Thank you, Madam Chair. The Standing Committee on Social Programs conducted its public review of Bill 24, An Act to Amend the Student Financial Assistance Act, on May 27, 2014. A clause-by-clause review was held the same day. The committee thanks the Minister and his staff for presenting the bill.
The purpose of the legislation is to ensure ongoing financial aid to students. The bill increases the maximum aggregate for principal amounts outstanding for all loans to $45 million for 2014-2015 and subsequent years.
Following the committee’s review, a motion was carried to report Bill 24, An Act to Amend the Student Financial Assistance Act, to the Assembly as ready for consideration in Committee of the Whole.
This concludes the committee’s opening comments on Bill 24. Individual Members may have additional questions or comments as we proceed. Thank you, Madam Chair.
Thank you, Mr. Moses. General comments. Mr. Dolynny.
Thank you, Madam Chair. Some of the discussions that we had with this bill in camera I want to bring to the floor of the House to make them public. One of the areas of concern that I know I had as a Member, this is the second time during the life of this Assembly that we’ve come back to add a component, or a financial component to this SFA total. I just want to make sure that we’re doing things in the right mannerism.
One of the concerns we had, and it was also brought up and echoed by the Auditor General of Canada, is that there has been some concern on the collection of student financial loans. In fact, some of the numbers that the Auditor General realized in their audit was that we failed to collect on roughly around 60 percent of our student financial loans that are out there, which is putting a burden on our system.
So my opening question here in a general sense is because of the fact, not just me, not just committee, but the Auditor General of Canada clearly articulating that we’ve got a collection problem. Is this collection problem, or is the repatriation of getting our money back to taxpayers causing the impetus here for seeing an increase of $5 million being asked here today? Thank you.
Thank you, Mr. Dolynny. Minister Lafferty.
Mahsi, Madam Chair. We’re fully aware of the collection that’s before us. It’s a challenge that we’ve been faced with, and the office of the Auditor General gave specific instructions on this particular area. The Member alluded to 60 percent fail. Those are areas that we are continuously and aggressively going after for collection. This is not pertaining to this particular change. The amendment is coming with the $5 million increase. So it is a separate topic, and I’ll get Ms. Saturnino to just elaborate a bit more on the process itself. Mahsi.
Thank you, Minister Lafferty. Ms. Saturnino.
Thank you, Madam Chair. The department, in its action plan related to the response to the office of the Auditor General’s audit on the Income Security Program, made a number of commitments with regard to automating the system, the reporting system for student loans, so to identify when a loan becomes due.
Previous to this there was a very manual process that was used. The request for the increase for the $5 million is not in relation to the collection or default of collection files. It is in fact related to the fact that we have recently increased our remissible loan rates, which means that we have more funds that are being disbursed to our post-secondary students while they are attending studies. As a result, we requested an increase in the amount of funds that are available under the revolving loan limit.
Thank you, Ms. Saturnino. Mr. Dolynny.
Thank you, Madam Chair. Just so I’m completely understanding the situation, this increase has to do with more remissible loans being involved; however, what we have heard also here is that this is a revolving amount of money, so money going out and coming back in. With respect to as we are now talking about the challenges we have had in collecting that money to come back into this so-called pot of revolving money, so you’re saying that this increase of $5 million has no way, shape or form involved with the fact that we are struggling to collect those monies back that are in debt or default. Are these two separate issues? Thank you.
Thank you, Mr. Dolynny. Minister Lafferty.
Madam Chair, that is correct; they are two separate issues. We have been talking about the collection, how we can collect or be aggressive in that area. I’ve been dealing with my department on how to address those matters at hand because we have to take the Auditor General’s recommendations seriously into consideration, so that’s what we are doing. Those are two separate issues with requests of the $5 million to increase. Mahsi.
Thank you, Minister Lafferty. Mr. Dolynny.
