Ministry of Training, Colleges
and Universities
Dr Bob Christie, deputy minister
Mr Helmut Zisser, director, student support branch
Mr David Trick, assistant deputy minister, post-secondary
education division
STANDING COMMITTEE ON
PUBLIC ACCOUNTS
Chair /
Président
Mr John Gerretsen (Kingston and the Islands / Kingston et les
îles L)
Vice-Chair / Vice-Président
Mr John C. Cleary (Stormont-Dundas-Charlottenburgh L)
Mr John C. Cleary (Stormont-Dundas-Charlottenburgh L)
Mr John Gerretsen (Kingston and the Islands / Kingston et les
îles L)
Mr John Hastings (Etobicoke North / -Nord PC)
Ms Shelley Martel (Nickel Belt ND)
Mr Bart Maves (Niagara Falls PC)
Mrs Julia Munro (York North / -Nord PC)
Ms Marilyn Mushinski (Scarborough Centre / -Centre PC)
Mr Richard Patten (Ottawa Centre / -Centre L)
Substitutions / Membres remplaçants
Mr Frank Klees (Oak Ridges PC)
Mrs Tina R. Molinari (Thornhill PC)
Also taking part / Autres participants et
participantes
Mr Erik Peters, Provincial Auditor
Clerk pro tem / Greffier par intérim
Mr Douglas Arnott
Staff / Personnel
Mr Ray McLellan, research officer,
Research and Information Services
The committee met at
1047 in room 151, following a closed session.
1999 ANNUAL REPORT, PROVINCIAL AUDITOR MINISTRY OF
TRAINING, COLLEGES AND UNIVERSITIES
Consideration of chapter
4(3.06), Ontario student assistance program.
The Chair (Mr John
Gerretsen): Good morning. I'd like to call to order the
standing committee on public accounts to deal specifically with
chapter 4, section 3.06 of the 1999 Annual Report of the
Provincial Auditor, dealing with the matter of the Ontario
student assistance program.
Thank you for attending this
morning. We look forward to your presentation. Perhaps if you
could identify yourself for the purpose of Hansard. You'll have
about 15 to 20 minutes for your presentation. There will be
questions from members of the committee afterwards.
Dr Bob
Christie: I'm Bob Christie. I'm the Deputy Minister of
Training, Colleges and Universities. To my left is David Trick,
who is the assistant deputy minister for post-secondary. On my
right is Helmut Zisser, who is the director of the student
support branch, and on Helmut's right is Louis Lizotte, who is
the senior policy adviser in the student support branch.
I will be making some brief
introductory remarks and then I'll turn the floor over to Helmut
for an overview of the program and the steps that the ministry
has taken in response to the recommendations made in the
auditor's 1997 annual report. As well, we will review the
follow-up comments made in the latest report of the auditor.
We welcome this opportunity
to update members of the standing committee on public accounts on
the ministry's work in response to these recommendations. The
recommendations in the 1997 report provided the ministry with a
constructive set of recommendations-some of them challenging-and
the opportunity to take needed steps to improve the integrity and
accountability of OSAP administration.
We're pleased to inform
committee members that the ministry has taken action on all of
the auditor's recommendations. Ministry staff will be able to
answer any questions you may have about the implementation status
of any of the specific recommendations of the auditor.
With that brief introduction,
Helmut will now provide you with an overview of the steps we've
taken and are currently taking to improve the management of the
program.
Mr Helmut
Zisser: As the deputy indicated, we've taken action on
all the recommendations made by the Provincial Auditor. In
several areas not only have we implemented what was recommended
but we've also moved beyond the specifics of the recommendation
to further address accountability or shared responsibility
issues.
In our presentation, we will
go over the initiatives the ministry has taken and the process to
address the issues raised by the Provincial Auditor. We will also
provide information about customer service at OSAP, which is an
important aspect of our accountability to the public, and
conclude with future directions for improvements to student
assistance in Ontario.
All of the recommendations of
the Provincial Auditor with respect to establishing performance
agreements with institutions, external compliance audits and
setting out disciplinary measures for institutions that do not
meet requirements have been addressed. Performance requirements
have been signed with all private vocational schools
participating in the Ontario student loan program since July
1997. The ministry finalized an accountability framework and
performance guidelines for the administration of OSAP with
colleges of applied arts and technology in October 1998, and an
accountability framework for the administration of OSAP was
concluded with Ontario universities in July 1999.
Detailed OSAP compliance
audits of private vocational schools started in the summer and
fall of 1998 for the 1997-98 program year. The number of audit
reports received for that year is 166, covering 228 institutions.
The ministry has reviewed all reports and followed up where
appropriate in asking for corrective action plans or taking
further actions as warranted. For 1998-99, 361 private vocational
schools and all 42 universities and colleges of applied arts and
technology are being audited. The audit process is currently
underway and reports are due over the next few months.
Income verification
arrangements are in place with Canada Customs and Revenue Agency,
formerly Revenue Canada, for income reported by students, their
parents or their spouses. The ministry receives income
information from the tax returns of students who receive student loans and from their parents
and spouses. This information is compared with the information
reported on the OSAP application form or as amended during the
course of the academic year. For 1998-99, some 213,000 student
files, 196,000 parent files and 22,000 spousal files were
verified. As the Provincial Auditor points out in his 1999
follow-up report, the introduction of the Ontario student
opportunity grants, replacing the loan forgiveness program, will
reduce the risk that students receive loan forgiveness before
their income is verified, as OSOG will be paid out annually and
only after income verification has occurred.
Further data-sharing
agreements are currently being pursued with the Ministry of
Transportation for vehicle asset verification and with employment
insurance.
Explanations are now required
when a student reports income that is below an estimated minimum
requirement to live on. In 1998-99, there were close to 40,000
OSAP applications where income clarification was required. Of
those files, about 38,000 provided satisfactory responses and
were processed. The other 4,000 applicants could not be processed
as they either didn't respond to the request for an explanation
or provided unsatisfactory responses.
The Provincial Auditor's
recommendation to give due consideration to student and spousal
assets when calculating loan entitlements was implemented,
starting with the 1997-98 academic year. Effective for the
1997-98 academic year, federal needs-assessment criteria related
to assets were implemented. Revisions have been made to Ontario
student loan regulation 774 to permit consideration of student
and spousal assets in determining loan entitlements. Assets
include vehicles, bank accounts, other investments and RRSPs.
Parental assets are not considered in the assessment.
In order to increase access
funding for students with financial need, universities and
colleges are now required to set aside 30% of tuition increases
for student aid. These amounts are supplemented with financial
aid distributed from the $600 million being raised in permanent
endowments under the Ontario student opportunity trust fund
initiative. These two sources of institution-based financial
assistance added close to $100 million in 1998-99 and are
estimated to be over $146 million for the 1999-2000 year.
After increasing in 1997,
Ontario student loan default rates decreased in 1998 and 1999. In
1999, the overall rate declined by 3.9 percentage points from the
1998 rate. Overall default rates since we have calculated them
are 18.6% in 1996, increasing to 23.5% in 1997, and then
declining to 22.1% in 1998 and 18.2% in 1999.
The robust Ontario economy is
certainly a big factor in the decline of OSAP default rates;
however, we believe the combination of measures that we have put
in place in recent years is also a factor and will become much
more of a factor in the years to come. Reforms to OSAP will
ensure that student loan defaults continue to decline.
We've taken steps to reduce
the future instance of student loan defaults. Colleges,
universities and private vocational schools are required to
provide prospective students with accurate information about each
program's graduation, placement and loan default rates, which
allows students to make a more informed choice of studies.
Institutions are required to share the cost of defaulted loans if
the institution's overall default rate is in excess of
established thresholds.
New OSAP applicants are
credit screened, and those who have been 90 days in arrears on
three or more personal accounts or loans totalling $1,000 or more
within the past three years are not eligible for a student
loan.
Student loan recipients have
the status of their Canada and Ontario student loan accounts
reported to credit bureaus. Private collection agencies have been
collecting student loan defaults since January 1999. Effective
for the 1998 taxation year, defaulted loans are recovered from
income tax refunds. This has occurred in an environment where
changes to federal bankruptcy legislation enacted in 1998
prohibit student loan borrowers from discharging student loans
through bankruptcy until 10 years after the completion of
studies.
The ministry has taken steps
to ensure that OSAP is administered properly and is available to
students who are entitled to assistance. The number of students
put on the OSAP restricted list has increased as a result of the
ministry's verification activities in recent years. In 1993-94,
we had 622 restrictions, and this number has increased to 3,737
in 1998-99.
There are two kinds of
restrictions we have in place:
Investigative restrictions
are issued by the ministry when students or institutions fail to
comply with program requirements. This can typically arise
because we receive information that indicates that someone is
participating in the program and has not presented complete
information.
Academic restrictions are
issued at the institution when the student fails to meet minimum
academic progress requirements. All students are required to
progress through their program of studies successfully in order
to continue to receive student assistance, and financial aid
offices at institutions are responsible for monitoring that.
We've also improved our
linkages with lenders. The majority of Ontario student loans are
held by three lenders: the Bank of Nova Scotia, CIBC, and Royal
Bank. The ministry has now established procedures to improve
processing of bank information with the major lenders. Facilities
to permit lenders to correct their own errors on the OSAP
database are in place. The ministry has established a full
electronic data interchange process with one of the major
lenders, and discussions are underway with the other two lenders
to achieve efficiency using EDI for their transactions.
The backlog of claims
identified at the time of the 1997 audit has been eliminated.
Claims for loss under the government guarantee are processed
expeditiously. It now takes just two weeks from the day the claim
is received from a lender for the claim to be verified, processed
for payment and sent to collection.
Recoveries from credit collection have also
increased. In 1997-98, the year before private collection
agencies assumed the collection of all student loans, only
$4.3 million was collected on outstanding student loans. In
1998-99, $21.2 million was recovered. This year, up to the end of
January, $35.7 million has been recovered.
Additional revenue is also
generated through income tax set-offs. For the 1998 taxation
year, the first year of the agreement with CCRA, formerly Revenue
Canada, $1.3 million was collected from income tax refunds. This
was out of a total of $26 million in claims that we forwarded,
representing about 9,000 delinquent accounts. The program started
in the middle of tax-filing season.
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In order to provide students
and parents with a clear picture of the ability of post-secondary
institutions to successfully place graduates in jobs, colleges,
universities and private vocational schools are required to
provide students with information on graduation rates, graduate
employment rates and Ontario student loan default rates. This
information is given to students to help them as they consider in
which institutions and programs to invest their money, time and
effort.
In the next series of slides
we have extracted the Web site at Queen's University to show how
that information is being made available to students. Someone
going to the site can pick the item "Student Information." That
presents them with a series of options, one of which is to look
at performance indicators. There's then a brief description of
what performance indicators are and a specific reference to the
OSAP performance indicators. They can then move on and review
those indicators in turn. There is information on graduation
rates. Queen's was chosen to show both their own rates as an
institution and the provincial average for universities. The
student can get detailed information by program on those rates.
Students can also look at the rates for employment and, again,
the details associated with that. Universities provide both
six-month and two-year employment rates. Finally, there's
information on student loan default rates, and that again is
available by program at this Web site.
Customer service is also a
very important aspect of the program. OSAP serves about 40% of
the post-secondary students in Ontario. In effect, the number of
individuals the program serves is even greater because it is not
only students who make inquiries about OSAP; their families,
their parents and their spouses all contact the ministry. OSAP
receives over 120,000 telephone calls a year, not including the
1-900 service. This includes calls from students attending
institutions outside of Ontario where the ministry acts as their
financial aid office for purposes of student assistance-the OSAP
program-and students seeking information about their loan, loan
forgiveness status, their reassessments, income verification
notices, their T4As, their loan defaults, income tax set-offs,
interest relief, bursaries and so on. OSAP also receives calls
from financial aid administrators at post-secondary institutions
and loan officers at lending institutions.
Most information requests
from Ontario students are directed to the institution's financial
aid office through an automated response system. The data shown
in the graph represent only the number of calls where the caller
required service from the ministry. OSAP services to the public
are available in the consumer's choice of English or French, and
a special TTY toll-free line is available for deaf and
hard-of-hearing students.
OSAP customer service demand
is cyclical. The peak periods occur just before and at the start
of the new academic year in August and September, and at the
start of the second term in January. The demand for service at
these times presents a challenge to the ministry and the
financial aid offices at colleges and universities. In order to
provide better service to students and to assist financial aid
offices at institutions, the ministry has established an Internet
Web site to serve student information needs. Through this site,
students can obtain comprehensive and timely program information
and receive up-to-date information about their loan. The site is
available 24 hours a day, seven days a week. This past August,
the Web site had over 140,000 visitors and received more than
seven million hits. Even during December, a period of relative
quiet, the Web site served about 50,000 visitors and had about
two million hits.
