Canada Student Loans Program is developing amendments to the Canada Student Financial Assistance Regulations and Canada Student Loans Regulations to make post-secondary education more affordable by introducing an interest-free and payment-free leave for Canada Student Loans borrowers taking temporary leave from their studies for medical or parental reasons, including mental health leave
Canada Gazette, Part I, Volume 154, Number 6: Regulations Amending the Canada Student Financial Assistance Regulations
February 8, 2020
Canada Student Financial Assistance Act
Department of Employment and Social Development
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the regulations.)
Issues: In Budget 2019, the Government of Canada announced its intention to make post-secondary education more affordable by introducing an interest-free and payment-free leave for Canada student loan (CSL) borrowers taking temporary leave from their studies for medical or parental reasons, including mental health leave.
The Canada Student Loans Program (CSLP) currently has no special provisions for students who take a temporary leave from their post-secondary education of six months or longer for medical or parental reasons. CSL borrowers in this situation are treated like any other borrower who has left school, meaning that monthly payments are required and interest starts to accrue on their loan starting six months after leaving school.
This can place a significant financial burden on students taking a temporary leave of absence from studies for medical reasons, including mental health reasons, or following the birth or adoption of a child, compounding the impact of financial stressors due to the added expenses associated with health recovery or parenting.
Description: Amendments to the Canada Student Financial Assistance Regulations (CSFAR) and Canada Student Loans Regulations (CSLR) would help make CSLs more affordable by introducing interest-free and payment-free leave from student loan repayment obligations for up to 18 months for borrowers taking temporary leave from their studies for medical or parental reasons, including mental health leave.
Rationale: These amendments would build on measures recently introduced to modernize the CSLP and make student loans more affordable and accessible by responding to the particular needs of borrowers facing financially challenging life circumstances. The net monetized benefits to the Government of Canada of implementing the proposed regulatory amendments are estimated at $0.0 million over 10 years (net present value), for a benefit-to-cost ratio of 1:1. Annually, it is anticipated that the proposed regulatory amendments would directly benefit an average of 7 000 borrowers. The benefit-to-cost ratio excludes significant additional qualitative benefits to students and Canadian society.
Currently, borrowers begin repaying their CSLs and interest begins to accrue six months after the date they leave their studies. This rule makes the CSLP less responsive to the needs of students in challenging financial and life situations and can create a significant financial burden for some vulnerable student loan borrowers. To better respond to the needs of borrowers who have to take a temporary leave from their studies for medical (including mental health) or parental reasons, Budget 2019 proposed specific amendments to the CSFAR and the CSLR.
Requiring students who take a leave from studies for medical or parental reasons to start repaying their loans as if they had permanently left school can compound the impact of already stressful and costly circumstances that result from dealing with illness or injury, or becoming a parent. The additional financial burden of student loan repayment could contribute to borrowers further delaying or entirely withdrawing from their studies, thereby delaying or forgoing the substantial benefits of a post-secondary credential. In addition, this financial impact is particularly felt by borrowers with disabilities, who may be more likely to take a leave from school for medical reasons, and women borrowers, who may be more likely to take a parental leave as they still tend to be the primary caregivers within families.
The CSLP provides financial assistance to students in the form of grants and loans to supplement resources and help meet the costs of post-secondary education. Delivered in partnership with 10 provinces and territories, the CSLP provides up to 60% of a borrower’s calculated financial need in grants and loans, while participating provinces and territories cover the remainder. The non-participating provinces and territories, namely Quebec, Nunavut and the Northwest Territories, receive alternative payments from the federal government to administer their own student financial assistance programs.
The CSLP provides the Repayment Assistance Plan to assist borrowers who are experiencing difficulty repaying their CSLs. However, there are currently no specific provisions to support borrowers taking temporary leave from their studies to care for a new child or recover from an illness or injury.
In Budget 2019, several measures were announced to modernize the CSLP and help make it more flexible and accessible for borrowers in vulnerable financial or life situations. Legislative and regulatory amendments have already been made to implement several of these measures, including lowering interest rates on CSLs; making the six-month non-repayment period following studies interest-free; increasing supports and flexibility for students with disabilities; and making it easier for borrowers in default to return their loans to good standing. These proposed regulatory amendments would implement the final measure announced in Budget 2019: an interest-free and payment-free leave for borrowers taking temporary leave from their studies for medical reasons, including mental health leave, or for parental reasons.
The objective is to help make post-secondary education more accessible and affordable by introducing interest-free and payment-free medical and parental leave for CSLs. More specifically, the proposed regulations would help address the financial burden and stress on students who take temporary leave from their studies for medical and parental reasons, including mental health leave, and help reduce financial barriers to pursuing their post-secondary education. It is expected that the proposal would particularly benefit borrowers with disabilities, many of whom have to take temporary breaks from their studies, and women borrowers who may be more likely to take parental leave.
Several sections of the CSFAR and CSLR would be amended to provide both full- and part-time CSL borrowers with the ability to apply for an interest-free and payment-free medical or parental leave in 6-month periods up to a maximum of 18 months. Specifically, the following changes would be made:
amending the CSFAR and the CSLR to give full-time students taking medical or parental leave the ability to apply for the leave within 6 months after leaving school, as long as that date is within 12 months of the medical event or the date a child joined the family, and to apply for an extension of their leave any time between 30 days before the end of their leave and 30 days after the end of their leave;
amending the CSFAR and the CSLR to ensure that, for full-time students, loan payments would not be required and interest would not accrue, in 6-month periods up to a maximum of 18 months, while they are on leave for medical or parental reasons;
amending the CSFAR to give part-time students taking medical or parental leave the ability to apply for the leave within 6 months after leaving school, as long as that date is within 12 months of the medical event or the date a child joined the family, and to apply for an extension of their leave any time between 30 days before the end of their leave and 30 days after the end of their leave;
amending the CSFAR to ensure that, for part-time students, loan payments would not be required and interest would not accrue during periods of leave for medical or parental reasons;
amending the CSFAR to ensure that no time spent on a medical or parental leave would be counted towards a student’s maximum lifetime weeks of CSLP support; and
amending the CSFAR to ensure that students on medical or parental leave who experience a bankruptcy-related event can avail themselves of the existing benefits that are available to students currently in school who experience the same situation.
Medical leave would be defined as a temporary leave from CSL payment obligations for medical problems, including mental health problems, which, in the opinion of a medical professional, would significantly interfere with the student’s ability to pursue their program of studies. Pregnant students would also be able to take medical leave, if needed, for reasons related to their pregnancy prior to the birth date of their child.
Parental leave would be defined as a temporary leave from CSL payment obligations following the birth of a child, finalization of an adoption or commencement of guardianship or tutorship footnote* of a child.
Interest-free and payment-free medical or parental leave would not be available to borrowers who are no longer in school (i.e. those who have begun repaying their loans once their six-month interest-free and payment-free period has ended)...