Proceedings of the Special Senate Committee on Post-Secondary Education
Issue 2 - Evidence - November 20 Sitting
OTTAWA, Thursday, November 20, 1997
The Special Senate Committee on Post-Secondary Education met this day at 9:05 a.m. to continue its inquiry into the state of post-secondary education in Canada.
Senator M. Lorne Bonnell (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, we meet this morning to further study post-secondary education in Canada. We have with us witnesses representing the Association of Canadian Community Colleges; the Association of Universities and Colleges of Canada; the Canadian Alliance of Student Associations; the Canadian Association of Students Financial Aid Administrators; the Canadian Association of University Teachers; the Canadian Federation of Students, and the Canadian Graduate Council. I understand these groups speak with one voice.
Ms Rubina Ramji, please introduce what organization each speaker represents. We will then hear your statement, followed by others who want to make a brief opening statement. Our committee members may then have some questions for you.
Ms Rubina Ramji, Chair, Canadian Graduate Council: Mr. Chairman, my other two colleagues will make the statement so I will be pleased to do the introductions. With me today is Ms Charlotte French, the President of the Canadian Association of Student Financial Aid Administrators. Seated next to her is Mr. Pierre Killeen, Constituency and Government Relations Officer, Association of Canadian Community Colleges.
Also here today are Ms Jocelyn Charron, Government Relations Coordinator of the Canadian Federation of Students; Mr. Hoops Harrison, National Director of the Canadian Alliance of Student Associations: Mr. Robert Best, Director, Government Relations and Public Affairs, Association of Universities and Colleges in Canada; Mr. Léger, Government Relations Officer, Canadian Association of University Teachers.
Beginning in the fall of 1996, our seven organizations began meeting regularly to discuss student assistance. We were brought together by a shared concern over rising levels of student debt, the resulting implications for accessibility, and by a shared belief in the importance of continued federal participation in student assistance, particularly through the Canada Student Loans Program.
In January, 1997 we released a package of proposed reforms entitled, "Renewing Student Assistance in Canada." We continued to work constructively on measures to address student debt and accessibility in the period following.
I would now like to ask Mr. Hoops Harrison and Mr. Jocelyn Charron to read an opening statement on behalf of the seven groups.
Mr. Hoops Harrison, National Director, Canadian Alliance of Student Associations: Student debt has become an issue of major concern in this country. Since 1990, the debt level of the average student who borrows to finance a post-secondary education has almost tripled. Increased federal loan limits, rising costs, including tuition and, most importantly, the abolition of provincial grant programs, have all fuelled the spectacular leap in the indebtedness of our youth. The average debt level among Canadian students who borrow is now comparable to levels among graduates of four-year private institutions in the United States such as Harvard and Yale. As the Conference Board of Canada said last month: "A lack of education is a low-income life sentence." We agree.
Wide access to post-secondary education is necessary to increase the knowledge-building capacity of our citizens, our institutions, and of our economy in an era of global competition. It would be unconscionable if post-secondary education in this country became accessible to only those from affluent backgrounds. If we do not stop this trend, we will undermine the basic principles of fairness and equity in our educational system.
In recent months the Speech from the Throne, the Prime Minister's reply to the Speech from the Throne, and Finance Minister Paul Martin's Economic and Fiscal Statement have all emphasized the need to deal with the student debt problem.
Our associations are delighted at the government's expressed determination to reduce barriers to post-secondary education through further reforms to the Canada Student Loans Program, and through increased aid to students with dependents.
All of our groups participated this week in the Human Resources Department's National Stakeholders' Meeting on Canada Student Loan Reform which was part of a larger student assistance effort in this country. We are very pleased at the wide degree of consensus which was achieved on the topic of student assistance reform. We will continue to work with the government in this area because we believe that a renewed Canada Student Loans Program is the best guarantee of hope and opportunity for Canadians struggling with the demands of the new knowledge economy.
Mr. Chairman, in January we unveiled a package of reform measures which we believe are necessary to improve this country's system of student assistance. We are pleased to take the opportunity of this Senate hearing to unveil our new and updated package. We use the term "package" precisely because it is a package of measures that is needed to deal with the problems of accessibility and student debt. There is no single answer to this problem.