In addition to the free
Internet service, OSAP offers a 1-900 automated line that
students can use to gain access to their account information.
There's a flat fee of $2 per call charged to the caller's phone
number. The nominal fee is to recover the cost of providing this
alternative service. The same information on application status
is available on both the Web site and the 1-900 automated line.
The decrease in the use of the 1-900 line between 1998-99 and
1999-2000 reflects the increasing popularity of the Internet and
the increasing use of the free Web-based service.
Students can also apply for
OSAP over the Web. Introduced as a pilot project in 1998-99, it
generated 45,000 applications. This year, at the end of January,
the number of Web-based applications is over 60,000, a jump of
more than 30%. Last year, there were about three booklet
applications for every Web-based one; this year, for every Web
application, there are about one and a half booklet applications.
We expect the number of Web applications to continue to
increase.
Applying for OSAP through the
Web site doesn't entail any cost on the part of the student.
Returning students receive a pre-printed application requiring
them to update existing information. Again, there is no charge
when using this application.
Future directions for OSAP.
In November 1999, the government announced three actions to make
OSAP a more efficient and fairer program: An improved income
verification system will be introduced so that individuals who
under-report income on their student loan applications do not
receive more assistance than they're entitled to; tighter credit
screening criteria will be applied to new loan applicants to
better ensure that students with a history of credit abuse are
not issued student loans; and the default rate threshold at which institutions
must begin to share the cost of student loan defaults will be
lowered to encourage institutions to take further steps to reduce
defaults.
The Minister of Finance
announced in the 1999 budget a new Aiming for the Top tuition
scholarship, which will help students who earn top marks and
require financial assistance to attend college or university.
Starting in September 2000, these scholarships, with a value of
up to $3,000 per year, will be awarded annually. Students can
receive a scholarship for up to four years.
In May 1999, the province
signed an agreement with the government of Canada to replace the
Canada and Ontario student loans with a single loan, starting in
August 2000. This single loan will simplify arrangements for
student borrowers and streamline the administration of OSAP. It
will also allow Ontario to introduce improved interest relief and
debt reduction programs to help students who have trouble
repaying their loans. The harmonization agreement provides
Ontario with access to the same terms and conditions for a
risk-sharing agreement with lenders as is currently being
negotiated by the federal government.
The Chair:
Thank you very much. That was an excellent presentation. I'll
turn it over to the government side, but I've just got one
question that I'm sure everybody is dying to know. When you say
that all calls are answered within three rings, are we talking
about by voice mail or by a human being?
Dr Christie:
Both.
Mr Richard Patten
(Ottawa Centre): Mainly by message machine.
The Chair:
We've got about 17 minutes for each caucus. We'll start today
with the government side.
Mrs Tina R. Molinari
(Thornhill): Thank you very much for your presentation.
It's very informative, and it's good to see that a number of the
recommendations that were made are in fact being implemented.
There's one question I have with respect to accountability, and
of course this is the time of accountability, where everyone
needs to take some ownership and responsibility. How are the
colleges, universities and private vocational schools required to
share some of the accountability and the cost in the default
loans?
Dr Christie:
Typically, as Helmut noted earlier, there are default rate
thresholds determined for these institutions. Those institutions
with default rates above the threshold begin to experience a
financial sharing of costs above that threshold. Helmut will
provide the details.
Mr Zisser:
Prior to 1998-99, there was no sharing of default costs with
institutions. The province paid 100% of default costs. There was
also no designation of programs with high default rates. Since
then, institutions with overall high default rates in excess of
the default threshold are responsible for reimbursing the
ministry for the cost of program defaults in excess of the
threshold. Default thresholds are determined on an annual basis.
In the first year the program was put in place, the default
threshold was set at 38.5%. That was 15% above the average
default rate in the province. The following year, the threshold
was lowered by 5%, to 33.5%; that is in 1999-2000. For the
2000-01 year, post-secondary institutions whose 1999 loan default
rates are above 28.5% are required to share the cost of defaults
for their high-default programs on loans issued after August 1,
2000.
Institutions can become
exempt from sharing the costs of loan defaults if they elect to
drop one or more high default programs from OSAP eligibility;
then their recalculated institutional default rate will fall
below that threshold.
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In the following year, this
policy will also apply to schools whose 2000 loan default rate is
above 25%. So there has been a gradual process of bringing that
down to 25%. The goal is to reduce default rates below 10% by
2003.
Mrs
Molinari: Thank you and just a follow-up. So it has been
going down in the last number of years. Do you have any idea of
predictions on the effects of that? Will institutions actually be
taking some ownership, or are they going to be more conscious of
what they're doing? I guess the bottom line would be that they
don't want their grants to be affected, so they are going to be
more aware that this is in fact an area. Are you finding that
there is co-operation there, that there's a willingness to
participate?
Mr Zisser:
There's certainly evidence that institutions are taking default
seriously and, as a result of receiving default information, are
looking at that information in terms of the programs they're
offering to try to determine what value students are receiving
from those programs, what practices they have as institutions
that might contribute to high default, what they could be doing
as institutions to better educate students in terms of their
obligations with respect to loan repayment and also whether
student loans make sense in all cases. I think there's a pretty
good indication that institutions have started to put in place
processes to address default.
The Chair:
Mr Maves.
Mr Maves: Go
ahead, Julia.
Mrs Julia Munro (York
North): I have a couple of questions. In the last sheet
you presented, you talked about future directions. It seems to me
that obviously one of the areas that is important here is making
students, that is, the current students in our secondary schools,
more aware of what is I think a fairly important process for them
when they're making decisions with regard to post-secondary
education. I wondered what ideas have been put forward to provide
those students, who are now required to have an education plan
from grade 7 onwards, what steps are being taken to have them
aware of the kinds of detail and understanding of the processes
with regard to student loans.
Mr Zisser:
We've drawn attention to the requirement for institutions to
provide this information to students as part of the OSAP
application process, and we currently publish the student loan
default rates on the OSAP Web site. We're certainly making sure
that institutions provide information on graduation and placement rates
through their own means to students so that the information is
available. Certainly one of the issues that has arisen is how we
can better focus our communications to students, parents and
others. In this respect, the minister has recently put together
an advisory committee on student financial assistance that will
look at the question of communications and how we better target
these messages to the appropriate audience.
Mrs Munro:
My second question has to do again with page 23 of your slides. I
wondered if you could give us a little more detail on the way in
which you anticipate this loan harmonization with the federal
government. It seems to me that this has been one that has
created a great deal of confusion in the minds of recipients and
the general public as a whole.
Mr Zisser:
Ontario is one of the two provinces which at this stage have
signed agreements with the government of Canada to harmonize
student loans. My understanding is that this process is also well
advanced with other provinces, but we were one of the first to
sign, in May 1999.
The harmonization has as its
goal to produce a loan product that is simpler for students to
understand, simpler for students to deal with and easier for
everyone to administer, including government but also the
lenders. Right now there is a complete duplication because there
are two separate loans, two separate terms and conditions, two
separate sets of repayment arrangements and two separate sets of
measures if a student runs into difficulty with repayment.
One of the issues that
students face is having to educate themselves about the
complexity of this product and then doing everything twice. So
the goal of the harmonization is to create for the student a
single loan document, a single set of terms and conditions, a
single set of repayment and, in the event that a student needs
assistance during repayment, that there's a single set of
instruments that can benefit them.
Mrs Munro:
Is there, as part of that negotiation, consideration being given
in terms of the provincial situation as I understand it exists
now, where the province is the guarantor of the student loans but
the federal government is not for its portion?
Mr Zisser:
One of the features of the agreement is that it would make
available to the province the type of risk-sharing arrangement
that the federal government and the other provinces have with
lenders. That was certainly one of the features that is there and
that we would hope will be in place for the 2000-01 loan year in
Ontario.
Mrs Munro:
Does this suggest, then, that the studies done by the ministry
place the way in which the federal government manages its student
loan risk to be advantageous for Ontario?
Mr Zisser: I
think most of our analyses would indicate that the guaranteed
loan arrangement that Ontario has is one of the more expensive
ways of delivering a loan product. Certainly, a risk-sharing
arrangement would see some efficiencies and a reduction in costs
to the province, costs which really don't benefit students or
taxpayers.
Mrs Munro:
Can you give us some idea in terms of the way in which other
provinces have dealt with that? You did say that some have gone
into a relationship with the federal government such as you are
now entertaining, but I just wondered what the ratio is. Is it
everybody but us or somewhere in between?
Mr Zisser:
Quebec does not participate in the Canada student loan program.
Other than Quebec, Ontario is the only province that is not part
of the risk-sharing arrangements.
Mrs Munro: I
think Mr Maves has a question.
Mr Maves:
How much time do I have, Chair?
The Chair:
You have about five minutes.
Mr Maves:
OK. Thank you, gentlemen, for your presentation. I did note that
from the auditor's 1997 report and his subsequent 1999 report, he
concluded that you had indeed followed through in several areas
on some of his recommendations for 1997. So I commend you on
those areas. I want to walk through this for a second, though.
Let me just ask, at what point do you write off a loan as being
defaulted?
Mr Zisser:
Under the current arrangements with lenders, we act as the
guarantor to the loan, so we expect the lender to make efforts to
achieve repayment. But if a lender has issued a 30-, 60-, 90-day
notice to the student and the student still has not responded and
the loan is no longer in good standing, then the lender can
return that to the province. They have to provide us with
documentation of the efforts they have made, and then, based on
that, we will pay the claim.
Mr Maves:
OK. So we have an arrangement with the banks where they lend the
money; while the student is in school, we pay the interest to the
bank for the loan; six months after graduation, the student is
required to start paying back the loan; 90 days after that
six-month period, if the bank has sent them a couple of notices
and they have not started to pay, they can then get all of the
principal back-we've already been paying interest-from the
government of Ontario, the taxpayers of Ontario.
Mr Zisser:
That's correct.
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Mr Maves:
When that happens-I mean, that's a pretty lucrative set-up for
the banks, but once that happens, how do we then go after the
student?
Mr Zisser:
Once the province has paid the claim to the bank, the ministry
transfers the loan to the collection management unit at
Management Board. They in turn transfer the loans to five private
collection agencies that were selected to collect on all Ontario
debt, and the private collection agencies then make the efforts
to collect the money.
Mr Maves:
Have we been using those collection agencies long or is that
something we've just done in the past few years?
Mr Zisser:
The current approach to having all of the collection take place
through private collection agencies started in January 1999.
Mr Maves: Previous to 1999, the
government would pursue the debt. What was the recovery rate when
the government was pursuing the debt?
Mr Zisser: I
don't actually know what the recovery rate at that point was. The
only information I have is that in the year prior to this
arrangement coming into place, something in the order of $4
million was all that was collected on the outstanding accounts,
but I don't have a recovery rate.
Mr Maves:
That's total for a year's-
Mr Zisser:
For the portfolio that was there at that time, that was the total
recoveries.
Mr Maves:
For that year?
Mr Zisser:
For that year.
Mr Maves:
OK. And for previous years on all these defaulted loans, it was a
similar rate? Do you have any idea?
Mr Zisser: I
don't have that information.
Mr Maves: Do
any of the members of the group know? I'd like to know what our
recovery rate was. Prior to January 1999, when the Ministry of
Education and Management Board went after bad debts that the
taxpayers had paid off for students, I would like to know what
the recovery rate was. What is the recovery rate experience since
January 1999?
Mr Zisser:
We don't have a rate calculation at this point. We simply know
the total value of the monies that are being paid to the province
by the collection agencies. An analysis of a rate like this would
require a substantial amount of work, in that the loans that are
in collection come from all the previous years and you would have
to relate something back to a cohort or some other unit to be
able to determine what it was for that group. Again, the
information we have is simply the cash we are getting. We don't
receive information at this point of how many of the loans are in
repayment with the collection agencies. In some cases, the
payment we receive is as a result of the individual making a
payment; in some cases they're making a lump sum payment to pay
off the entire amount; in some cases they're settling the
account.
Mr Maves:
Are we selling these debts to the collection agencies?
Mr Zisser: I
believe that under the contract Management Board has at this
point, it is a two-year contract during which the collection
agencies have the right to collect on the accounts.
Mr Maves:
Are we getting a set amount or are we going to get a percentage
of whatever they collect?
Mr Zisser:
Management Board has signed contracts with each of the collection
agencies, and it's my understanding that there is a percentage
that the collection agency receives for collection and the
balance of the money comes to the province. So it's a
percentage.
Mr Maves:
Do you know what the percentage is?
Mr Zisser:
My understanding is that it varies by collection agency. There
are five different contracts.
Mr Maves:
Are they public numbers?
Mr Zisser:
I don't have the numbers.
Mr Maves:
So this is the first fiscal year for this, or do we have any
numbers yet? Have we exceeded, in this arrangement, the $4
million that was there in the last year?