Madam Chair, for the life of me I can’t understand. If we have a revolving amount of money, which is a total wholesome amount, a pot, if you will, and we are giving out loans and we are collecting loans back in payment, to me this is a revolving pot of money. If we are, by virtue, having trouble, as indicated by the Auditor General, and I am hearing promising words that we are working towards mitigating collection, which is good to hear, that sounds like by default that we are actually increasing this revolving pot limit. For the life of me, I can’t understand how these are two separate issues if we are dealing with one pot of revolving money.
I’m going to ask the department if they can provide some type of accounting framework to clearly articulate that these are indeed two separate issues, because I can’t for the life of me see how this are two separate issues. Thank you.
Thank you, Mr. Dolynny. Ms. Saturnino.
Thank you, Madam Chair. When a student receives funding to attend post-secondary studies through the remissible loan, part of the agreement is that they would return to the Northwest Territories and live here in order to pay back that loan. They are not in fact required to make financial payments towards that loan. At current rates, for every year that a student attends post-secondary studies, it takes them approximately two years, in fact 1.7 years to come back to the Northwest Territories and remiss that same amount of money.
The rate that we are currently providing our remission rates compared to the amount that we provide has resulted in the rate of which students are receiving the remission to take longer. As a result, we have more funds that are being disbursed than are being written off or forgiven at the same time.
Madam Chair, I think we’re getting a bit more clarity here. So, we are hearing that the remission rate, the rate that we are writing off, or basically return of work services, if I can use that terminology, is increasing. The question that I have here is: How much of that is real cash that is being in default? Really, is this real cash that’s not coming back in as a result of a fairly high default rate of possibly 60 percent? How much of that revolving fund or how much of that of the potential $5 million increase here is due to actual cash not coming back into the coffers of this revolving fund? Thank you.
Unfortunately, I don’t know the answer to that question; however, I can commit that we will look into it and we can provide that information.
Madam Chair, I am encouraged to get that type of information, and I think committee would also be interested in receiving that.
Lastly, this is a question I brought up two years ago when we had the opportunity to look at this bill. Last time we increased it to $40 million. It was the fact that if we are going to do the work of opening up a bill to do a consequential amendment to the act, the fact that the appeals program was also noted as being an opportunity in this area and, again, I ask once again.
The student financial assistance appeals process is in dire need of a review. When can we expect to see this happening, and why didn’t we include it now? We know how much time, work and energy it takes to get a bill to the House, to the floor. I know this has been asked not by this Member; other Members have come forward. I am asking why didn’t we include it now since we are opening this up for the second time during the life of the 17th Assembly and if it’s not going to be opened up now, when can we expect to see the appeals process being revamped, relooked, retooled in order to meet the needs of our students? Thank you.
Thank you, Mr. Dolynny. Minister Lafferty.
Mahsi, Madam Chair. We recall that two years ago that was addressed to our department. I was just trying to get clarification of the status on that. The appeals part will be introducing that potentially this coming fall. I will get Ms. Saturnino to just maybe elaborate more in detail. Mahsi.
Thank you, Minister Lafferty. Ms. Saturnino.
The section relating to appeals that is currently under the SFA Act is in relation to the SFA Appeals Board. With regards to the first level of appeal, that’s in the Student Financial Assistance Regulations. We have made a commitment to return to standing committee with recommendations for changing the current process with regards to the first level of appeal, specifically in regards to Section 40 of the Student Financial Assistance Regulations.
Thank you, Ms. Saturnino. Next under general comments I have Ms. Bisaro.
Thanks, Madam Chair. I have similar concerns to my colleague Mr. Dolynny. I also wondered about why we needed the increase, and I appreciate the answer. I do have questions around the amounts, similar to Mr. Dolynny.
We’ve talked about a default rate, I think defaulting on loans rate, and we’ve talked about a remission rate. My question is not so much the dollar amount but a trend.
Has the percentage of remission and defaulting on loans gone up or gone down over the last number of years? Thank you.
Thank you, Ms. Bisaro. Ms. Saturnino.