Our new package includes a mixture of grant and remission programs, tax measures, and program changes to encourage flexibility in repayment. If implemented together, they will reduce the number of student borrowers with insupportable debt loans, cut student default and bankruptcy levels, provide increased flexibility options for all borrowers, and link repayment obligations to the individual's ability to pay.
[Translation]
Mr. Jocelyn Charron, Government Relations Coordinator, Canadian Federation of Students: First, we urge the government to create a scholarship program for first- and second-year students from moderate income families who have an above-average need for financial assistance. These are critical years for these students because this is often the time when they become aware of the size of the debt load that they will be carrying once they graduate. In some cases, this realization makes them drop out of school altogether. Extensive research shows that scholarships of this nature encourage students to persevere with their studies. Of course, the new Millennium Scholarship Endowment Fund may, if it is well designed, fill this need, but regardless of what happens, the need for scholarships based on needs assessment is, in our view, indisputable.
Second, we hope the government will move to introduce a work-study program. These programs give students with significant financial needs non-refundable assistance in exchange for a commitment to work on campus, generally in some academic or professional capacity, without taking the place of support staff. Institutions participating in the program receive wage subsidies which partially cover education-related expenses. Participants do of course gain valuable work experience in the process, but this is a secondary consideration since work-study programs are not training programs. We recommend that the federal government act quickly with the provinces and post-secondary institutions to launch this kind of initiative on a national scale.
These measures are necessary while students are still in school. Finally, the government must address the problem of the high level of student indebtedness after graduation. We call upon the government to introduce a deferred scholarship program. Many provinces already offer debt remission programs to their students upon graduation. Generally speaking, these programs are aimed at reducing the students' overall debt load, regardless of their ability to repay the debt. We favour a somewhat different approach, that is a targeted remission program based on debt-to-income ratio. The full debt could be remitted if it became clear that the individual experiencing ongoing repayment problems during the first three or four years after graduation will not be able to repay the debt. Debt remission could also be a more gradual, monthly process, with at times a portion of the interest, the full interest, or even a portion of the capital forgiven.
We also believe that some changes need to be made to the tax system to make education more affordable. In the February budget, it was encouraging to note that the initiatives announced resembled much more closely our recommendations with respect to the tax treatment of education savings plan and compulsory fees. However, these initiatives are not, in our view, an appropriate long-term solution. Contributions to RELSPs should be tax deductible and individuals should be able to withdraw money from their RRSPs to finance post-secondary studies. This would be one way of encouraging continuous training. We also believe that the interest on student loans should be tax deductible. This would be a great relief for borrowers as they make the transition from school to the labour market. The United States recently adopted a similar measure. Unlike other tax measures which target the overall student population, this particular measure would present a clear advantage to students of more modest means who are forced to borrow substantial sums of money to finance their education.
[English]
Mr. Harrison: So far, Mr. Chairman, the recommendations we have made are variations on a theme we arrived at last January. As noted earlier, we have just made revisions to "Renewing Student Assistance in Canada." The major changes involve introducing flexibility in loan repayment and linking this flexibility to a much improved system of interest relief and targeted debt remission.
Our paper, therefore, recommends three changes to the present loan system to reduce student debt and make loan repayment more flexible. First, allow all borrowers the option of suspending principle payments during the three- to five-year period of transition from school to the labour market, thus reducing required monthly payments and allowing more flexibility. Providing interest payments are met, this does not require any government expenditure.
Second, provide needy borrowers with a reformed and more graduated version of the present Interest Relief Program during the same three- to five-year transition period, thus assisting that minority of students who are unable to pay the interest payments unaided.
Third, provide those few borrowers who demonstrate significant difficulties in meeting their debt obligations after the transition period with some form of debt reduction. This could be done through a single, substantial remission at the end of the interest relief period or through relief on monthly amortization payments for needy borrowers at any point after the end of the interest relief period, or some combination of the two. In either case, the size of the remissions would be dependent on a calculation which takes into account both the individual's ability to pay and his or her level of debt.