Mr Zisser:
Certainly we've exceeded it. The collection process started in
January 1999, so in the first three months of collections,
because that was all that was left in the 1998-99 fiscal year,
recoveries were $21.2 million.
Mr Maves:
Wow.
Mr Zisser:
This would have included some recoveries that were made under the
previous arrangements. Then this year-that is, from April through
to January-so far $35.7 million has been recovered.
The Chair:
We'll have to leave it at that.
Mr Maves:
OK. I'll pick up, when you leave, some background.
The Chair:
I think Mr Peters has a comment about that.
Mr Erik
Peters: If I may make a comment on that, Mr Maves, with
your permission, could the information also be supplemented by
the value of the accounts turned over? I believe the value of the
accounts turned over by the ministry to CCS and then to the
private sector collection agency-am I not right that there was a
hiatus, there was a time period where you couldn't turn over
accounts to CCS, so that this $4 million may be a particularly
skewed number? To give you a little bit of a history of how this
works, it may be worthwhile to relate the value of accounts
turned over for collection with the collection year by year.
Mr Maves:
Wouldn't the accounts be cumulative also? Aren't we trying to get
the money from previous years?
Mr Peters:
We are, but I think there was a period of time where CCS was in a
hiatus, where they were not in a position to accept accounts. So
various collection years were affected.
We reported to this
committee, actually, when we dealt with CCS, that there was a
year, and I believe it was 1998, when collections virtually
dropped to 50% of their normal volume because they had real
problems in getting information across. It wasn't just this
ministry; it was the relationship of the Central Collection
Service of the government with everybody else in the government.
That's why this information may give you a clearer picture of the
success.
Mr Maves:
Do you know, Auditor, since you did this audit in 1997, what the
previous annual numbers were for recoveries?
Mr Peters:
Since 1997, did we audit this particular area?
Mr Maves:
No. You audited in 1997. In the years prior to that, what were
typically the annual recoveries that were being made in the old
system?
Mr Peters:
They are in one of my annual reports. I'm not sure up to which
date we reported, offhand. I don't recollect.
The Chair:
But does the ministry have the figures as to how much you
collected in the years prior to 1998?
Dr Christie: We don't have them
with us at the moment, but I believe, in discussion with Helmut,
that what we can assemble is the annual dollar recovery versus
the cumulative amount outstanding for recovery.
The Chair:
Could you table that for the committee?
Dr
Christie: Yes, we can.
The Chair:
The other question that Mr Maves asked: Do you have the amount
that was actually turned over to the collection agencies for
collection?
Dr
Christie: Yes. That should be part of the total out for
recovery, so we'll identify what's available and we'll provide
everything that's available to the committee.
Mr Patten:
Good morning. I'm just going to ask some questions in the first
round related to your report, and then I have some others from
the auditor's report for clarification.
The performance agreements
with institutions are related to the OSAP arrangements, right?
This has nothing to do with the certification or the licensing of
the private vocational schools.
Mr Zisser:
That's correct.
Mr Patten:
OK. Now, what is the interrelationship with the office that does
the licensing and certification, which to me is part of the root
cause of the problem of the manner in which many of these loans
have been managed by some of these institutions? The reason I say
this is because my riding is in Ottawa Centre and I have a fair
number of downtown, private vocational institutions, and they are
coming in in droves. Perhaps that's an overstatement. Many of
them are continuing to operate and are establishing new offices
because of the high-tech sector in the Ottawa area. Therefore,
the standards of acceptance for licensing and certification are
important, because many of these institutions have high fees,
$18,000 or so, and part of their promotion for attracting
students is, "We will help you get a loan if you are in financial
need." That's promoted quite stridently in a number of instances.
I could provide some examples of that; you probably have this. In
your attempt to be more stringent in putting pressure on them for
their obligations related to student loans, is there not a
relationship also in terms of the continued growth of this
particular sector?
1130
Mr Zisser:
The licensing of a private vocational school takes place pursuant
to the Private Vocational Schools Act. That act is a piece of
consumer protection legislation which is intended to ensure that
there are some minimum assurances to the consumer for a school
which is in the for-profit business of providing vocational
education, that is, education that leads to employment in an
occupation. Those assurances are essentially around the facility:
that there has been a fire inspection, for example; that there is
a curriculum; that there are instructors who meet certain minimum
standards; and that the school has posted a bond in the event
that a student is not satisfied with their program and wishes a
refund. The act specifically sets out conditions under which a
student can have a refund and the rate of refund they are to
receive. Essentially it's consumer protection to get a refund if
you're not happy with the product.
The student assistance
program, then, sets further conditions in terms of what
constitutes post-secondary education. Generally the definitions
we use are definitions that are used in other provinces: that the
program must be a minimum of 12 weeks in length; it must lead to
a certificate, diploma or degree; it must serve individuals who
have completed grade 12 or have mature student status; and the
institution must be licensed or recognized in some manner. Those
are the entry requirements.
The performance
requirements set a further set of conditions on the school with
respect to the due diligence that the ministry expects if an
institution is going to participate in the student loan program.
Those requirements are essentially around making sure that
students have been given proper information about the loan
program, that the application is carefully screened by the
institution, that the supporting documentation is carefully
reviewed and that the institution then adheres to requirements
with respect to students' attendance at the institution and
students making academic progress in order to maintain their
benefit. The agreement we sign with institutions is around good
management in terms of the administration of the student loan
program.
Mr Patten:
Is there any federal legal tie-in here, or is it all
provincial?
Mr Zisser:
The regulation of the schools is a provincial matter. There are
entry requirements for schools to become approved for OSAP as
well. We require a school to have been in operation for a minimum
of one year before we will extend Canada student loan eligibility
to the school. The school must then administer that appropriately
for a minimum of two years and there must be an audit completed
that verifies the administration was properly carried out. At
that point they can be considered for Ontario student loan
designation.
Mr Patten:
On the issue of income verification, you talked about a
double-check a year with the CCRA for incomes reported by
students, parents, spouses and whoever else in between.
The confidentiality or
accessibility to the files, does this remain always with the
students? My point is, for parents who are perhaps making
contributions or are part of the-the file of parents is available
for the program, but do the parents have access to the student's
file in terms of whether their payments are being made or
anything of this nature?
Mr Zisser:
No. The ministry is governed by the freedom of information and
protection of privacy legislation, and we seek from the student a
proper release with respect to accessing their taxpayer
information. We seek similar releases from parents and spouses.
There is no practice of sharing that.
Mr Patten:
No, I meant that the other way around. I'm sorry. I meant, can a
parent find out whether their offspring, the student, is
fulfilling the obligations of repayment of a loan?
Mr Zisser:
Not from us.
Mr Patten: From anybody?
Mr Zisser:
Since the loan is with a bank, it would be whatever banking
policies are. I would imagine in most cases that banks would not
be revealing information from their clients to anyone else.
Mr Patten:
OK. That's a little unfair, it seems to me. But anyway, I won't
comment on it now. I'll speak to my son.
The Chair:
Would you like to declare a conflict of interest there?
Mr Patten:
No, no. I'll speak to the bank.
In your section under
"Increased Accountability for Students," requiring submissions or
receipts for child care, in this whole area of child care, the
support for students for child care purposes, have there been any
changes in the application of support? I continue to hear
especially from women who are saying they want to go back to
school and what is calculated as income-the loans, for example,
are calculated as income, which immediately makes them
inaccessible for child care support. Is that true or is this old
information? Are we still having difficulties with this?
Mr Zisser:
Assistance for students with children can be provided in a number
of ways. First of all, the loan program itself will recognize the
number of children a student has in terms of providing additional
assistance, depending on number of children. The assistance for
the first two children comes through the loan program itself. In
addition to that, the ministry has a bursary program to provide
assistance with child care, and that is for the third, fourth and
fifth child. There is also a Canada study grant for students with
dependants that essentially works by replacing a loan with
non-repayable bursary assistance for students with children. All
of those mechanisms are there to assist students with their child
care costs.
Mr Patten:
If we can construct a little case, let's say here's a single mom
with two children. She wants to go back to university and is on
welfare. Tell me what happens in that case. She's saying: "If I
can get support for child care, that's the major problem and
stumbling block for me. But I'd need a little bit of OSAP
money."
My understanding is the
OSAP money is considered in the application as income rather than
a loan, and that's added to the welfare amount and therefore
there is a question of eligibility for child care support.
Ms Zisser:
So you're not talking about how OSAP provides support to
students, but how OSAP relates to child care programs at the
municipalities.
Mr Patten:
Yes. What's your experience? I don't fully understand where the
problem is, but people are saying there is a problem there. It's
not quite as clean as what it seems. Are you saying that if
somebody is on welfare and they need child care, they should not
talk to the municipality at all about child care; they should be
incorporating that need assessment as part of their discussions
around the OSAP grant?
Mr Zisser:
OSAP certainly builds it into its need assessment. For example,
for students with one or two dependent children, we would be
providing them, through the loan program, $40 per week per child,
or $83 per week per child for sole-support parents. That is
simply built into the assessment-
Mr Patten:
That's a grant, though; it's not a loan.
1140
Mr Zisser:
For the first two children it's part of the loan. Since many of
these individuals will end up with loan funding in excess of the
$7,000 for two terms, in effect it turns into a grant when they
complete their studies. Those individuals who have more children
will now be eligible to receive the child care bursary for the
additional children.
Mr Patten:
All right. This is perhaps part of the same thing, the "Increased
Contributions from Students with Assets" section that you
referred to, and you said assets include vehicles, bank accounts,
investments, RRSPs, level of eligibility. The level of
eligibility, first of all, for an OSAP grant in terms of income
was $900? If someone makes more than X amount a year, part-time
or whatever, obviously part-time in most cases-where do they not
qualify? What's the level of income?
Mr Zisser:
OSAP always looks at a student's need and it calculates the need
first by looking at the student's education costs. It would look
at their tuition fee, their ancillary fees, book costs and so on.
It will also then calculate a value for living costs, things like
child care and so on. So it creates a figure for costs.
On the other hand, it looks
at the student's resources. When it looks at resources, it looks
at the 16 weeks leading up to the study period and asks, "How
much is the student making there?" and it expects some
contribution from those earnings. It would look at any resources
that a student might have during their study period: For example,
are they receiving scholarships, grants, bursaries? Do they have
part-time employment? Then it makes a calculation based on those
two factors to determine whether the costs exceed the need, and
to the extent that the costs exceed the need, the program is in a
position to recognize that up to certain pre-established
levels.
In the case of the study
period contributions, the program currently exempts the first
$600 of resource, and then for every dollar beyond that will
consider 80 cents of that as a resource to the student's
education.
Mr Patten:
How did you arrive at $600?
Mr Zisser:
That is the Canada student loan national policy.
Mr Patten:
So that's the reason. What's the rationale for it? It's a pretty
feeble number. It's a ridiculous number, really.
Mr Zisser:
My understanding is that there were extensive consultations taken
by the federal government back in 1993-94, where they looked at
various models of doing this, and this was the policy option they
adopted based on that.
Mr Patten:
OK.
The Chair:
Ms Martel now. We'll be going five minutes over because of the
earlier intervention, so you've got your full 18 minutes.
Ms Shelley Martel (Nickel Belt):
Thank you for coming today. Before I ask you some questions,
though, I wanted to make a comment about the collection efforts
because I saw Mr Maves's eyes light up when he heard how much
those private collection agencies were taking in. I think it's
incumbent upon me to go back to what the auditor said in 1997
about collection agencies, because we dealt with it at the time,
and it would be relevant if the researchers could get some
additional information.
In his 1997 annual report
the auditor said, "There has been a serious lack of student loan
collection activity during the last year, primarily because
Central Collection Service"-which is government-"experienced a
50% reduction in staffing and had not accepted new loans for
collection since May 1996." The status of the accounts at the end
of October 1996 as reported by the auditor was that there were
45,000 claims, $99 million worth in default. So the issue really
is, what went on in government in terms of collection, if
anything, from May 1996 until these files were turned over to
private collection agencies in January 1999? The fact is that
there were no loans being collected from any source, not just
OSAP but AG as well and other ministries, where there was no work
going on at all.
If we're going to make a
valid comparison about the efforts of the private collection
agencies versus perhaps the efforts of government staff, we would
probably have to go past 1996 and into 1995 and 1994 to get some
idea of what was actually going on in that branch, because it was
clear there was nothing for what may have been a two-year
period.
On the collection agencies,
though, to the ministry-and perhaps you can't provide this
information because the contracts are not directly with you but
with Management Board-I would really like to know why we'd have
different percentages of collection with the different collection
agencies. I can't even understand why the government would set a
different rate, in terms of percentages, with each collection
agency. Do you have any idea of how that was arrived at?
Mr Zisser:
Through a competitive bidding process.
