effective way to make post-secondary education more accessible for Canadians.
The cost borne by Canadian taxpayers to expand access to post-secondary education is a necessary investment in Canada's future, one that will pay huge dividends in terms of economic growth, increased productivity and higher incomes for the graduates.
Expanding access to post-secondary education continues to be a priority for the federal government. A key objective of the recently announced innovation strategy is to ensure that all Canadians have access to post-secondary education.
The Minister of Human Resources Development will be consulting with partners and stakeholders to determine how this objective can best be met.