Vol. 144, No. 14 — July 7, 2010

Registration

SOR/2010-144 June 17, 2010

CANADA STUDENT FINANCIAL ASSISTANCE ACT CANADA STUDENT LOANS ACT

Regulations Amending the Canada Student Financial Assistance Regulations and the Canada Student Loans Regulations

P.C. 2010-769 June 17, 2010

Her Excellency the Governor General in Council, on the recommendation of the Minister of Human Resources and Skills Development, hereby makes the annexed Regulations Amending the Canada Student Financial Assistance Regulations and the Canada Student Loans Regulations pursuant to

(a) section 15 (see footnote a) of the Canada Student Financial Assistance Act (see footnote b); and

(b) section 17 (see footnote c) of the Canada Student Loans Act (see footnote d).

REGULATIONS AMENDING THE CANADA STUDENT FINANCIAL ASSISTANCE REGULATIONS AND THE CANADA STUDENT LOANS REGULATIONS

CANADA STUDENT FINANCIAL ASSISTANCE ACT

CANADA STUDENT FINANCIAL ASSISTANCE REGULATIONS

1. Paragraph 40.04(1)(b) of the French version of the Canada Student Financial Assistance Regulations (see footnote 1) is replaced by the following:

b) a obtenu une bourse par suite de la fourniture de renseignements inexacts au ministre, à l’autorité compétente ou à l’entité autorisée par le ministre ou par suite de l’omission de leur fournir des renseignements;

2. The headings before section 40.1 of the Regulations are replaced by the following:

PART VII

GENERAL

ADMINISTRATIVE MEASURES — PRESCRIBED PERIOD

40.05 (1) Subject to subsection (2), for the purposes of paragraphs 17.1(1)(a), (b), (d), (f) and (g) of the Act, the prescribed period is as follows:

(a) if the amount of assistance awarded in excess of the amount to which the person would have otherwise been entitled is

(i) less than $4,000, one year,

(ii) $4,000 or more but less than $6,000, two years,

(iii) $6,000 or more but less than $8,000, three years,

(iv) $8,000 or more but less than $10,000, four years, and

(v) $10,000 or more, five years;

(b) if the person is not a qualifying student, five years; and

(c) if administrative measures have already been taken in respect of the person under section 17.1 of the Act or section 18.1 of the Canada Student Loans Act, five years.

(2) If more than one period applies to the person under subsection (1), the prescribed period is the longest applicable period.

SUBROGATION

CANADA STUDENT LOANS ACT

CANADA STUDENT LOANS REGULATIONS

3. Subsection 24(3) of the Canada Student Loans Regulations (see footnote 2) is replaced by the following:

(3) For the purposes of subsections 12(2) and (3) of the Act, the amount that the Minister shall pay to a lender in respect of a guaranteed student loan on any day after a borrower’s death or disappearance that the Minister may fix shall be equal to the amount of the outstanding balance of principal and accrued interest payable by the borrower on that day.

4. The Regulations are amended by adding the following after section 29:

ADMINISTRATIVE MEASURES — PRESCRIBED PERIOD

29.1 (1) Subject to subsection (2), for the purposes of paragraphs 18.1(1)(a), (c) and (d) of the Act, the prescribed period is as follows:

(a) if the amount of assistance awarded in excess of the amount to which the person would have otherwise been entitled is

(i) less than $4,000, one year,

(ii) $4,000 or more but less than $6,000, two years,

(iii) $6,000 or more but less than $8,000, three years,

(iv) $8,000 or more but less than $10,000, four years, and

(v) $10,000 or more, five years;

(b) if the person is not a qualifying student, five years; and

(c) if administrative measures have already been taken in respect of the person under section 18.1 of the Act or section 17.1 of the Canada Student Financial Assistance Act, five years.

(2) If more than one period applies to the person under subsection (1), the prescribed period is the longest applicable period.

COMING INTO FORCE

5. (1) These Regulations, except sections 2 and 4, come into force on the day on which they are registered.