Thank you, Madam Chair. I don’t have the exact figures with regards to defaults on student loans at this time, but what I can inform you of is that we’ve recently worked with the Department of Finance and have substantiated, through income tax returns and filing of income tax returns, that approximately 70 percent of our non-Aboriginal students who received the remissible loan do return to the Northwest Territories upon completion of studies. In comparison, approximately 80 of our Aboriginal students return and file income tax returns the following year.
Thank you, Ms. Saturnino. Ms. Bisaro.
Thank you, Madam Chair. That’s great. Can I get a sense of whether or not…and this is not so much relative to the students coming back but… Well, I guess it is, because if more students are coming back then we are remissing more money.
I’m looking for a trend. Can you give me any indication of over, say, the last five or 10 years whether or not this number has been going up or whether it has stayed steady or if it has gone down? Thank you.
Thank you, Ms. Bisaro. Minister Lafferty.
We just know that over a five-year period it’s around 70 percent, but we can provide the detailed information to the Members.
My next question is similar to Mr. Dolynny’s in looking at the cash amount, but I guess if you can’t tell me the percentage, you probably can’t tell me the amount of dollars. I’m looking to know whether or not the dollar amount that we are forgiving and/or that we are losing through defaulted loans is going up or down over time.
That is detailed information that we don’t have at the tips of our fingers here, but at the same time, we can provide that information to the Members.
Thanks to the Minister. My last question is a general question with regard to this particular process, and I think we all know that developing a bill requires a great deal of time and effort on the part of both Regular Members, the Minister’s office and staff. It’s quite a process to put legislation in place and to go through the whole process of providing it to committee, committee does the review, it then comes here. There is a great deal of time and effort involved on many people’s parts, and it seems to me that there might be a better way to do this without having to make a change to legislation, whether it’s every year or every two or three years.
I’d like to know whether that’s something that the Minister and the department have considered, and if they have, did they find that there’s an easier way to do it without having to go through a bill every time we want to increase the amount in this fund?
These are the areas that we are currently exploring. As I stated, two years ago it was introduced to the standing committee, and we want to have a better and also a faster process of dealing with it in light of this time-consuming…(inaudible)…. We hear the Members clearly, so we’ll find ways of expediting this process in a timely manner.
Thank you, Minister Lafferty. General comments. Next I have Mr. Yakeleya.
Thank you, Madam Chair. My questions would hopefully stay within the confines of this bill here. I’m very interested in hearing what the issues are and the increase to the student financial assistance. Certainly, I spoke earlier in my Member’s statement of the struggles students have attending post-secondary education in colleges or universities. I want to ask the Minister, in regard to this increase, is the Minister, I guess… I’m glad to hear that the students are returning to the Northwest Territories, so is it to say that if a student has a loan and they come back to the Northwest Territories, do they have to work within a government department, agency or NGO, then that will help them with the remission of their loan? Is that the agreement?
Thank you, Mr. Yakeleya. Minister Lafferty.
Mahsi, Madam Chair. Part of the process is that the loan to be remissed are those individuals need to come back to the North and live in the North. They don’t necessarily have to work in the North, but they have to be living in the North.
Thank you, Minister Lafferty. Rather than getting into great detail on the program itself, if we could limit our comments today to the issue of the increase on the cap for the Student Financial Assistance. That might serve us well. Thank you. Mr. Yakeleya.
Thank you, Madam Chair. I will certainly take your advice on this one here and I will make comments on his opening comments. I will follow that procedure.
Since these are opening comments, I do want to say that it is good to have students who are going out from the North or in the Northwest Territories, especially from outside the Territories. It encourages them to come back and bring these skills back with educational knowledge and be positive role models in our communities. I know that Aboriginal students are taking advantage of it through the grants. I know a grant is only limited and they’re only allowed a certain number of semesters before the grant runs out. SFA has that in the policy, and sometimes the Aboriginal students feel that they’re treated differently from the rest of the population. If the semesters are taken up or the funding is being used to the maximum, they no longer are eligible for it and they want to continue on with another type of career, because it takes them awhile to get into that requirement for this type of education. Say if they want to become a lawyer or study, they have used up their semester, I call it points, then I guess that’s when they’ll have to look at the loan system and see if they’re eligible, and according to the Minister, as long as they come back and live in the North, that shows true repatriation of our students.