Finally, with respect to the length of the repayment period, we feel that, while there should be some flexibility beyond 10 years, we do not believe that student assistance should result in life-long debt. The repayment period should not extend too far and, certainly, not longer than 15 years.
That concludes our presentation. We would be pleased to answer any questions the committee may have.
The Chairman: If there is leniency towards those who do not pay their debts after many years, and then grants are given to cover the debts because there is non-payment, do you think there is a possibility that people might not pay in the first couple of years, in order to be eligible for these grants later on?
Mr. Charron: What you are expressing is a form of the moral hazard argument. Frankly, I do not think that is very likely.
A great percentage of students currently repay their loans. They do so for a number of reasons, mainly, because there is no rational reason for not seeking a good job as soon as they graduate. Most people who spend three, four, or more years studying, want to use their education. They want to integrate into the labour market.
The people we are talking about who would need deferred grants or some kind of remission are those who experience problems in the labour market.
Also, there would be no incentive to default on the loan because one would have to spend three or four years wilfully evading work, in a sense. That scenario does not seem very likely to me.
[Translation]
Senator Corbin: On the one hand, you are proposing a tax break on what you refer to as the human capital. Looking at your summary which I find easier to read, I see that you are proposing that individuals be allowed to withdraw money from their RRSPs without being subject to a tax penalty. Therefore, you are asking for two tax breaks. I think that this would be difficult to justify given that the tax system must be fair to all Canadians. Believe me when I say that I am not dismissing your proposal, but I think the government would have a difficult time of it from a tax fairness standpoint if it were to endorse these two proposals. I am not saying that they are not without merit, but I do see them as posing a problem at the outset. Do you have anything to add which might help convince us to back this proposal?
Mr. Pierre Killeen, Constituency and Government Relations Officer, Association of Canadian Community Colleges): As far as providing a tax break on human capital is concerned, our tax system already has in place measures which favour this type of investment. As an individual, I have an interest in making money on the stock market. Under the current tax system, a person cannot take out a loan and receive any kind of interest rate relief. Businesses, on the other hand, can benefit from this kind of relief if they need to borrow money to purchase equipment. They will have the benefit of a form of tax treatment involving interest relief. We are trying to get across the message that in this knowledge-based economy, our tax system needs to be reformed to help people earn a living.
Furthermore, our current tax system allows individuals to use money in their RRSPs to purchase a home. We feel that it should also be possible for people to use their RRSP funds for education- related expenses.
Senator Corbin: I understand, but in the case of RRSPs, there is no tax penalty as such. RRSP contributions are sheltered from tax from the moment they are invested. Is this proposal realistic given the young age of students? How many students have RRSPs?
Mr. Killeen: That is an excellent point. It is important, in my view, to understand that this could help a university or college student in the long run. That is the sector that I represent.
The average age of first-year college students is now 26 years. The needs and means of these students are truly different from those of their younger counterparts. These students are involved in the process of continuous learning.
Mr. Robert Léger, Government Relations Officer, Canadian Association of University Teachers: I believe this measure would primarily help older students. Some of them have RRSPs. You are quite right in saying that this would not apply to a 19-year-old student just starting university because most likely he does not have an RRSP. However, it is quite conceivable that a 35-year-old student might have an RRSP and this measure could be helpful to him.
[English]
Senator Forest: I have a comment, rather than a question.
I have felt great concern in the past few years over students in the arts and humanities for whom job opportunities have been very scarce. I know of post-doctoral fellows who are having a great deal of difficulty securing employment. Some of the students from the professional schools have a much better opportunity in the employment field. My thinking is that this type of tax relief and deferment will be helpful to those students who, in the early years, are experiencing great difficulty.
It is apparent that these measures, if they can be effected in some form or to some degree, would be a help to those students. It is very important that scholars in those fields have the opportunity to continue in their field of expertise.
Senator Butts: Mr. Harrison, what is the difference between the Canadian Federation of Students and the Alliance of Students Association? Why are there two organizations? There is power in numbers, I guess, but apart from that, what is the reason for having two groups?
Senator Forest: You should not have asked that question.
Senator Butts: I am new at this but I am certainly familiar with universities.
