Vol. 145, No. 8 — April 13, 2011

Registration

SOR/2011-96 March 25, 2011

CANADA STUDENT FINANCIAL ASSISTANCE ACT

ARCHIVED — Regulations Amending the Canada Student Financial Assistance Regulations

P.C. 2011-460 March 25, 2011

His Excellency the Governor General in Council, on the recommendation of the Minister of Human Resources and Skills Development, pursuant to section 15 (see footnote a) of the Canada Student Financial Assistance Act (see footnote b), hereby makes the annexed Regulations Amending the Canada Student Financial Assistance Regulations.

REGULATIONS AMENDING THE CANADA STUDENT FINANCIAL ASSISTANCE REGULATIONS

AMENDMENTS

1. (1) Paragraph (c) of the definition “full-time student” in subsection 2(1) of the Canada Student Financial Assistance Regulations (see footnote 1) is replaced by the following:

(2) The definitions “full-time direct loan agreement” and “full-time risk-shared loan agreement” in subsection 2(2) of the Regulations are replaced by the following:

“full-time direct loan agreement” means a contract that is entered into after July 31, 2000 between a qualifying student and the Minister under paragraph 5(1)(d) and

(a) that is in the prescribed form; and
(b) that includes the student’s social insurance number. (contrat de prêt direct à temps plein)

“full-time risk-shared loan agreement” means a contract that was entered into before August 1, 2000 between a qualifying student and a lender under these Regulations. (contrat de prêt à risque partagé à temps plein)

2. Sections 3 and 4 of the Regulations are replaced by the following:

3. A certificate of eligibility issued under subsection 12(1) of the Act shall specify whether the qualifying student named in that certificate qualifies for the issuance of that certificate under the Act and these Regulations as a full-time student or part-time student.

3. The heading “OBTAINING AN INITIAL STUDENT LOAN” before section 5 and sections 5 and 6 of the Regulations are replaced by the following:

OBTAINING A DIRECT LOAN

5. (1) Subject to section 15, the Minister may make a direct loan to a qualifying student who is enrolled as a full-time student at a designated educational institution and who

(a) is issued, or in respect of whom is issued, a certificate of eligibility;
(b) within 30 days after obtaining confirmation of their enrolment from an officer of the designated educational institution but no later than the last day of the confirmed period, submits the confirmation of enrolment
1. (i) to the Minister unless they are notified in writing by the appropriate authority that the confirmation of enrolment is to be submitted to the Minister by the designated educational institution, and
2. (ii) to the branch of the lender to which they are indebted under any risk-shared loan agreement or guaranteed student loan agreement;

(c) authorizes the designated educational institution to forward to the Minister any refund of fees that have been paid with the proceeds of a direct loan authorized by the certificate of eligibility for credit against any direct loans of the student;
(d) has entered into a full-time direct loan agreement for the period of studies referred to in the certificate of eligibility;
(e) if more than six months have elapsed between the day on which the student ceased to be a full-time student under section 8 and the first day of the current confirmed period,
1. (i) if they are indebted under any full-time risk-shared loan agreement or guaranteed student loan agreement entered into as a full-time student, pays to the lender any interest accrued under those agreements to the day before the first day of the confirmed period, and
2. (ii) if they are indebted under any full-time direct loan agreement, pays to the Minister any interest accrued under that agreement to the day before the first day of the confirmed period;

(f) if the confirmation of enrolment is submitted to the Minister more than six months after the day they ceased to be a full-time student under section 8 but before the last day of the confirmed period that started within the six-month period,
1. (i) if they are indebted under any full-time risk-shared loan agreement or guaranteed student loan agreement entered into as a full-time student, either
  1. (A) pays to the lender the interest accrued under those agreements from the day after they ceased to be a full-time student to the day before the day on which the confirmation of enrolment is submitted to the Minister, or
  2. (B) enters into a consolidated risk-shared loan agreement or a consolidated guaranteed student loan agreement in which the unpaid accrued interest referred to in clause (A) is added to the principal amount,
1. (ii) if they are indebted under any full-time direct loan agreement, either
  1. (A) pays to the Minister the interest accrued under those agreements from the day after they ceased to be a full-time student to the day before the day on which the confirmation of enrolment is submitted to the Minister, or
  2. (B) enters into a consolidated direct loan agreement in which the unpaid accrued interest referred to in clause (A) is added to the principal amount.