Ms Martel:
I understand that they might have been chosen through a
competitive bidding process. I'm wondering why the government
would actually set different rates of repayment to private
collection agencies. Why would they not have a set percentage? If
you collect a set percentage, a set percentage comes back to the
government and a set percentage goes to all five collection
agencies. Why the variation between collection agencies?
Dr
Christie: I think probably the best way to address your
question is for us to talk to Management Board and determine
what, of those processes-some of them may have been commercially
private-we can bring forward in answer to that question. This was
a process undertaken by Management Board.
Ms Martel:
When you're talking to them, if you could, just to be clear on
what I'd like to see-I think the auditor already mentioned it-the
total value of the defaulted loans that went to the collection
agencies. I'd be interested in knowing why there are variations
in percentages, but also the percentage that the government has
received then from the five contracts, and the percentage that
the private collection agencies have received as a result of the
five contracts as well, so that we have those figures.
Let me begin by asking some
questions with respect to your presentation. On page 22 you
talked about the ability of individuals to apply for OSAP through
the Web site. If I might, Mr Zisser, you mentioned a couple of
times that if they do it that way it's free, which leads me to
the question of, what is the fee for a student who wants to use a
paper application to apply for OSAP?
Mr Zisser:
It's $10.
Ms Martel:
If you call OSAP as a student and request some
information-perhaps what's happening with your loan, whether it
is going to be processed-is there a fee for that as well?
Mr Zisser:
There is no fee if you call the regular telephone number; there
is a fee if you call the 1-900 service. However, students who are
attending Ontario institutions who want information about their
loan are encouraged to deal with the financial aid office at
their institution. Those financial aid offices all have direct
access to the students' information. All of the public
institutions have on-line access to our computer system and are
in a position not only to provide information to students but to
actually serve students by processing whatever transaction is
required.
Given the large number of
students that we're trying to serve and also the very real issue
in terms of all students wanting service on the same day in the
year, we need a system that distributes that work across to the
financial aid offices. They are also in the best position to
actually know the student's full set of circumstances and provide
a complete service.
Ms Martel:
What's the cost for the 1-900 line?
Mr Zisser:
It's $2.
Ms Martel:
I didn't really understand the difference between the 1-900 line
and a regular call, so maybe you'd better explain that to me. Who
would use the 1-900 line?
Mr Zisser:
The 1-900 line is a way for a student to gain access to their
account information. It's a voice interactive system that allows
students to input their security code and, with that, to then
obtain access to the status of their loans. So from a telephone
they can find out: "Did you receive my application form? Did you
assess it? What is the amount of loan? Are there errors on it?
What are they? What do I need to do next? Do I have loan
forgiveness owing to me?" and so on.
That same service is
available through the Web, presented in a graphic form. Students
would again have to enter their personal identification number to
access the information.
1150
Ms Martel:
I still don't understand why there's a fee for one telephone call
and not a fee for another. You can get virtually the same
information. In one case you'd have to wait to talk to someone, a live body,
but you essentially are asking for the same information,
essentially the same student. Why is there a fee for one call and
not for another?
Mr Zisser:
The students we generally serve through Thunder Bay would be
students who are studying out of country, where we're acting as
their financial aid office, or individuals who have inquiries
that are not specifically related to the current year's
application. What we are trying to do is to encourage students to
make use of the financial aid office at their institution for
those purposes or to serve themselves by going to the Web or
going to the 1-900 service.
Ms Martel:
If the student is appealing their OSAP loan, who are they
generally calling? Their financial aid office or OSAP in Thunder
Bay?
Mr Zisser:
A student who is asking for a review-that's how we refer to an
appeal at the first stage-is dealing with their financial aid
office. Financial aid offices have been delegated the authority
to handle those issues. If a student then is still not satisfied
with the outcome of that, they can move that forward to the OSAP
Appeal Board. In that case, they would then be dealing with our
secretary who handles those issues for the board here in
Toronto.
Ms Martel:
Can I ask how many students would have to use that mechanism,
would have no choice but to call you in Thunder Bay with respect
to that?
Mr Zisser:
With respect to?
Ms Martel:
The OSAP Appeal Board.
Mr Zisser:
Total appeals in 1999-2000 were 82, I believe.
Ms Martel:
So it's only those people who would be at the board who would
have no choice but to call you in that circumstance, those
82?
Mr Zisser:
That's correct.
Ms Martel:
Let me ask, when did you implement the policy of fees?
Mr Zisser:
I believe the $2 fee was implemented around 1998-99.
Ms Martel:
And the $10 fee?
Mr Zisser:
Sorry, the toll charge line was introduced in November 1996 and
the $10 fee was introduced in 1998-99.
Ms Martel:
Can you tell me, how much has been collected in fees thus far
between the toll charge and the $10 charge for a paper
application for OSAP?
Mr Zisser:
In 1996-97 the net revenues for the $2 toll line were $46,535; in
1997-98 they were $332,845; and in 1998-99 they were
$311,512.
Ms Martel:
So somewhere in the order of over $700,000. My math is not great.
But just quickly, $680,000 maybe. Can I ask where those fees
go.
Mr Zisser:
They are directed to the consolidated revenue fund.
Ms Martel:
So none of these fees go back into post-secondary education at
all. A full 100% of the fees collected go directly to the
consolidated revenue fund.
Mr Zisser:
That's correct.
Ms Martel:
OK. Let me go back into your presentation as well. On page 9 you
talked about reducing student loan defaults. You had the loan
default rates and you gave us a number of figures through 1996,
1997, 1998 and 1999. For 1996, just to use it as an example, you
said the default rate was 18.6%. I'm not clear what that 18.6%
represents. Is it the total number of students who applied for
and are in receipt of OSAP in Ontario at a particular time? How
do you arrive at that percentage?
Mr Zisser:
We use a cohort method to do that. So for 1996, we used the
1993-94 cohort of students who would have completed their
studies, and then two years after that point we measured to see,
have they repaid their loans or not? So the base number is the
number of students whose final year of study was 1993-94, and
then the defaulters are, of those students, the ones who have two
years later not-where we have paid the claim on the loan.
Ms Martel:
So it's been paid out already. Do you have the actual numbers to
match against the percentages?
Mr Zisser:
Yes. I don't have the 1997 rates. We do have those numbers; they
were published. I just did not bring that half-inch of paper with
me.
Ms Martel:
There are two things I'd be interested in: one, the number of
students that is represented by 18.6% and, second, the monetary
value that the 18.6% represents, what is the monetary value in
terms of defaulted loans.
I ask this because in his
1997 report the Provincial Auditor looked at the trend in student
loan defaults as part of his review, and he provided a graph in
that report that went up to 1996-97, but clearly stopped there
because he reported in that year.
The increase was quite
dramatic in the default: In 1994-95, the total cost of defaulted
loans was in the order of $21 million; in 1995-96, it was $35.3
million; and then in 1996-97 it jumped to $62.6 million, a
dramatic increase, almost double, in one year. I would be
interested in knowing then what the total value is. While the
minister has said recently that we're reducing our loans, she
didn't give the figures. So I'd like to know how dramatic the
reduction is and if we're only slowly climbing down from what was
a very high period of defaults noted in 1996-97.
Mr Zisser:
The only year I don't have is 1996-97, but we can certainly put
together that series of numbers. It would have been included in
the ministry's estimates.
Ms Martel:
That would be helpful, if you could go back. You see, we have the
information already up to and including 1996-97. The information
we have includes the average value of the claims, the number of
claims, and then the total cost of the defaulted loans. So if
that's a pattern that you can work with, that was already
presented by the auditor in his 1997 report. If we could have the
same comparisons for the balance of the years, that would be very
helpful.
On page 10, you were
talking about reducing student loan defaults and you listed a
number of strategies that you're using. I was interested in the second one
in particular, that institutions are to share the cost of
high-default programs, and you mentioned established thresholds
with respect to that item. I didn't catch all of the information,
so can you explain to me a little more fully: Is it a different
threshold per institution? What percentage is it of potential
defaulted loans? How do you arrive at the calculation? And is it
different institution by institution?
Mr Zisser:
The thresholds that were established are the same for all
institutions, and in the first year of the policy, the threshold
was set at 38.5%. So institutions that would have been affected
by the default sharing policy would have had to have a default
rate of at least 38.5%. Any institution that had a default rate
below that was not affected by the policy. At those institutions
that had a default rate in excess of 38.5%, the ministry would
have made a calculation as to the amount of loan that would be
affected and the institution had the option of either posting
some form of security for that amount or discontinuing one of
those high-default programs that may have been putting the
institution above that threshold.
Ms Martel:
I'm sorry, did you give us, when you were speaking on this page,
the number of institutions that found themselves in that
position?
Mr Zisser:
No, I didn't, but I know we have that information somewhere.
The Chair:
That will be the last issue. We've gone through the time
period.
Ms Martel:
Can we just wait for the response?
The Chair:
Sure, we'll wait for the response.
Ms Martel:
You can bring it back to us later, if you'd like.
Mr Zisser:
I know we do have a count of how many institutions were affected
by that.
The Chair:
OK. The one question that I have arising out of that is, have you
actually collected on any of the securities that have been
posted, or is this a matter that has been left in abeyance to see
what's going to happen over the next number of years as far as
the default rate with those institutions is concerned?
Mr Zisser:
The policy was not retroactive, so what the postings relate to is
the class of students that would be starting in that year. The
calculation would then be done for that class of students when
they had finished their studies two years after. So the first
time that we will be looking at that issue will be next year. The
purpose of the security, of course, in the case of private
schools, is to make sure that there is some security there.
The Chair:
Right. Thank you very much. We will recess, then, until 1:30.
The committee recessed
from 1203 to 1335.
The Chair:
I would like to reconvene the hearing on the Ontario student
assistance program. We're back to the government side for 20
minutes of questioning.
Mr Maves:
I'm just going to try to pick up where I left off, actually. I
had asked questions about the recovery rate, if we could have
some numbers of what previous recovery rates had been by the
ministry and what they are now that the collection agencies have
taken over. I just wondered if you had any opportunity to get
those numbers over the last hour and a half.
Mr Zisser:
I think we have determined that we don't have recovery rates per
se at this point, simply because we haven't been able to do such
calculations and such calculations have not been provided to us
either from the collection agencies or Management Board at this
time.
Mr Maves:
I had it pointed out to me in the auditor's 1997 report-I think
it was in the 1997 report-that where he did an audit of the CCS,
the collection service, he was unable to even come up with any
numbers of what was being recovered on an annual basis in
previous years. I don't know how many of you were there at that
time, but that's quite disconcerting to me as a member of the
government, that the ministry couldn't even provide numbers on
what they had recovered once the CCS had taken over the debt. I
wonder if you have any comment on that.
Dr
Christie: None other than that some of the reforms
undertaken at Management Board to deal with collections and the
collections process were undertaken for that reason, to improve
the process, and we have a more centralized and better managed
collections process. In terms of the particular numbers you're
asking about, we are following up with Management Board to secure
the numbers.
Mr Maves:
I appreciate that.
Continuing along, quite
often I hear the banks, when we talk about OSAP and Canada
student loans-and I'll review it again. Banks lend the money to
the students. We pay them the interest on it when the students
are in school. We then pay the interest six months before the
students have to pay it back. After 90 days, if it's defaulted
on, we pay the bank. The banks often complain about being
involved in this system. What is the downside to the banks in the
system? Is there one?
Dr
Christie: I think the downside to the banks overall has
not been their involvement in the Ontario side of the student
loan process.
Helmut pointed out earlier
that Ontario is one of only two provinces that were not under the
same loan system as the federal government over the last several
years. The arrangement the federal government had with the banks
was basically a 5% default arrangement whereby they paid the bank
5% based upon an estimated default rate, and then the bank was
responsible for collecting. As it turns out, defaults were
considerably higher than 5% across the country. That hit the
banks rather than the federal government. A number of banks
through that period were very unhappy with the amount of money
that it was costing them, and in fact indicated that they would
not continue the student loan arrangement under those conditions,
which is in part why the federal government has been
renegotiating the structure of the arrangement.
Mr Maves:
If the system that we have right now with the banks is so, to me,
safe and lucrative for banks-not only that, but they pick up
clients because a student may take a bank account with Scotiabank
and be there for four years, and even after they default and nothing
happens to them, they probably will still end up banking at Nova
Scotia. So I know that part of the rationale for banks being
involved in this is that they get a client base. Considering how
lucrative the system is right now for the banks, I'm just
wondering if the ministry has considered negotiating ourselves a
different deal, perhaps even by tendering it to the banks and
saying: "Look, if you want this business, let's tender it and you
come up with a process whereby we're not getting dinged for so
much of it, but you're still going to get a benefit." Have we
ever considered doing something like that?