Mr. Harrison: The differences in our organizations certainly have nothing to do with our presentation here today. We speak here with a united voice, and we are concerned about the same issues.
Senator Butts: It is just a matter of numbers.
Mr. Harrison: It is a matter of numbers, and who we represent.
The Chairman: You have two spokesmen instead of one.
Mr. Harrison: Perhaps we can discuss that later.
Senator Butts: In your second recommendation, you deal with needy borrowers. Is there a specific cut-off point when you refer to needy borrowers? Who is the needy borrower?
Mr. Robert Best, Director, Government Relations, Association of Universities and Colleges of Canada: Senator, I think what we are looking at is the needs assessment under the Canada Student Loans Program as a determination of need. That is the first measure of needs assessment that presently exists in the program. Ms French may wish to add something to my comment.
Senator Butts: I will give you some background as to why I asked the question. The answer Mr. Charron gave previously had to do with the fact that students are not going to cheat on their loans because they are going to get good jobs.
I spent 28 years as a university teacher, and my experience was that the people who did not repay, the people who reneged, were those who did not finish college. That is the background of my question.
Ms Charlotte French, President, Canadian Association of Student Financial Aid Administrators: We appear before you today because we have measures in this package that include up-front grants and work-study programming which address the problem of retention and continuance of students.
The Canada Student Loans Program and the provincial assistance as they presently stand do not meet the full financial needs of many students. One of the difficulties is that there is a much higher drop-out rate among students who are unable to meet their financial needs. They leave before they complete their programs because of the debt they are accumulating. At the same time these students still do not have enough money to meet all their costs. When they leave, it is without having attained the credentials they started out to attain, and which would help them achieve employment. They leave with a student loan and accumulated debt in other areas. This is why we have portions in the package which deal with grants for first and second year, and work study. We want to help keep those students in the programs so they can acquire the credentials and seek the employment for which they started the program in the first place.
Senator Butts: My problem lies with the students who fail. They do not walk out on their own. These students, many of whom I taught, walk out with a debt they tell me that they feel no obligation to pay if they do not pass.
Mr. Charron: We must distinguish two categories of students here. The first category would comprise students who did not pursue their education because they either had bad grades or grades that were not sufficient, and then found themselves in the labour market, unable to find adequate employment. Speaking personally, I feel that those students need some kind of remission if they are not wilfully reneging on their loans; if they are trying to find jobs and they cannot fulfil their obligations.
Of course, some students may think they have no obligations. The question then is whether we should take measures or construct a program that is entirely based on those few people who do not fulfil their obligations. How much of that should we take into account when trying to come up with a good student loan program and with a total package of student assistance measures? I would think that this should not be our main concern.
Senator Butts: Would the debt just be wiped out after 15 years?
Mr. Charron: Not necessarily, because there are a number of matters one must examine before any debt remission measures are enacted. One of these is the debt-to-ratio income, that is, how much money you make versus how much debt you have.
The second matter is the history of the person in the labour market. Many other programs experience this kind of problem such as employment insurance and others. It is nothing special, in a sense. It is just a question of how to deal with this category of student.
Mr. Best: Senator, we are not talking about wiping debts off after 15 years. We want to get the vast majority of people into a position where they can meet their obligations within 15 years or less. The focus is to try to reduce the numbers.
The banks tell us now that the default rate is 25 per cent. We want to provide a package of measures that will very significantly reduce the number of people who are put into a position of defaulting or going bankrupt because they simply cannot pay. For us the focus is to substantially reduce that number.
I agree with Mr. Charron's assertion that in any program there will be people who do not play fair, in some sense. Our whole notion here is that this is a repayment obligation, but that some people run into genuine problems and will need assistance. However, it is an obligation. It will be very important that, from the beginning and at various key points throughout the program, people are made aware that it is a repayment obligation that they are taking on, that there will be assistance available if there are problems, but that it is an obligation.
I recognize the importance of your earlier question on the determination of need in the second option. Mr. Charron referred to it. We are using here a notion of debt-to-income ratio. It is not just purely the income that is taken into account. Both the amount of debt and the income of the individual are factors in the equation. We have not specified exact levels or ratios, but that would be the mechanism, first of all, that would trigger interest relief in some cases and, in other cases, a remission.