(2) A qualifying student who has no outstanding student loan or guaranteed student loan made to them as a full-time student and who meets the conditions referred to in paragraphs (1)(a) to (d) becomes a full-time student on the later of the day on which the confirmation of enrolment is received by the Minister and the day on which they enter into the full-time direct loan agreement.

(3) A qualifying student who has an outstanding student loan or guaranteed student loan made to them as a full-time student and who meets the conditions referred to in paragraphs (1)(a) to (d)

(a) in the case where they meet the requirements of paragraph (1)(e) or (f), again become a full-time student on the day on which they meet those requirements; or
(b) in any other case, continues to be a full-time student beginning on the day following the day on which they would otherwise have ceased to be a full-time student.

4. Section 7 of the Regulations is replaced by the following:

7. (1) Subject to section 15, a borrower shall, in order to continue to be or again become a full-time student,

(a) within 30 days after obtaining confirmation of their enrolment from an officer of the designated educational institution at which they are enrolled but before the end of the confirmed period, submits the confirmation of enrolment
1. (i) to the Minister, if they are indebted under a direct loan agreement, and
2. (ii) to the branch of the lender to which they are indebted under a risk-shared loan agreement or guaranteed student loan agreement;

(b) when more than six months have elapsed between the day on which they ceased to be a full-time student under section 8 and the first day of the current confirmed period,
1. (i) pay, if they are indebted under any full-time risk-shared loan agreement or guaranteed student loan agreement entered into as a full-time student, to the lender any interest accrued under those agreements to the day before the first day of the confirmed period, and
2. (ii) pay, if they are indebted under any full-time direct loan agreement, to the Minister any interest accrued under that agreement to the day before the first day of the confirmed period;

(c) if the confirmation of enrolment is submitted more than six months after the day that they ceased to be a full-time student under section 8 but before the last day of the confirmed period that started within the six-month period and
1. (i) if they are indebted under any full-time risk-shared loan agreement or guaranteed student loan agreement that was entered into as a full-time student, either
  1. (A) pay to the lender the interest accrued under those agreements from the day after they ceased to be a full-time student, or
  2. (B) enter into a consolidated risk-shared loan agreement or a consolidated guaranteed student loan agreement in which the unpaid accrued interest referred to in clause (A) is added to the principal amount; or
1. (ii) if they are indebted under any full-time direct loan agreement, either
  1. (A) pay to the Minister the interest accrued under that agreement from the day after they ceased to be a full-time student, or
  2. (B) enter into a consolidated direct loan agreement in which the unpaid accrued interest referred to in clause (A) is added to the principal amount.

(2) A borrower who meets the conditions referred to in paragraph (1)(a)

(a) in the case where they meet the conditions of paragraph (1)(b) or (c), again becomes a full-time student on the day on which they meet those conditions; or
(b) in any other case, continues to be a full-time student beginning on the day following the day on which they would otherwise have ceased to be a full-time student.

5. The portion of subsection 8(1) of the Regulations before paragraph (a) is replaced by the following:

8. (1) Subject to paragraphs 5(3)(b) and 7(2)(b), the borrower ceases to be a full-time student on the earliest of

6. Paragraphs 15(1)(a) and (b) of the Regulations are replaced by the following:

(a) if the Minister is informed that the borrower has failed to consolidate risk-shared loans or guaranteed student loans made to them as a full-time student within six months after the month in which they ceased to be a full-time student and they do not fulfil the requirements of subsection 5(1) or 7(1) before a judgment is obtained against them and such that the beginning of the last confirmed period is on or before the last day of that six-month period, the day following the last day of that confirmed period;
(b) if the Minister is informed that the borrower has failed to make a required payment within the two-month period after the payment was required under their loan agreement, guaranteed student loan agreement, these Regulations or the Canada Student Loans Regulations and they do not fulfil the requirements of subsection 5(1), 7(1), 12.1(1) or 12.2(1), as the case may be, within that period, the day following the last day of that period;