Dr
Christie: That's the kind of activity the ministry has
been undertaking in the last couple of years. I will stand to be
corrected by the people who are more directly involved, but there
was a tender to the banks for a redesigned loan program a year or
two or 18 months ago, I believe, on which we did not receive
attractive responses. At that point we began discussing with the
federal government their negotiations with the banks for a
revised loan arrangement. One of the things that people told us
would result in a better deal for taxpayers in Ontario was a
harmonized arrangement with the federal government that
simplified things for students and lowered administrative costs
for the banks, and hopefully we would be able to capture some of
that benefit in a better loan arrangement.
That is what has been done
over the last year or so, and as Helmut noted, last May there was
in effect an agreement in principle signed for a harmonized
federal-provincial loan arrangement that would have somewhat more
attractive features.
Mr Maves:
I take, then, based on the federal set-up that we've done the
calculations and said, "If it cost us 6.95%, but we no longer had
to swallow the defaults that we do, we'd be better off." Have we
done those?
Dr
Christie: We have done those calculations. Again,
depending on the default rate and how it's structured, we could
certainly be better off. As Helmut noted, the default rate at the
moment is around 18%. Default rates below 18% will certainly be
to our benefit.
Mr Maves:
I guess what hangs over it is what the ultimate performance is of
the contracting out of the debt recovery. If that vastly improves
the picture for us, then giving the banks 6.95% or whatever it is
up front may be less attractive to us.
Dr
Christie: I'm not an expert on the collections process,
by any stretch of the imagination, but what people have told me
is that once a loan goes into collection, your chances of
material recovery on the loan are not great; that the best way to
recoup value is to keep the loan in service and in payment.
You're likely to have a better outcome that way.
Mr Maves:
How long after a collection agency gets a debt from us now will
that debt remain on the books? Can they go after it forever? Is
there a certain point in time where a person can resurface and no
one will go after them for that debt? Any idea how that works? I
heard you in your presentation say something about 10 years and
that was the bankruptcy law.
Dr
Christie: Ten years in the bankruptcy law is how
long-and I'm always open to correction from my colleagues here,
but my understanding is that at the moment a person cannot avoid
their student loan debt by declaring bankruptcy. That student
loan debt will stay with a person for 10 years, whether or not
they declare themselves bankrupt and are freed of other
liabilities. That's what I believe the 10-year period refers
to.
On the collection side, as
we noted this morning, I don't know the details of the agreements
with the collection agencies, so I don't know the answer to how
long they would pursue a loan. It would be my expectation that,
given the costs of pursuing a loan, there will come a point where
it will not be worth their while to continue spending money
pursuing a loan on which they're not realizing anything.
Mr Maves:
As a layperson I almost can't understand, when someone owes a
debt to the taxpayers of Ontario, why it wouldn't be rather
simple for us to collect that debt, assuming the levers that we
should have available to us: garnisheeing wages, garnisheeing tax
returns, limitations on reissuing of their licence and so on and
so forth. I think most Ontarians would be astonished that a
government has so much difficulty recovering debts owed to
taxpayers.
Dr
Christie: Over the last several years, the ministry and
government have extended the range of instruments that they
employ for exactly the reasons you cite. Because of the
difficulty that one has, we have put into place, for example, the
arrangement with the federal government on income tax set-offs.
Where someone is getting money back on their tax return, we'll
have a prior call on that against the student loan. But even
there, there are conditions on that. If the person's income is
very low, Revenue Canada has, in effect, a hardship test and they
won't off-set the tax return against someone whose income is very
low. Now, in many cases it's likely to be a person with low
income who's unable to pay off a student debt. None of these
vehicles is a guaranteed route to it. It's often difficult if a
student moves out of province etc. Through ways other than
national level means, like the income tax system, it is very
difficult often to even track someone down if they have moved to
another province and don't need an Ontario driver's licence any
more.
Mr Maves:
I notice the Queen's University table; 21% of their
mathematicians default on their loans. I guess the math makes
sense for them to default. The other one, you'd think there was a
moral obligation to pay, but those in theology have a 16%
province-wide default rate.
Mr Patten:
In God's hands.
Mr Maves:
Lawyers have 8%. I guess they know the law well.
The ICL, income-contingent
loans, have you continued to pursue that or have we decided it's
so impossible to get an
agreement with the feds that we're not going to spend any more
energy on that?
Dr
Christie: We certainly pursued the feds vigorously on
classic income-contingent loan programs, and there were strong
features of that in what was tendered to the banks some time ago.
We've preserved a number of features of that in the harmonized
agreement with the federal government, which contains features
whereby indebtedness and payment history is reviewed several
years-is it five years, Helmut, or three years in?
Mr Zisser:
Five years.
Dr
Christie: They are reviewed five years into the
repayment period, and depending on the person's income, there may
be additional forgiveness at that point in the repayment period,
the theory being that if people are not generating the income to
pay the loan, it's foolish to force them into bankruptcy when
they aren't going to be able to pay it anyway. So there is that
form of income-contingent loan relief built into the harmonized
agreement with the federal government.
Mr Maves:
Have you looked at any processes used by the other provinces? Are
any of them more successful, so that we should be adopting some
of what they're doing? Are any of them contracting out that
repayment?
Dr
Christie: I'll ask someone else to address the loan
repayment piece. Most other provinces, on the student loan side,
had functioned under this 5% deal that the feds had with the
banks. Therefore, the defaults were the banks' problem and not
the province's problem. The banks made it very clear that that
will no longer be the case. They won't engage in a student loan
program under those conditions. So it would be my expectation, at
least with respect to student loans, that because we've had to
deal with them longer, we would likely have a more thorough
process than other provinces did which are just beginning to have
to think about having to deal with them. But I'll ask any of my
other colleagues, who might have a better feel for what other
provinces do, to comment.
Mr Zisser:
The other provinces that are under the risk premium are, as the
deputy mentioned, not in this business, because the debt is
essentially being handled by the bank.
Mr Maves:
The last thing I wanted to ask-I know Mrs Munro has a question
and Mrs Molinari has one-the Credit Valley seemingly scam. Can
you explain what went on there, and what are we doing about
it?
1350
Dr
Christie: The Credit Valley case-I'll ask Helmut to
comment as to where that is with the courts at the moment,
because I'm just a little leery depending on where it is in the
courts.
Mr Zisser:
As we understand, it is before the courts right now, so we
shouldn't be talking about the particulars of the case. We could
certainly talk about the steps the ministry is taking to make
sure it properly administers OSAP and also the steps we're taking
to make sure we've learned from this experience in reviewing our
processes.
Dr
Christie: Helmut might also want to comment on the
general practices of the ministry in instances, not necessarily
this particular one, where questions are raised with respect to
occurrences at an institution, including the administrative
practices followed.
Mr Zisser:
The program relies on post-secondary institutions for delivery of
OSAP, so the accountability framework we have really relies on,
first of all, a clear set of requirements, which we have in place
through the performance requirements. Those requirements also set
out consequences in the event that there's a failure to comply,
and we do monitor that through the audit process so that there is
an annual basis for us to be able to determine: Is an institution
complying with this?
In addition to that, one of
the things the ministry does is that we do monitor, and we do
that quite frequently now, any trend changes in terms of school
performance. We look at factors related to patterns in enrolment,
patterns in withdrawal, changes to tuition and so on.
Mr Maves:
I appreciate all that. I'm going to finish. Then, Chair, maybe if
we've got about three or four more extra minutes, my colleagues
could ask their questions and then we would probably be done for
the day.
We're pursuing Credit
Valley in the courts and-you nod your head; thank you. OK, I'll
leave it with you, Ms Munro.
Mrs Munro:
I want to come back to the issue of harmonization, just for my
own clarification, to be able to understand where the federal
government has now indicated that they wish to move from the 5%
to I believe 6.95%.
We were talking about the
default rate currently standing at 18%. Is that correct? The
ministry's objective is to reduce that to 10%. That's my
understanding. I just wondered, following along in the
conversation you had with Mr Maves, whether as part of that
negotiation there would be an opportunity to revisit any
agreement in light of changes in the default rate. Do you see
that as a factor that would influence the position being held by
the bank and, obviously, the point of view of the province in any
ongoing agreement, not only the harmonization but, as a kind of
subset to that, the relationship with the bank?
Dr
Christie: Perhaps I could just make a general comment
and then ask Helmut to deal with it further. It's important to
understand, at least as I understand the harmonized deal, that
the bank does not take all the risk above 7%. There's a 7%
threshold, if you like, for the system. If the system as a whole
runs defaults at 20%, then system-wide the difference is still to
the cost of the sponsoring governments. But where the banks are
at risk in this system is that if the system-wide default rate is
7% and bank A manages to secure 5% as defaults on their loans,
they get to keep the improvement they've made, but if instead
it's 9% for that bank they have to pay the amount above the
system average. But if the system as a whole produces differently
than the 7%, then overall that cost is charged to governments.
Banks are not bearing that risk.
Mr Zisser: Banks are looking to
governments to take measures to improve the performance of the
program. They're not happy with some of the situations that have
developed in the past regarding student loan default. So the
federal government, in the period leading up to their
renegotiation of their agreement-because they had a five-year
agreement and it expires this July 31-paved the way for some of
that in terms of starting to take steps to make sure there were
adequate instruments in place to assist students who were in
repayment difficulties. They had introduced an enhanced interest
relief program. They had introduced a debt remission program.
They have certainly encouraged provinces and worked with
provinces to look at other steps we could take along this route
as well, because the first preference is that we continue to have
arrangements with banks.
Mrs Munro:
I guess what I really wanted to know was whether any change in
the provincial default rate would have any impact on the
potential relationship with the bank and the way in which the
bank would view its responsibilities in this agreement.
Dr
Christie: To the extent that the province's actions
result in improved default performance, that will be favourable
for the banks; they won't make any money on it as long as it
benefits each of them equally. Those who will benefit from a
lower default rate will remain the taxpayers. If the default rate
drops low enough, that will also benefit taxpayers; banks won't
get the benefit of that. But there is an overall benefit to banks
in being involved with fewer defaulted loans.
The Chair:
Just so I have a clear understanding, when you're talking about
default rate are you talking about the dollars in default or are
you talking about the number of payers in default? Is it a dollar
value that you're talking about or the number of loans?
Dr
Christie: I believe it's the number of loans,
Helmut?
Mr Zisser:
If we're talking about the risk premium, the calculation made
there is based not on the defaulted loans but actually the number
of loans going into consolidation. So at the time loans go into
repayment, this insurance payment is in effect made. The
calculated rate that the media has reported on is one that the
federal government has developed in its work with the banks as
one that reflects the current trends in default. It already
factors in the fact that we're making some improvement, that
there are these measures in place to assist students in loan
repayment and so on; otherwise, the rate would have to be
higher.
Mrs
Molinari: My question is on the harmonization again. I
want to try and put this in very simplistic terms, because it's
confusing when we're talking about percentages and we're not
clear on what exactly that means. First of all, with the
agreement we now have, harmonization, are we bound to the same
agreement that the federal government has with respect to the
percentage we pay?
Mr Zisser:
What the agreement does is give us access to that rate the
federal government is negotiating. The federal government is in a
better position to get a good deal than we are in a situation
like this, so one of the benefits we can get as provinces is
access to this type of arrangement.
1400
Mrs
Molinari: OK. When we say that our default rate is 18%,
are we saying 18% of the total dollars that are loaned, or are we
saying 18% of the defaults?
Mr Zisser:
The calculation of defaults, as we report them, is the incidence
of students defaulting, not the dollar value of the default.
Mrs
Molinari: The 18% is not in dollar terms, but the 6.95%
that is paid to the bank is in dollar terms. It is 6.95% of
what?
Mr Zisser:
Of the loans going into consolidation, that is, the loans where
students are due to make repayment. It's the face value of those
loans at the time they are due for repayment.
Mrs
Molinari: It's approximately 7% of all the loans, not
the defaults.
Mr Zisser:
That's correct.
Mrs
Molinari: Moving to a different topic, the auditor
mentioned that the loan forgiveness has been phased out and we
have other things that we've put in place for that. I need some
assurance that what has replaced that is of benefit to the
students and allows more accessibility for a greater number of
students and that is the reason that was replaced. Could you
please comment on that and reassure me that's in fact the
case.
Mr Zisser:
The loan forgiveness program conferred a benefit on students that
many students were quite unaware of. The way the program operated
was that at the time a student completed their studies and the
loans went into repayment, the ministry would make a calculation
to determine how many terms the student was in school and then,
based on that, calculate the amount of debt that the government
would repay. Since 1997-98, the loan forgiveness level has been
set at $7,000. So if an individual had a debt of $10,000, the
student would be required to repay $7,000 and the ministry would
remit $3,000 to the student's lending institution to reduce the
debt.
Given that it was paid at
the time students finished their studies, many students would
have formed an opinion or impression that they were carrying very
large debt, because they might be getting statements from their
banks indicating their cumulative loan debt and there's no
reference on that to loan forgiveness. It wasn't uncommon for
students, first of all, to have an erroneous sense of the amount
of debt that was there, and also the government was paying the
interest on these amounts. So the decision was taken to change
this program so that the debt reduction would happen annually.