As Mr. Charron said, though, that remission is not automatic. For example, the individual must demonstrate some due diligence in having sought work. It is possible to build that in. It is built into certain other programs. We have not ruled that out by any means.
Senator Andreychuk: Previously, we had a system of bursaries, government loans, and loans which fell into a category that was difficult to trace, that is, loans from parents, friends, or others. Of course, there were students who financed their own expenses while at university.
Your proposals appear to address those students who are returning to university or college. They have already acquired RRSPs, so that means they were in the work force before their return. The straight loan is a modification of the existing government loans.
Assuming the government accepted your measures, what impact would they have on the category of people who do not go to the government to get loans but have found an alternative method of financing their costs? Would we be prejudicing them?
When we started this study, groups like yours talked about students in need. You have spoken about people who take out government loans. We can track those.
Many students have told me that they have borrowed from their families and did not require to seek assistance from the government. They did not cause problems for taxpayers or the government. What incentives will you give them to continue to rely on these personal sources of financing? We want to encourage as much self-financing as possible in Canada. The government system is only one method of paying for education.
Mr. Best: With reference to your last question, that is why we have proposed, as a longer-term measure, further changes to encourage incentives to families and individuals to save through the RESP vehicle.
Some changes to make RESPs more appealing were announced in last year's budget. We are saying, as a longer-term measure, the government should consider other measures that will provide some incentive for families and individuals to save for education, so that fewer people have to take on any kind of debt, governmental or non-governmental.
Mr. Harrison: Since I financed half of my education through family and the other half through the student loan program, I understand your point. The intent of our recommendations here is not to make it disadvantageous for those people who choose the self-financing options but rather to level the current state of student financing.
I know that my grandparents did not charge me with 9-per-cent to 12-per-cent interest on the loan they made to me, as is currently expected of graduates who must borrow from banks.
In regards to RRSPs, in some form they relate more to mature students who are returning to university or college; but they are also a consideration for some young people who may have started their RRSP investment. When they are assessed for a student loan, the government takes into consideration their assets, including their RRSPs. If we do not put a mechanism like this into place, students would be expected to cash in their RRSPs at a penalty in order to pay for their education. We feel that is not an equitable choice by the loan assessment program.
Mr. Killeen: It is very important that we encourage individuals, families, and grandparents to save for their own and their children's post-secondary education. We sense that we are going through a transformation in the way that post-secondary education has been financed in this country. There has been a retrenchment of public dollars going into these institutions and going into the hands of students.
We are dealing with the generation of students who are in school today and those who are coming out of school today who have been caught by this transformation. The message that governments have been giving individuals is that they are looking for greater private investment in post-secondary education.
This transformation has happened almost overnight. What we have now is a generation of people finishing school and coming into the labour force and who have sky high debts as a result of the change in financing. What we are trying to say here with this package is that something needs to be done for this generation who were unaware that this would happen. Effectively, this transformation has taken place almost overnight, that is, in the last five years. The debt problem is starting now.
Senator Andreychuk: Are you saying then that this issue, because of the downsizing of governments and the retrenchment of governments, has caused an unusual debt problem for students and we must correct that? Is that the most pressing need in our post-secondary education system, as opposed to all the other things that we have been dealing with such as the job market and the changing internationalization of education?
We have heard many ideas relating to the post-secondary education system, but are you saying that this is the critical area that must be addressed at the federal level?
[Translation]
Mr. Léger: Certainly this is a critical area. Students are facing extremely serious problems and we need to come up with solutions. We must act immediately for the sake of our students who are already heavily indebted. However, we must also look down the road and consider ways of reducing the debt load of first- and second-year students. It would be an exaggeration to say that this is the only problem we are confronting. I represent a teacher's association and clearly we are also experiencing problems in the research field. Several of us are also members of another coalition focussing on research problems which are also equally important. I would not want to be put in the position of having to choose between the two. That would be an extremely difficult choice for my association to have to make because both issues, that is research and student assistance, need to be urgently addressed.