7. Section 33 of the Regulations is replaced by the following:

33. The Minister, an appropriate authority or a body authorized by the Minister for a province may make a grant, other than a grant awarded under section 34 or 40.022, to a qualifying student who

(a) is issued, or in respect of whom is issued, a certificate of eligibility;
(b) within 30 days after obtaining confirmation of their enrolment from an officer of the designated educational institution at which they are enrolled but no later than the last day of the confirmed period, submits the confirmation of enrolment
1. (i) to the Minister unless they are notified in writing by the appropriate authority that the confirmation of enrolment is to be submitted to the Minister by the designated educational institution, and
2. (ii) to the branch of the lender to which they are indebted under any risk-shared loan agreement or guaranteed student loan agreement;

(c) has entered into a full-time direct loan agreement or a direct student loan agreement for the period of studies referred to in the certificate of eligibility in relation to repayment of the grant under subsection 40.04(2).

COMING INTO FORCE

8. These Regulations come into force on the later of June 1, 2011 and the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issue and objectives

The Canada Student Loans Program (CSLP) promotes access to post-secondary education through the provision of financial assistance to eligible students. Pursuant to the Canada Student Financial Assistance Regulations (CSFAR), students must sign a combined student loan agreement and certificate of eligibility each time they receive a loan or grant disbursement. This repetitive process is a remnant from the time when banks delivered student loans and is unnecessarily burdensome for students.

The objectives of the amendments to the CSFAR are to

Reduce the administrative burden on students by simplifying the student loan and grant disbursement process; and
Support the Government of Canada’s Service Delivery Vision (SDV), announced in Budget 2008, to modernize and simplify the CSLP by streamlining the administration of student financial assistance.

Description and rationale

Under the current loan disbursement process, students who have applied for financial assistance and have been found to be eligible to receive a Canada Student Loan or Canada Student Grant must go through a series of steps in order to obtain their award:

obtain a Certificate of Eligibility from the province/territory (document indicating that a student is eligible for student financial assistance);
be confirmed as enrolled by their designated educational institution;
sign and consent to the certification portion of the Certificate of Eligibility;
provide bank account information for electronic funds transfers and deposit;
sign a student loan agreement (contract between the student and the Minister stating the terms and conditions applicable to a Canada Student Loan or a Canada Student Grant that has been converted into a Canada Student Loan due to a change in the student’s circumstances); and
provide proof of identification at an authorized Canada Post location or an on-campus National Student Loans Service Centre (NSLSC) kiosk.

These steps must be repeated by students each time that they are found to be eligible to receive financial assistance. Thus, a student in a four-year program who is eligible to receive Canada Student Loans and/or Grants in each year of study would have to complete this process at least once per year, and as often as four times per year, depending on their disbursements and any reassessments that are performed. This places an extraordinary administrative burden on students.

The roots of the current process come from the previous loan disbursement system under which student loans were disbursed by financial institutions and lenders were numbered in the hundreds. At that time, it was more practical to issue certificates directly to students. However, under the direct loan regime in place since August 2000, opportunities exist to streamline this process. With the CSLP using a single service provider, it is possible to issue certificates of eligibility and confirmations of enrolment directly to the service provider without the student having any involvement in the transmission of the documents.

These amendments allow the CSLP to introduce in British Columbia, in time for the 2011–2012 loan year, a multi-year direct loan agreement, the Master Student Financial Assistance Agreement, that will cover all loan and grant disbursements, including those to be made in the future. The principal difference between the current student loan disbursement process and the new multi-disbursement process is that students entering into the new loan agreement will be able to receive future student loan and grant disbursements without re-signing an agreement, subject to a few limitations depending on the student’s circumstances. These changes will also allow the Certificate of Eligibility to be forwarded directly from the province/territory to the service provider and the confirmation of enrolment to be forwarded directly from the designated educational institution to the service provider when possible.