I’m a little concerned when students who come to the North, raised in the North, and take advantage of our generosity because they don’t have to go to the banks. One thing I always found curious when I met with the students down south, they said they’re paying off their loan. I didn’t understand that, that they had, to the banks or some other institution, to pay off their loans. We see a lot of those students in our schools right now or in our health centres. People who are young who say they’re paying off their loans working up here. I never understood that. I thought everybody has a similar situation like I do, and I didn’t realize that. That’s part of my ignorance was, I didn’t know there were different levels of education in the Northwest Territories. You know, I’m saying, paying off your loan?
Anyhow, I do want to say that the more I look at this that the students who are taking advantage of this through the loan system and go down south, and for whatever reasons they continue to live down south after they finish their education, that’s where we’re seeing this issue here. I’m not too sure if the Minister and his department is continuing to work on that, because he said aggressively seeking policies that would make sure students, to the best of their knowledge, said they’ll come back and work and live in the Northwest Territories. It feels like sometimes that we’re being taken advantage of and our system has some form of a degree of abuse, and that’s not the whole intention of these support systems we have in place for students.
I wanted to just let the Minister know that we need to look at this issue seriously and stronger, the issue that students who come to us with good intentions and they get support, but they do not return, for whatever reasons, and only they know those reasons. However, according to the statement, there is a lot, a high percentage of them coming back and living in the North, so that’s a good sign. We’re seeing a small fragment or segment of our loans, and I certainly, again, support this bill with the request, and I support the students who are taking post-secondary institution training for the betterment of their families. Those are my comments.
Thank you, Mr. Yakeleya. I didn’t really hear any questions there. Did you want to respond to that, Mr. Lafferty?
Mahsi, Madam Chair. Yes, this particular remissible loan, $40 million to $45 million, is certainly an incentive for the individuals to come back to the North and also to live in the North, and also to welcome them back to work in the North as well. Yes, they are 30 percent, or less than 30 percent out there we’re still working with individuals that may not come back or there are some challenges. We have to continue working with that, but it is creating incentive for them to come back to work. Mahsi.
Thank you, Minister Lafferty. General comments. Next I have Mr. Hawkins.
Thank you, Madam Chair. I’m just going to follow up and it’s very specific to the issue before us at this second, but I’m going to follow up on a matter that I raised in committee some time ago. Still, to my knowledge, I have yet to receive either a letter or any type of correspondence to that. It directly relates to the SFA and the loan system, and now we plan to expand it.
The issue I brought to the attention of the Minister is when we provide loan bursary programs and we only charge, if memory serves me correctly, at 1 percent above the regular rate, it is very, very low. Here, we’re asking for more money to increase the loan system, which I’m not necessarily against by any means, but the fact is how do you encourage people to come back when we have the lowest interest rate on loan systems. Shouldn’t we have a multi-tiered system to encourage people to come back? It doesn’t cost any additional money by increasing the rate, and actually it helps keep the balance of this fund lower if people are paying the higher rate if they choose not to come back to the Northwest Territories. It’s a choice, because right now it’s almost as if we’re giving money away and I’d like to see education pursued, and if we need to expand the loan system, I’m in favour of that, but we need to do it in a way that’s strategic.
Thank you, Mr. Hawkins. Minister Lafferty.
Mahsi, Madam Chair. First of all, we’re not the lowest in Canada, and even the interest paid, it does go back to the general fund. But I will get Ms. Saturnino to elaborate, and she’s been actively involved in this, as well, with the remissible loans. Mahsi.
Thank you, Minister Lafferty. Mr. Hawkins.
He just said Ms. Saturnino.
I’m sorry. Ms. Saturnino.
Thank you, Madam Chair. We’ve recently done some research, and that recent research shows that the Northwest Territories does not offer the lowest interest rate in Canada. There are a number of jurisdictions that offer loans with zero percent interest rates, or just offer grants straight across the board, such as the Government of Newfoundland.