This has, again, two significant benefits; one is that for the
student it gives them a realistic sense of their indebtedness.
They now know that their debt for two terms of study is only
$7,000 for that year of study and not some larger amount, even
though we may have lent that student vastly larger amounts of
money. We actually save money in terms of the interest we're not
paying. I think it's an improvement both for students and in terms of the value that
taxpayers get for the program.
Mrs
Molinari: As far as dollar amounts going directly to the
students, what is the difference?
Mr Zisser:
The amounts would remain the same, that is, the threshold of
forgiveness has stayed at $7,000. So in the same case of the
student who had a $10,000 loan, they would see $3,000 of that
paid at the time they finish that year's program of studies. It
is a completion grant, so it does require the student to finish
their studies for that year, and we do carry out the income
verification before making the payment. We had also started to do
that for the last year of the loan forgiveness program.
Mrs
Molinari: Just so that I understand correctly, then, the
program that's presently in place is not giving any of the
students less money in dollars as the loan forgiveness
program?
Mr Zisser:
It's paying it more promptly and giving the student a much better
understanding of what their debt is. We've instituted a few
additional steps to make sure that students understand this is
occurring. We send a notice to the students in advance of making
the payment to advise them that this is going to happen and also
to give them an opportunity to make sure the amounts of loan we
have recorded are correct or to take steps with their lender to
make changes that are required. We also confirm to the student
when we have made the payment, so that they understand their debt
has been reduced for that year.
Mrs
Molinari: So in dollar amounts, the student is receiving
the same thing as with the other program, but with this program
the province is in fact saving money because of the interest
that's not paid on the ongoing rate because it's paid on an
annual basis. So we're saving money in not paying that interest.
Is that correct?
Mr Zisser:
That's correct.
Mr Patten:
I'm going to look at it a little bit from the student's point of
view. There's no question the percentage of enrolment has gone
up, even in the university-college sector, let alone the private
vocational schools, which I think probably would have the most
dramatic increase. What's the relationship between the student
body growth and the percentage of students who are now
borrowing?
Mr Zisser:
As I think I mentioned earlier, about 40% of Ontario students are
receiving some form of assistance from the Ontario student
assistance program. If you break that down by colleges versus
universities, in the case of universities for 1998-99, which is
the last year for which we have this information, 37% of
full-time post-secondary enrolment students were receiving
assistance from OSAP, compared to 50% for college students in
that period. In the 1997-98 year, those numbers were quite
similar, 39% for university students and 53% for college
students.
Mr Patten:
You just have a two-year period. What's the trend? Does this
suggest that less of the student body is now using the program or
the government programs?
Mr Zisser:
There have not been any very significant shifts. This is a data
series that will move a little bit from year to year, but it has
remained relatively constant.
Mr Patten:
During lunch I made a few phone calls to some of the student
federation offices. Of course, you've heard their overall
concern, which is that no matter how you cut it, more and more
people are walking out of-if they graduate, and even if they
don't graduate, they still have a mortgage. They're leaving their
university or college or course of education with no house but a
mortgage that they have to begin life with, and some of it is
considerable. I know there's a top-up. You're still talking a
maximum of $28,000, but that's considerably more for a lot of
students and that is their major concern.
From time to time you must
be meeting with them and certainly the minister or the PAs must
be meeting with the federations of college and university
students. What's their impact in terms of changes to your
program? You talked about new programs that you were examining at
the moment. What will that mean in light of the information that
students themselves are telling you?
Dr
Christie: In terms of the new programs we've talked
about, particularly the Aiming for the Top scholarship, it hasn't
been introduced yet. We haven't seen the demographic figures of
the people who will qualify.
Mr Patten:
I'm sorry, what was it called?
Dr
Christie: Aiming for the Top. Not having seen the
demographic, we don't really have the information to know how to
assess what sort of impact it's going to have. It's clearly going
to be beneficial, as will the harmonized loan program, certainly
in terms of transparency. Of course, in a more cost-effective
program there is the capacity to make loans available to a
greater number of students. As we look at the enrolment growth
coming over the next several years that is something that we're
very conscious of as well.
In terms of the advice
received from students, as was mentioned earlier, there has been
an advisory committee on student assistance. That advisory
committee has been reformed and will meet again and continue to
provide advice to the ministry on matters around student
assistance. Would anyone else like to comment?
Mr Zisser:
I would just make the point that students have certainly
expressed the desire to see assistance, not only in the form of
loans but in the form of grants or bursaries. We certainly have
seen a very significant growth in Ontario over the last three
years in terms of the resources that are available to provide
students with non-loan assistance.
Through the Ontario student
opportunity trust fund program there are now $600-million worth
of endowment funds that are generating income that institutions
can use to assist students in financial need through bursaries.
The 30% set aside from tuition fees also has provided very
substantial resources to institutions to assist students. I think
what we have is a better balance between the kind of assistance
that OSAP provides in the form of a loan, according to its
criteria, and the kind of discretion that institutions now have to assist students in
need in a more flexible way through their own resources.
Mr Patten:
Aiming for the Top, or whatever it was called, presumably is a
program that will either reward or provide incentives for those
who can maximize their achievements, whatever that is. I haven't
seen the program but my only comment is that the higher achievers
tend to have access to scholarships and other forms of
remuneration based on merit, in any case.
I want to come to the other
side of the program, and that's sole-support students. I'm coming
back to the child care support. I think I've just about got a
handle on what it means. Here's what I think it means. Let's say
it's a mom with two kids, the example I used this morning, and
she has the ability to go to university or college and would like
to go. She's also got a child care subsidy. When she approaches
the college or university they sit down and try to assess her
situation. If I'm wrong please tell me, but I gather they take
into account that her child care subsidy is a source of income as
well, correct?
Mr Zisser:
I don't believe we include child care subsidies, but I would have
to double check.
Mr Patten:
OK. I was led to believe it was. On the other side of the coin, I
am told that's a barrier for people in that kind of a
circumstance. What they would have to do is convert from what is
a subsidy now and welfare income for a living, then take on all
of the costs related to tuition, to books, to travel, to whatever
it is, and convert a subsidy that was received before to now
borrowing for child care. So the child care becomes a cost in the
future because it's now on the loan side of the ledger. Is that
correct or am I off on that?
Dr
Christie: To the extent that child care was included
under the loan program and to the extent that the person's total
loan was less than $7,000, including the cost of child care, for
a two-term program, that would be true in that case.
Mr Patten:
But it would have to be below $7,000.
Dr
Christie: Anything above $7,000 is countered by a
student opportunity grant. It may be part of the loan at the
start of the year, but at the end of the year, as Helmut was
describing, it is written down to $7,000, the difference between
the total loan during the year and the year-end amount being the
amount of the student opportunity grant. In circumstances in
which a child care subsidy is coming through the OSAP side, in
addition to tuition, books, living expenses etc, and that's above
$7,000, it will not increase the loan because the loan is capped
at $7,000.
Mr Patten:
That's true. However, it seems to me that the parent is then
caught in a dilemma. It's a rock and a hard place, it seems to
me. There's something that is not working in this, because I get
this representation fairly frequently. I'm perhaps not able to
understand the nuances or subtleties of the calculations because
we're dealing with three: the calculations for the parent, the
calculations for the OSAP program and the calculations for the
child care subsidy at the municipal level, supported by the
province; and OSAP is considered income.
I believe at the moment
there is a disincentive. Even though I hear the government saying
this, and of course we would all agree we'd want to maximize the
opportunity for people on social assistance to be able to pursue
their studies, but if they have kids, then we want to make sure
they're taken care of. But at the moment my belief is that
there's a disincentive. When I look at your program, the child
care bursary and the levels of support-a maximum of $83 a week,
for example-I think the rule of thumb will tell us that it's
about $275 a week in actual costs. If a mom is receiving
something fairly close to that on welfare, to trade that for a
loan cost that she'll have to pay down the line, and it's less
than what she's getting and she'll have to borrow more, you can
see what I mean. It doesn't look very attractive.
I'd like to ask you if that
can be examined and if you could let the committee know exactly
how that works. The auditor might want to take a look at that
too, because the objective is to help people reduce their
dependence upon social assistance with the assistance of
educational accessibility.
Dr
Christie: Unless my colleague wants to add something, we
will look at the figures you've described.
Mr Patten:
Thank you.
The other question is on
the relationship. You have said you're in negotiations with the
federal government at the moment, and the harmonization of this.
The millennium scholarship: I'm quite aware that many of the
provinces didn't like this apparent intrusion by the federal
government even though they have concurrent responsibilities in
relation to post-secondary education. Perhaps this was a response
to a neighbouring province and the circumstances that it would
never acknowledge any benefit from the federal government, so
this may be part of it.
At the moment my
understanding is that if someone is in a debt position-and I have
a few examples here that I may not have to use if you agree-and
is eligible for the millennium scholarship, then that immediately
is an offset for any provincial loan debt. Is that correct?
Mr Zisser:
I think we recognize that there is some overlap between the
provincial student opportunity grant program and Aiming for the
Top-
Dr
Christie: The millennium fund.
1420
Mr Zisser:
Sorry, it's the millennium fund.
This was an issue that we
were aware of and that the millennium foundation was aware of
when we entered into these discussions. It was recognized that
for them to do what they wanted to do across the country,
recognizing different circumstances, they would find cases where
these two things would overlap. The way it was addressed at the
time was to acknowledge that. The millennium fund at that point
calculated what they estimated to be the value of that overlap
and requested provinces that signed agreements to agree to
reinvest such savings for the benefit of students. At the time
Ontario signed the
agreement, we committed to doing that as well, because there
wasn't a practical way to disengage the two programs.
One of the issues we face
is simply that of timing. The Canada millennium fund wanted to
make payment at that point very early in the new year. It's
turning out to be probably in March, but it's still very early in
the new year. At this time, students are not yet eligible for an
Ontario student opportunity grant. We have to wait until they
complete their study periods and we have to verify their income.
There is a sequencing issue: That amount is going to be paid to
students, it's going to reduce the amount of debt that they have,
and some of those students will be eligible for further debt
reduction through the student opportunity grant later on. It's
certainly one of the design issues that is worrisome and that we
wish to look at in terms of seeing if there is a better way to
make that work in future years.
Mr Patten:
There are two implications here. The first one I wasn't aware of
and you just mentioned it. The province of Ontario has agreed
that if they use the millennium scholarship as an offset, if they
take that money, even though it's taken off the student's debt,
the province takes a similar amount and puts that into
post-secondary education in some manner. What happens with that
money? It just goes to the financial institution?
Mr Zisser:
What we signed specifically said we would reinvest the money for
the benefit of students. The government has not yet announced
what those reinvestments will be, but certainly has stated quite
emphatically that it will do so.
Mr Patten:
Could you notify the committee when that happens?
Dr
Christie: We will certainly do so. I expect that it will
occur in the form where you will be aware of it, but we will
certainly make sure that the committee is formally advised.
Mr Patten:
Does the letter that's received on this scholarship come from the
feds or does it come from the Ontario government?
Dr
Christie: On the millennium scholarship?
Mr Patten:
Yes.
Dr
Christie: It's from the federal government. It's from
the millennium foundation, which is not per se the federal
government. They've set up a piece of legislation to create this
foundation. It's a separate body, but they are the ones who send
out the letter.
Mr Zisser:
We provide them with 35,500 names. We did that in November. In
addition to that, we provided to them the mailing addresses for
those individuals. They were all selected based on their criteria
from the list of individuals who had applied to OSAP and had high
need and met those criteria. They then took that step. The
foundation is requiring provinces to then make the payment later
on, and we expect that will happen sometime in March.
Mr Patten:
I'd like to switch to customer service. This is somewhat along
the lines of the questioning from Ms Martel this morning. The 800
number for OSAP information no longer exists, correct?
Mr Zisser:
We don't have a general 800 number; we do have 800 numbers. We
have an 800 number for students who are deaf and hard of hearing
to support that service, we have an 800 number to serve the
millennium fund and we have an 800 number for purposes of income
tax set-off. But we don't have a general 800 number because, in
general, students should be dealing with the financial aid office
at their institution for all services related to their loan.
That's the best place for them to get the service promptly.
That's also where they can immediately have their account dealt
with, because the authority for making changes and so on has been
delegated to the financial aid officers at the public
institutions. We still provide a service for out-of-country
students.
Mr Patten:
The 900 number is a pay, $2 a shot, is it?
Mr Zisser:
That's correct.
Mr Patten:
In your chart this morning you said the demand is pretty high
when you hit August and early September and it probably drops off
somewhat in November or what have you, and maybe it starts up
again in December for the next semester. Was this a ministry
decision or was this imposed? Was this a mandated requirement
that you charge for these services or was this in the pursuit of
trying to make your contribution to cost recovery or whatever it
is, that this was recommended from the ministry? Or was this
something that come through finance or a cabinet directive?