Once implemented in British Columbia for the 2011–2012 loan year, the new process will be gradually implemented in other participating jurisdictions. The regulatory amendments to the CSFAR allow the current procedure and the new procedure to exist in different provinces and territories and give the Government of Canada the option of implementing the multi-year loan agreement in any participating province or territory.

Description of amendments to the CSFAR

Amendments to the CSFAR associated with the following key elements were made to allow for the existence of the new multi-disbursement loan process.

Student loan agreements and disbursement requirements

The amended Regulations allow CSLP to disburse financial assistance to students provided that they either sign or have already signed a loan agreement that will cover that disbursement. This allows either the current procedure or the new multi-year procedure to be used in a particular province or territory, and supports the objective of reducing the burden on students, since future disbursements will be possible with significantly less participation from the student in participating jurisdictions where the new multi-year procedure is available.

Certificate of Eligibility

The amendments reduce the number of regulatory requirements related to the Certificate of Eligibility. This provides flexibility in the way that participating provinces and territories provide certificates of eligibility for students who are eligible for loans and grants. For example, by eliminating the requirement for a student to sign the Certificate, the process can be simplified by having provinces and territories send the Certificate to the service provider directly.

Confirmation of enrolment

The amendments allow for students to be relieved of the requirement to confirm their own enrolment at a designated educational institution if the province or territory informs them that their enrolment will be confirmed by their educational institution. This will alleviate the student’s need to obtain information that can be easily shared between educational institutions and the service provider.

Process for obtaining Canada Student Grants

The amended Regulations specify that a student receiving a grant has to enter into an agreement governing those grants in cases where they would be converted into loans. Grant conversion into a loan occurs in relatively rare situations where students’ circumstances change and they are no longer entitled to a grant, and prevents situations where students have to immediately pay back their grant.

Other changes

Other regulatory amendments have been made to ensure consistency of the CSFAR, clarify important elements or adjust paragraphs referring to modified sections.

The definition of “full-time students” is amended to refer to the new paragraphs that have been added to the CSFAR;
The parts of the definition of “full-time direct loan agreement” relating to the terms and conditions of the current loan agreement are removed so that the definition applies to loan and grant disbursements made under the current loan agreement and under the multi-year loan agreement;
The definition of “full-time risk-shared loan agreement” is changed so that it reflects the change made to the definition of “full-time direct loan agreement”;
The requirement that students transferring to another designated educational institution obtain a written authorization from their province or territory to get a student loan on the basis of their enrolment at another designated educational institution is removed as it is no longer a current practice;
Amendments to sections to clarify the circumstances in which students are restricted from receiving further student financial assistance (which can include loans, grants, interest-free periods, or repayment assistance) and to remove references to past loan regimes that are no longer in force; and
References associated with entering into a risk-shared loan regime have been removed from sections 3, 5, 6, 7 and 33 and subsections 2(1), 2(2), 8(1) and 15(1) as this type of financial assistance is no longer provided by the CSLP.

In summary, sections 3, 5, 6, 7 and 33 and subsections 2(1), 2(2), 8(1) and 15(1) of the CSFAR are amended to allow both the current process and the multi-year loan agreement process to coexist.

Benefits and costs

The amendments do not affect the substantive eligibility criteria for financial assistance or the amount of financial assistance for which a student may be eligible.

Benefits

Moving from the current administratively cumbersome process to a multi-year direct loan agreement will greatly diminish the amount of time currently spent waiting in line by students to fulfil the current requirements for obtaining a loan or a grant. The major time saving benefits will be realized after the first year that the new process is implemented in a particular province or territory, as all recipients of Canada Student Loans or Canada Student Grants are asked to sign the multi-year loan agreement in its initial year of implementation.