(2) Sections 2 and 4 come into force on August 1, 2010.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issue and objectives

Amendments to the Canada Student Loans Regulations (CSLR) and the Canada Student Financial Assistance Regulations (CSFAR) implement changes to the Canada Student Financial Assistance Act (CSFAA) and the Canada Student Loans Act (CSLA) adopted in the Budget Implementation Act, 2009, which received Royal Assent on March 12, 2009.

The Budget Implementation Act, 2009 introduced sections 17.1 of the CSFAA and 18.1 of the CSLA to enable the Minister to take administrative measures, which include denying, for a prescribed period, financial assistance or seeking the immediate repayment of student loans or grants under these Acts when an individual has obtained financial assistance to students (FAS) by knowingly making false statements or misrepresentations, including by omission, in an application or other documentation (i.e. is in non-compliance with the legislation).

The Budget Implementation Act, 2009 also provided the Minister with the authority to ensure that the loan obligations of a borrower are terminated in the event of his or her death, certified or presumed, regardless of the type of loan held, be it risk-shared, guaranteed or direct.

In order to fully implement these legislative changes, the amendments to the regulations set a framework for the exercise of these new authorities.

In implementing the administrative measures, the Government of Canada’s goal is to deter instances when individuals make false statements or misrepresentations, including by omission, in order to acquire FAS, including loans, grants, repayment assistance, and in-study interest-free status, by setting clear and appropriate periods of denial of financial assistance when these instances occur. The new provisions will also prevent individuals who have been recognized for providing false statements or misrepresentations, including by omission, from doing so repeatedly for a prescribed period.

Additionally, the provisions related to the death of a borrower eliminate the discrepancy between the legislation and the regulations that in the future could hinder the process of terminating the loan obligations of disappeared borrowers under the guaranteed loan regime who are considered deceased.

Description and rationale

Changes to the CSFAR and the CSLR include the following key elements:

Administrative measures

The regulations introduce new sections in both the CSFAR and the CSLR that set a period of one, two, three, four or five years as the prescribed period where the Minister could deny FAS. The period of time is set in relation to an amount of financial assistance given as a result of the false statement, misrepresentation or omissions.

For example, if the person received between $4,000 and $6,000 as result of a false statement, misrepresentation or omission, the person could be denied FAS for a two-year period. A suspension of five years is mandated if the person would not have been qualified for enrolment or was never enrolled in the program of studies indicated in an application or other document provided, or if administrative measures have already been taken in respect of that person.

As instances of non-compliance with the CSFAA and CSLA are minimal, the new provisions are anticipated to affect a small percentage of individuals overall. For instance, there were 127 confirmed cases from January 2002 through December 2006, representing approximately $1.3 million out of a total of $9 billion in funding issued (approximately 0.014%). The implementation of the administrative measures section of the legislation and the regulations is expected to result in net cost savings to the Government of Canada in the amount of approximately $364,000 annually.

The measures enhance the integrity of the federal government’s FAS portfolio and ensure that resources are allocated to individuals who have demonstrated legitimate entitlement and need. This supports the mandate of the Canada Student Loans Program (CSLP) of ensuring that loans and grants are only provided to qualifying students based on financial need.

Even if these numbers are relatively small, the new provisions are preventive in nature and ensure the protection of federal government funds. The prospect of not having access to financial assistance for a number of years is a deterrent commensurate with the small percentage of non-compliance.

Death of borrower

The amendment updates the CSLR to ensure that an existing section properly references the newly added section 12(3) in the CSLA with respect to the disappearance of a borrower. It ensures that the regulations and legislation are fully aligned. As per section 12(3) of the CSLA, it is the Minister who determines if a borrower who has disappeared can be presumed dead. This determination is based on proof of death or disappearance.

The application of the new provisions is expected to be cost neutral as the cost of terminating the debt obligations of a deceased borrower is approximately the legal costs that the federal government would incur to manage and recover the debt. The volume of such instances is expected to be minimal.