Mr Zisser:
It was certainly a decision by the ministry to carry out this
activity. I think the issue was, how do we provide a service to
students and do that in a cost-effective manner? So there was the
issue of investing and setting up such a service. At that time it
was felt that to adopt this type of approach was something we
wanted to try. Certainly in the initial two years of operation, a
lot of students used the service and they could for the first
time obtain information that they could not otherwise have
obtained as quickly. We've seen now that with the Web site
gaining popularity, this service is not being used quite as much
by students as it was at that time.
Mr Patten:
I'm picking up a pattern here in a variety of ministries that to
kind of push or encourage citizens to access various services,
the one that's perceived to be the least desirable by the
ministry has a user fee applied to it, and the one that they want
people to start using is still perhaps a free service.
In my discussions at
lunchtime I had someone say, "Listen, at certain times it's
extremely difficult to see their financial officer or the adviser
at the college or university." For days on end they cannot get
the information and so they're forced, somewhat, to use that 900
phone number, or any of them, to try to get information. If
you're saying that this is something you're trying, that means to
me it's something that's being examined for its effectiveness.
You might check with the students and their utilization of
that.
The other thing I would
like to suggest, if I may, because we have talked about this-I
don't know if we've
got a report that has been released on it yet, but maybe it's an
upcoming one. In the portion of financial counselling that we
believe should be taking place with students when they submit
their application for loans, and I don't want to be hard on some
young people, but not having had to incur debt or manage it or
understand the significance of it, to an 18- or 19- or
20-year-old: "Hey, this is free money. This is great. This is how
I'll manage it." I've had some personal experience on that score
myself and have said, "Just a minute, maybe we should talk about
what this actually means, especially when you have to begin to
pay this." Part of the counselling is not just the eligibility
but the long-term responsibility and the implications of what
this would mean for the student down the line. So when your
advisory committee-I don't know if that's one of the items that
is being examined, but it might very well be.
I guess Bart mentioned the
whole issue of the income contingency loan repayment plan. Has
that been dropped or is it under reconsideration or has it gone
back for renewal or what?
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Dr
Christie: The agreement we have with the federal
government, as I noted earlier, has an income-contingent loan
feature as a dimension of that, as part of the program.
Mr Patten:
In your discussions with the harmonization, I want to know where
the ministry is at or where the government is at. Is this
something you want to discuss with the federal government in
terms of sharing that responsibility of looking at such a
program?
Dr
Christie: In fact, that feature has been discussed with
the federal government and is part of the structured federal
offer to the banks, which the provinces then have the capacity to
sign.
Mr Patten:
OK. I guess you can't say what the story is at the moment because
you're negotiating.
I think I'll stop here.
Thank you.
Ms Martel:
I will return to the millennium scholarship issue, if I might. I
have a number of questions. Let me begin in this way. My
understanding of the intent of the federal program was that it
was to put money directly into the hands of the neediest
university and college students in the country. Is that
correct?
Dr
Christie: I believe that was their intention.
Ms Martel:
Presumably the neediest would be those with some of the highest
debt load in either the province or across the country. Would
that be your understanding?
Dr
Christie: Certainly before a program like our student
opportunity grant, it's likely that they would have a high debt
load.
Ms Martel:
Let me be sure this is clear. Each province made its own decision
about how that federal money would be used, correct?
Dr
Christie: Helmut, would you comment on how other
provinces have approached this?
Ms Martel:
Before you do that, though, I want to make it clear that the
decision ultimately about how the federal money was used was made
by the province of Ontario.
Mr Zisser:
I think the way the program is administered from province to
province is something that was negotiated between provinces and
the foundation, taking into account the different circumstances
of different provinces. There is not a uniform way that provinces
deliver student financial assistance. Not all provinces have debt
remission programs, the same levels of debt remission, the same
terms and conditions, the same way of treating things. So the
foundation I think has tried to enter into arrangements that
respected some of those differences and tried to make the program
work in all jurisdictions.
Ms Martel:
Let me put it this way: Ontario made a conscious decision to send
this money directly to financial institutions instead of giving
it to students, correct?
Mr Zisser:
No. Ontario agreed with the foundation that for this year the
most expeditious way of implementing the program was to use the
existing process that the province had to pay down student debt.
Clearly it was their desire to see the money used to reduce
student debt. The mandate that the foundation has adopted for
itself is one of assisting students and helping to reduce student
debt, and they opted for this. One of the factors that certainly
contributed to how this approach was put in place was the fact
that we were having these discussions prior to the year 2000.
There was a lot of concern by both parties about what would
happen on January 1, and we wanted to have a reliable method of
doing that. This was a proven method that we had already put in
place, and we offered to extend that to the millennium foundation
as well.
Ms Martel:
Let me ask, in the eight other provinces, did they provide
funding directly to students?
Mr Zisser:
They all do it differently.
Ms Martel:
Is there any jurisdiction that provides funding directly to
students under this program?
Mr Zisser:
I believe there are some that do that.
Ms Martel:
Could Ontario have exercised that option as well?
Mr Zisser:
If Ontario were that province and it made sense to do so, but
Ontario's circumstances are different from that of all other
provinces; our programs are different. It was the judgment of the
parties at the time that this was the way we could deliver the
program within the timelines and within the criteria that the
foundation had established for the program.
Ms Martel:
Isn't it true that the net effect of the program in Ontario is
that many students who have a debt load of over $7,000 will
receive only a partial benefit or no benefit at all? That is the
net effect of you deciding to send the money to the financial
institutions instead of the students.
Mr Zisser:
I think the net effect is that because there is an overlap
between the programs, some students certainly will not derive as
great a benefit as other students. Certainly, many students will
be getting that benefit, and again, as was made very clear at the
time the agreement was
signed, in the press release from the foundation, all the parties
knew in advance that there was this overlap. There was an attempt
to quantify that, and there was a commitment to reinvest.
Ms Martel:
With the overlap, you're saying that somehow these students
couldn't have received both. Is there any legal or legislative
reason why a student in Ontario could not have received a
millennium scholarship, the full amount directly, and not still
have received the Ontario student opportunity grant? What
legislative or legal barrier was there to say that they couldn't
receive both fully?
Mr Zisser:
It would not have been possible under the current
legislation.
Ms Martel:
Can you provide this committee with a copy of the piece of
legislation that would clearly have said that these students
can't receive both? What legislation is that?
Mr Zisser:
Well, there's no legislation that has that wording. The
regulation that specifies how the student opportunity grant is
calculated indicates that there is an order in which we do
things, which is that the student must complete their program of
studies; it sets out-
Ms Martel:
Sorry, this is a regulation?
Mr Zisser:
Yes.
Ms Martel:
A regulation can be changed. The regulation could've been changed
to allow for Ontario students to receive a millennium scholarship
amount and an amount of money under the opportunities grant and
to not have one offset the other. Am I correct?
Mr Zisser:
Well, you're correct that regulations can be changed.
Ms Martel:
Right. So if Ontario had really wanted to put money into the
hands of the neediest students, Ontario could have had a
regulation change which would say that Ontario students could
receive the full amount of the millennium scholarship, $3,000,
and they could also receive the full amount of the Ontario
student opportunity grant at the same time. We could have done
that by regulation, correct?
Mr Zisser:
The province has the ability to make regulations.
Ms Martel:
Right. OK. I wanted to read into the record what the net effect
of this has been, because I think it's important for you to
understand and for other committee members. We got a letter from
Confederation College, from the chair of the board of directors,
that said the following:
"I am writing on behalf of
the board of governors of Confederation College to express our
concern with the way in which the province of Ontario has chosen
to administer the Canada millennium scholarship fund. We
understand that Ontario and British Columbia are the only
provinces where the benefit of this important federal program
largely accrues to the province and not to the students to whom
it was intended.
"To our knowledge, 312
students at Confederation College have been advised that they
qualify for the scholarship this year.
"-173 students will obtain
no personal benefit whatsoever as the province is using their
scholarship to pay down the forgivable portion of their student
loan.
"-These students actually
never see their $3,000 scholarship, however they will be taxed on
it.
"-It may also affect
daycare or rent subsidies and other income-contingent
assistance.
"-The province is the only
party to benefit since the forgivable portion of the student loan
is now funded by the millennium scholarship, not the
province.
"-139 students will receive
only a small benefit as their overall student loan will be
reduced by an average of $800 (and pay tax on $3,000).
"-56 students from reserves
will have their loans reduced by an average of $1,515.
"-12 students will have
their student loan reduced by the full $3,000 (and pay tax on the
$3,000 scholarship).
" ... As you can see, this
approach suggests most students should refuse the scholarship as
it increases their financial burden rather than reducing it. For
most it has little benefit. For all, it has possible tax
implications. In some cases, it may have a negative effect on the
tax situation of supporting parents. We do not believe that this
was the intent of the fund."
1440
Neither do I, and I regret
that Ontario and British Columbia decided to go about it this
way, because the net effect is that the millennium scholarship
fund is in fact subsidizing the Ontario student opportunity
grant. You're subsidizing with federal money costs you would have
incurred to pay that grant to students. Is that correct?
Mr Zisser:
At this stage there have been no savings. We will not know what
the savings are because we will not know what that actual overlap
is until we complete the process for these student opportunity
grants. So some students will not complete their program of
studies and will not be eligible. We will find through income
verification that some students have not provided accurate
information and will not be eligible. I don't know how the
college would draw those conclusions because we have no such
information and I would argue that you could not make such
calculations until November of this year.
Ms Martel:
Can I ask why it was that in a leaked cabinet document in
November 1999 the suggestion of a $90-million windfall to the
province was outlined?
Mr Zisser:
I'm not familiar with that.
Dr
Christie: The $90 million is not a number that I am
aware of having been associated with.
Ms Martel:
Okay, Deputy. If it's not $90 million, how much do you suspect
the province will benefit by this windfall this year?
Dr
Christie: For fiscal 2000-01, there should be no net
fiscal benefit as a result of the province's commitment to
reinvest any savings to the benefit of post-secondary students.
The gross benefit may be between $50 million and $75 million.
We're not sure how much it is yet, because we're still-
Ms Martel: But you must have
some idea. You know already who the students are because you sent
those names to the fund, all right? So you would also have access
to what their debt load is, and you would also know that $3,000
applied against their debt load will leave the province with some
portion of money to pay or not, because the province might be
totally off the hook because the $3,000 would cover what the
province would have paid out in a grant. So you must have some
fairly substantial good guess or estimate about what this means
for the province, how much money you're going to save because
you're using federal money to replace your money this year.
Dr
Christie: The original estimate in May of last year-and
I think this was an estimate jointly arrived at by the millennium
foundation and the ministry-was on the order of $50 million. As
we see the actual numbers come in, we will have a better idea.
But as Mr Zisser noted, the actual impact won't be known until
students have completed their term and we know how much debt is
there and therefore how much student opportunity grant is
required. But that won't be known for some months yet.
Ms Martel:
Deputy, the May estimate of $50 million is for the student
academic year 2000-01? How are you defining that as a year?
Dr
Christie: For what period was that estimated?
Mr Zisser:
That estimate was for those students who would be eligible to
receive the millennium fund who were in the 1999-2000 year. But
there are no savings in 1999-2000 because the province would not
be paying the student opportunity grant within this year. It
would be paid next year.
Ms Martel:
So you'll see these savings beginning April 1, 2000; through that
fiscal year.
Mr Zisser:
No, the earliest-
Ms Martel:
Through that fiscal year.
Mr Zisser:
-we would possibly see them would be November.
Dr
Christie: But in that fiscal year.
Mr Zisser:
In that fiscal year.
Ms Martel:
What's your estimate for what you might receive next year?
Because this is a 10-year program, correct?
Mr Zisser:
In terms of savings or in terms of the monies that the millennium
fund will make available to students in Ontario?
Ms Martel:
I'm more interested in the savings that Ontario is going to
accrue.
Mr Zisser:
We don't have an estimate at this stage, because I think there
will certainly be some discussions in terms of how this program
will unfold in Ontario. It is not a design that we have been
particularly happy with, and I think it is certainly an area that
we will continue to monitor.
I think this needs to be
remembered: We decided to deliver a program that has never been
delivered before, that was designed in such a manner that it
certainly had a large potential to overlap with Ontario
initiatives and it had to be delivered very promptly, because the
desire was to have it up and running by January of this year. So
the design we have is not a perfect design but it is a design
that is ensured to get money to students. To the extent that
there is that overlap, the provision has been made to make sure
there is a reinvestment of those monies by the province.