For example, approximately 60 000 students in British Columbia are expected to receive a Canada Student Loan for the 2010–2011 loan year. Every loan year, approximately 45% of borrowers are first-time loan recipients. It is therefore anticipated that, in British Columbia, approximately 27 000 first-time student borrowers will have to sign a multi-year loan agreement each year while 33 000 student borrowers will not have to go through the process of entering into a student loan agreement. The time savings that students would experience when signing a multi-year loan agreement will be similar in any province or territory.

This will enhance the Government of Canada’s ability to provide better service to students and support its SDV.

Costs

As a loan and grant disbursement system is already developed and in place, the amendments do not necessitate new requirements nor do they require a new administrative process. The only difference between the current and the new process is that some of the administrative steps of the current loan and grant disbursement process are removed or, in certain circumstances, do not require the student’s direct involvement. Also, no additional costs are associated with monitoring and enforcing the new process. Thus, there is no financial cost to the Government of Canada as a result of the regulatory amendments.

Consultation

The proposed loan disbursement process is part of the Government of Canada’s broader SDV. The SDV is the result of a 2007 CSLP review of the student financial assistance system. During the review, many consultations were conducted with the provinces and territories through the Intergovernmental Consultative Committee on Student Financial Assistance (ICCSFA). The implementation of the multi-disbursement loan agreement was identified as one of five federal and provincial/territorial priorities to streamline and modernize the student financial assistance system.

Stakeholders also participated in the 2007 review through meetings of the National Advisory Group on Student Financial Assistance (NAGSFA). During the review, they suggested to CSLP to consider using a multi-year loan agreement. Stakeholders were extensively consulted in the development of the SDV and support its objectives. NAGSFA comprises

the Canadian Federation of Students;
the Canadian Alliance of Student Associations;
the Canadian Association for University Continuing Education;
the National Educational Association of Disabled Students;
the National Association of Career Colleges;
the Association of Universities and Colleges of Canada;
the Canadian Association of University Teachers;
the Association of Canadian Community Colleges;
the Canadian Association of Student Financial Aid Administrators;
the Canadian Association of University Business Officers;
the Intergovernmental Consultative Committee on Student Financial Assistance, and
two members of the academic community.

Updates were provided to ICCSFA and NAGSFA at their respective meetings with the CSLP in November 2010. Both the provinces and territories at ICCSFA, and stakeholders at NAGSFA, restated their support for the multi-year loan agreement initiative.

In February 2011, a draft of the Regulations was shared with the NAGSFA and ICCSFA members for feedback and comments. Stakeholders indicated support for the regulatory amendments.

Implementation, enforcement and service standards

The new multi-year loan agreement will be implemented in British Columbia in time for the 2011–2012 loan year. Students in British Columbia who are found eligible for a full-time student loan or grant will receive by mail a multi-year loan agreement as early as June 2011. To get their loan disbursement, they will be required to sign the agreement for the 2011–2012 loan year, but will not be required to re-sign an agreement in the future (except in rare cases: if the student’s permanent province of residence changes; they sign another loan or repayment agreement; or they take a break in study of at least two years). The province of British Columbia will send a certificate of eligibility to the service provider and designated educational institutions will confirm the student’s enrolment to the service provider. The CSLP has the option of implementing the multi-year loan agreement in other participating provinces or territory for the loan year 2012–2013.

The procedures for the administration of CSLP are set out by the CSFAR. These amendments do not necessitate any formal compliance mechanism. To ensure effective management and accountability to Canadians, CSLP will continue to monitor its program and performance measures will continue to be included in its Annual Report and Actuarial Report, and Human Resources and Skills Development Canada’s Departmental Performance Report.

Contact

Atiq Rahman
Director
Operational Policy and Research
Canada Student Loans Program
Learning Branch
Human Resources and Skills Development Canada
200 Montcalm Street, Tower II, 1st Floor
Gatineau, Quebec
K1A 0J9
Telephone: 819-994-4518
Fax: 819-997-6037

Footnote a
S.C. 2008, c. 28, s. 108

Footnote b
S.C. 1994, c. 28

Footnote 1
SOR/95-329

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