Consultation

On June 15, 2009, the CSLP met with representatives of the National Advisory Group on Student Financial Assistance (NAGSFA), a group of stakeholders made up of post-secondary education students’ associations, educational organizations, student financial aid administrators, and members of the academic community. A subsequent invitation was extended to NAGSFA members for a meeting on August 17, 2009, to further discuss questions and comments regarding the administrative measures.

NAGSFA members recommended that a mechanism for reconsideration should be available to individuals facing administrative measures to address instances where an individual is seeking a modification to or rescinding of the measure. Members suggested both internal and external parties could be involved in reviewing information submitted for reconsideration.

Additionally, they wanted to ensure that a robust system be developed for

(a) informing students in general, in advance, about the possibility of administrative measures resulting from instances of non-compliance, including false statements or misrepresentations, including by omission;

(b) clearly notifying an individual about a measure when the non-compliance has been determined; and

(c) clearly informing individuals about the tools at their disposal when they have received notice of a measure.

Following these meetings, the CSLP has developed a comprehensive administrative measures process that includes a stage for reconsideration of information and facts. This process will be implemented along with the approved regulations that will become effective on August 1, 2010. The reconsideration mechanism has been developed in policy as there is no enabling authority for it to be defined in the regulations.

These regulations were pre-published in the Canada Gazette, Part I, on April 3, 2010, followed by a 30-day comment period. No comments were received.

Implementation, enforcement and service standards

The CSLP has an established administrative investigations process that has been in place since 2002. The CSLP’s administrative investigators review cases where there is a question regarding compliance. These investigators produce a Record of Investigation for each case that includes the facts of the case along with recommendations. This record is passed on to an adjudicator for review and finally approved by the CSLP. Information gathered during investigation will serve as a basis for the determination of administrative measures.

As per the legislation, persons facing an administrative measure may make submissions to the Minister, or a delegate thereof, at any time. Based on the new facts that are presented in such a submission, the Minister, or a delegate thereof, may rescind or modify the measure.

The CSLP will implement these new administrative measures on the first day of the 2010–2011 loan year, i.e. August 1, 2010. Meetings with the participating provincial and territorial jurisdictions and the federal Service Provider to discuss business needs began in fall of 2009. Discussions were ongoing throughout the winter of 2010, and testing of the federal solution began in the spring of 2010.

As part of implementation for August 1, 2010, amendments to the Terms and Conditions of the Canada Student Loan Agreement were approved on April 22, 2010. The amendments include inserting references into the Terms and Conditions regarding the immediate repayment of loans as well as the potential accrual of interest on an outstanding amount of student loan as a result of the denial, for a prescribed period, or termination of an interest-free period available to full-time students during their studies.

In addition, the CSLP will be working with the Canada Revenue Agency (responsible for carrying out collection activities for the Program) to ensure that the death of borrower amendment is fully implemented.

Performance measurement and evaluation

The CSLP has been conducting reviews of instances of non-compliance since 2002. Following the implementation of the regulations, the CSLP will begin to track data on administrative measures and will report on this data in conjunction with the results of the reviews that are undertaken. Also, in monitoring this data, the CSLP expects to conduct trend analysis in an effort to develop further strategies for managing risks.

Contact

Micheline Nehmé
Director
Accountability and International Academic Mobility
Canada Student Loans Program
Human Resources and Skills Development Canada
200 Montcalm Street, Tower 2, Floor 0
Gatineau, Quebec
K1A 0J9
Telephone: 819-997-6171
Email: micheline.nehme@hrsdc-rhdcc.gc.ca

Footnote a
 S.C. 2008, c. 28, s. 108

Footnote b
 S.C. 1994, c. 28

Footnote c
 S.C. 2008, c. 28, s. 113

Footnote d
 R.S., c. S-23

Footnote 1
 SOR/95-329

Footnote 2
 SOR/93-392

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