Ms Martel:
I'm not blaming you for this decision; I'm sure it was a
political one. But what I am saying is a regulation doesn't even
have to go through the House. It could have passed by cabinet at
any one of the cabinet meetings that went on all last fall,
because this was under discussion all last fall. The point I'm
making is, I don't think there was the political will to be sure
that students could benefit from both. I think the design of the
political powers that be was to have this money subsidize the
provincial program, because the province has a windfall under
this situation. The province gets $50 million that they weren't
counting on, paid for courtesy of the federal government or the
federal private corporation. I think this could have been done
without any problem whatsoever. I don't think there was the
political will to do it, and I don't blame you for that.
With respect to the $50
million, does that also include interest payments that would have
been paid out if Ontario was making payments under the Ontario
student opportunity grant for those people who might have that
offset by the millennium fund?
Mr Zisser:
I don't believe it was that precise a calculation, because at
that time we had very little information that would help us
refine a calculation to that point. It was an estimate. It was
one that I think both the foundation and the province thought was
reasonable in terms of what we knew about the program at that
stage.
Ms Martel:
So the estimate might actually be higher, because when you take
into account potential interest payments that will be forgone in
a number of cases, that might be an additional saving to the
province, an additional amount of money that the province would
in fact accrue.
Mr Zisser:
I think what the deputy has indicated is that there is now a
range in which we believe this will take place, but we really
will not know until a few more steps occur.
Ms Martel:
Do you have any idea how many students now in the province, the
percentage of students, will not benefit at all because their
debt load is higher than $10,000?
Mr Zisser:
I don't have that information.
Ms Martel:
Could you provide that information to the committee? I would
assume that you can do those calculations because for anything
over $10,000, the $3,000 would be applied and it would be left
for their debt. I'd like to get from you some idea of those
people who have got a scholarship, because you provided the
names, whose debt would have been over $10,000 who will
automatically now not see any benefit at all in terms of what
they have to pay on their own debt. If you could provide that to
the committee it would be very helpful.
I want to just be clear then. You're saying this
was a measure that was put in place for this year in order to get
some money out to people. Are you going to be reviewing the
situation with respect to how many students may in fact turn down
the scholarship because they don't want to be assessed with the
tax penalty that might come?
Dr
Christie: The design is a matter that we are discussing
and will continue to discuss with the foundation. As Helmut has
noted, this was a program that the federal body wished to get up
and running within a certain timeframe. They looked for
assistance from the provinces, including being concerned about
duplicating administrative systems etc. The provinces have worked
with them in this regard. But there is nothing in this that
doesn't admit of improved delivery mechanisms in the future, and
we'll certainly be discussing those improved mechanisms with
them.
On the issue of the taxable
status of this, this is a decision that Revenue Canada has made.
It is not a function of anything in the province's design. It is
a matter of the federal government's design of this system. It is
our preference certainly that this not be taxable. I think we
have expressed that. This is a matter for the millennium
foundation to deal with Revenue Canada on.
1450
Ms Martel:
Deputy, do you have any idea how many Ontario students might have
refused the scholarship, if you have access to that
information?
Dr
Christie: I'm not aware of any information on that.
Ms Martel:
Would it be possible for you to deal with your connections at the
foundation to find out in Ontario how many students may have
refused? If they also have a general idea about why they refused
it, I'd be interested too, because I'd be interested to learn how
many students looked at it and, after realizing it wouldn't do
anything directly for them because they were over a $10,000 debt,
that they made a conscious decision not to accept it because they
worried about the tax implications. They had to make a decision
to refuse this grant what, two weeks ago?
Mr Zisser:
The millennium foundation has extended the time that students had
available to decline the award if they so chose. In fact, today
is the last day for that. It had initially been set two weeks
earlier, and they've extended it to today. They have requested
that we then submit the revised list to them on Tuesday next
week.
Ms Martel:
OK. Part of the condition that the corporation set down was that
the savings that Ontario realized would have to be used to
benefit students, and I heard you say clearly earlier that
Ontario hadn't made a decision. Can you give us some idea of what
you're looking at? The intent was to directly benefit students
with high debt load. I am curious about how Ontario might propose
to directly benefit those same students.
Dr
Christie: The manner in which any savings might be
deployed would be a matter of the business planning process and
decisions to be made, and those are under review. Decisions
haven't been made. When they are, we'll be able to answer.
Ms Martel:
Deputy, let me ask you something else. This is with respect to
tuition. On February 2, you will remember, it was the Access 2000
Day of Action. I attended the rally that was held by Laurentian
University students. I was driving home and I heard Premier
Harris on the radio responding to a question about the students'
demand for lower tuition. The Premier said on the CBC, and I will
quote this for you, "I think you'll find that lower tuition has
proven in study after study to benefit the wealthy, not
lower-income classes."
I was astonished by that
comment. I'm not sure that I believe it, but I'm going to give
the Premier the benefit of the doubt and ask you if in Ontario we
have any study that has been done that would show that lower
tuition benefits the wealthy and not the lower-incomes.
Dr
Christie: I'm not aware-this doesn't mean it hasn't been
done-of a study on the impact of tuition by income cohort, let's
say, at least of a recent one in Ontario. I think in general,
because there is student assistance provided for the low-income
groups but no assistance provided for higher-income groups, then
certainly the impact of tuition might be expected, after student
support, to be higher in the high-income groups than the
low-incomes simply because student support affects the one but
not the other. However, studies with respect to the degree of
that I'm not aware of. I don't have that.
Ms Martel:
You're not aware of studies that exist in Ontario, for example,
that would prove this?
Mr David
Trick: Ms Martel, as the deputy says, we haven't done a
study specifically relating to Ontario students, but there are a
number of academics who have studied this issue over time, and
there are some studies of that nature that we could certainly
share with you.
Ms Martel:
So these studies would prove that the benefit for lower tuition
goes to the wealthy. That's what you're saying?
Mr Trick:
The studies that support the point that you heard the Premier
make.
Ms Martel:
OK. What jurisdictions do they come from?
Mr Trick:
I'm sorry. I'd have to go back and look at exactly which
jurisdictions were covered, and they weren't entirely within
Canada.
Ms Martel:
They weren't entirely within Canada?
Mr Trick:
They weren't entirely within Canada. There were other
jurisdictions as well.
Ms Martel:
But you have copies of these?
Mr Trick:
We can certainly share them with you.
Ms Martel:
That would be very helpful. I'd certainly appreciate that.
Let me return to your brief
from this morning, on page 12, where you talk about "improved
linkages with lenders." You talk about your EDI system, your
electronic data transfer, and that you've got one agreement in
place with CIBC and discussions with others. Who pays to
implement EDI? Is it a cost-sharing agreement? Is there new technology that's
required? Who is responsible for developing it or putting it in
place?
Mr Zisser:
Both parties pay for their respective costs. What it means in
practice is that you need to negotiate with the other party the
data transfer protocols: how you're going to package the data and
in what sequence; what kind of controls you will place on it to
make sure there's integrity; what technology you're going to use
to move the data from one to the other; the timing for that; what
kinds of systems will pick it up; what you will do with it.
It has been part of our
overall investment in the program to try to improve the speed
with which we process by relying more on computer technology. We
were fortunate to find a financial institution that was willing
to work with us on that. It has proven to work very well because
it has eliminated a lot of the paper between the two
organizations. We do a better job administering those loans.
There is less chance for error in those kinds of transactions
because one party isn't turning something into paper that someone
else is then keying and potentially making errors on.
That's the goal we would
have for the future with all lenders. We would like to see the
system move in that direction. We're also going to be exploring
options that move beyond, for example, even loan documents. There
may be a possibility to make some of those transactions occur
electronically. In that case we'll need more linkages with our
financial aid offices because there are those matters to
consider.
Ms Martel:
One of the issues that the auditor indicated in his reports in
1997 and 1999 had to do with the inputting of reams of
information affecting financial institutions and payment to the
same. I think in 1997 he noted it was about 150,000 pieces of a
backlog; in his most recent report, 125,000. I'm going to assume
it's a question of having this particular system implemented that
would reduce some of that backlog. Are they directly tied or is
it a separate issue?
Mr Zisser:
There were two backlogs. The one we have dealt with successfully
is the one of claims. The one dealing with what we refer to as
bank errors is the one that we are still working on. I think we
have resolved that issue now in the case of one of the lenders,
and there are two others where we are working on that. We have
created a facility that can permit the lender to do that. We have
had success with one of the lenders to provide them with that
tool and they are actively using it. We have provided the other
lender with the tool and we are hoping it will receive active
use.
Ms Martel:
With respect to your customer service, you had told this
committee that calls are answered in three minutes?
Mr Zisser:
Three rings.
Ms Martel:
I'm curious and I go back to a question that was probably raised
facetiously. Is it answered by a live body in three rings or by
voice mail, and do you track incoming calls on those times?
The Chair:
That was not asked facetiously.
Mr Zisser:
We do both. We do have a policy that if a person is not there, we
will return that call within one business day, within 24 hours.
We monitor that. We are also going to be monitored on that. I
think the government more broadly will be making sure that all of
us are routinely measured in terms of the customer service
standards the government has set. We are also putting in place
customer feedback systems which will start at the end of this
fiscal year so that students and others can provide us with
feedback on whether they are satisfied with the service we are
providing and make suggestions in terms of what we might do to
improve service to them.
Ms Martel:
Do you phone in for that or do you mail that in?
Mr Zisser:
What we are trying to do is use the Web to do that. We have
looked at other very good Web applications and we've noticed that
they have these kinds of features. That is the device we're going
to use in the first instance to give people an opportunity.
Again, given that is the area where we are now experiencing most
of our traffic, that is the part that we would really like to
work very well.
Ms Martel:
Let me go back to the issue of studies. You had said earlier that
Ontario hadn't done a study in this regard. I noticed in the
auditor's report from 1997 that he talked about performance
reporting and about examples of trends that we could be
monitoring and reporting on. There was certainly indication of a
level of student financial assistance versus tuition fee,
proportion of students that require financial assistance by type
of post-secondary institution etc.
I was looking through your
performance reporting. On some of the issues you're starting to
report, but clearly I don't see anything that would respond to
the concern that I have about student indebtedness in relation to
tuition increases.
I think there has been a
dramatic increase. The Canadian Federation of Students, when they
had their Access 2000 campaign, made that clear. I think it would
be very important for the province of Ontario to start doing that
kind of tracking so that we do know whether or not tuition
increases benefit the well-off, lower-income or middle-income
families, and what the relationship is between increasing tuition
costs and students dropping out or the level of student
indebtedness. It is becoming a situation in this province where
lower- and middle-income families cannot afford to send their
kids to university and to college. I don't think that's a
position we in this province want to be in as we try and compete
in a global economy.
So can you tell me, Deputy,
given that this was raised in a preliminary way in the auditor's
report in 1997, has the ministry thought about doing that kind of
tracking in a detailed way to see what the impacts are on
students?
Dr
Christie: We are trying to track performance measures of
various kinds. Obviously, measurability is a factor in each of
them. We look each year at what we are measuring and whether we
could improve the measurements or whether we need to look at new
measurements. We look
at that every year to see if there are things that we could
measure reliably enough and that would be meaningful enough to
include in that. We'll certainly continue to review things for
addition to the measurements.
Ms Martel:
Do you track tuition increases by institution now?
Dr
Christie: Yes, we certainly monitor tuition levels by
institution.
Ms Martel:
And against that, would you track institution by institution
default rates of students who had attended?
Dr
Christie: Yes, we track default rates by
institution.
Ms Martel:
But do you make the connection between the financial institution,
what that tuition increase was and what the level of default
is?
Dr
Christie: Because the default measure in any given year
has to do with people who graduated at least two years prior and
therefore studied the four years prior to that, it's a complex
relationship to try and measure. Measures of that complexity or
behavioural measures of that complexity are certainly of
interest, but it's not clear that we have the capacity really to
measure that at the moment.
Mr Trick:
Ms Martel, if I could just add a bit to that. Clearly, as the
deputy mentions, drawing some of these one-to-one connections
requires a lot of fairly fine-tuned statistics. I think one of
the general points-and we've gone through some of these numbers
this morning-university default rates, as it happens, are less
than half of what the default rates are at community colleges. At
the same time, college tuition fees are less than half of what
tuition fees are at universities. So there are a number of things
that you have to put into the equation other than tuition in
order to explain the default rates.
Certainly, when we've done
studies of correlations, the two issues that are most prominent
in terms of defaults are, did the student complete the program
and, if he or she did complete, did the student find a job after
graduation. Those are the two correlations that come out most
strongly. Clearly there's a lot more work that could be done in
terms of, within the university, trying to connect the students
to what their reasons were for default. So we have numbers at a
gross level, but maybe not at that finer level that you're
getting at.
Ms Martel:
All right. I think that's it. Thank you.
The Chair:
Thank you very much for attending today. We appreciate the
information that you've provided to the committee, and we look
forward to receipt of the various undertakings that you've
given.
The public session is
adjourned.
The committee continued
in closed session at 1505.