[English]
Mr. Harrison: The 200,000 students that I represent have said that student debt is the single most important problem facing them today. I agree that our package of measures is intended to stop the bleeding, and correct the problem so this situation does not happen again.
These are unusually high debts taken on by graduates. My answer from the student perspective would be, yes, this is the biggest problem.
Mr. Charron: Mr. Léger has already stated part of what I wanted to say. For my organization, the main issue is access and how to increase it; how to ensure that we have the intellectual capacity in Canada that we need for the future. To do that, of course, you must solve the student debt problem.
We also have the problem that there are not enough spaces for those who want them in post-secondary institutions. That is a problem that relates to another question, the funding question.
Then, of course, we have the additional problem of requiring the installations, the equipment, the labs, the research centres, to keep those student at a graduate level in Canada. That is all part of increasing accessibility, retaining students, and building our intellectual resources.
I would agree that to ask us to rank or prioritize one of them over the other would be fairly difficult.
Mr. Killeen: From the perspective of the Canadian Association of Canada Community Colleges, student financial assistance is one of our top priorities. It is a social question. It begs the question: What kind of society does Canada want to become in the future?
In a knowledge-based economy, knowledge is power. That can be a very positive notion but it is a very negative notion if we do not provide people with the means to acquire knowledge. We are telling individuals that, in this day and age, the key to success in the job market is post-secondary education. What are an individual's choices in this day and age if he cannot afford post-secondary education? We see this as critical to our future as a learning society, as a learning nation.
The Canadian post-secondary education system is one of the best in the world. People come to Canada to study how we deal with accessibility and how we deal with social issues around post-secondary education. Student financial assistance is the cornerstone of this. It reinforces those Canadian values that, if you do not have the means, we will provide you with the means or we will help you out with the means to better your lot in life.
Senator Andreychuk: Mr. Charron, I simply want to say on the record that the issue of student loans seems to be an urgent issue which we must address, but it is by no means the only issue in education. Perhaps, as senators, it is one which we can address.
[Translation]
Senator Losier-Cool: Since the Speech from the Throne, our government has announced the creation of the Millennium Scholarship Endowment Fund. Have student and teacher associations reacted in a proactive way? Scholarship eligibility criteria and guidelines have yet to be defined. It has been announced that these scholarships will be available to individuals with modest financial means. Do you have any suggestions or guidelines for us as to who should be eligible to receive these scholarships?
Mr. Léger: Given the urgent student debt problem, we hope that the Millennium Fund will take into consideration the financial needs of students. At present, a large number of scholarships are awarded to students on the basis of merit. The problem that we are dealing with here today is one of indebtedness and of increased university tuition fees. As a teacher association, we hope that the Millennium Fund will give consideration first and foremost to the financial needs of students.
[English]
Mr. Best: I would echo that emphasis. The Prime Minister spoke of promoting excellence, as well as meeting the needs of low- and moderate-income individuals. What I heard in that speech related to the notion of promoting excellence. I take that to mean providing people with the opportunity to excel, providing them with the opportunity to make the most of their lives.
Education is a great provider of opportunity. It seems to me the key is overwhelmingly one of meeting financial need, which all of us recognize as the crucial issue in this era of high debt; meeting the financial needs of individuals, to put them in a position where they can realize their potential through education.
For all of us, the overwhelming emphasis of the Millennium Fund should be on needs-based assistance.
[Translation]
Mr. Charron: Yes, our association does have some proposals in so far as the Millennium Fund is concerned. I think that the issue of merit or needs assessment as opposed to rewarding excellence is an important issue and I concur with my two colleagues on this. However, as far as the fund itself is concerned, we recommend that the amount in the fund decrease a little each year or rather that some of the fund's capital reserves be used to fund scholarships. If we look at the overall level of student need, even if we were to use only the interest accumulated on this $1.5 billion fund for scholarships, this would not meet all of the needs. Quebec alone spends $250 million on scholarships for a student population which represents one third of Canada's overall student population. We hope that the Canadian government is prepared to make a serious effort in this area. We do not necessarily expect it to spend three times as much as Quebec spends, but we would like to see this fund renewed on a yearly basis so that significant amounts of money are spent. There are also issues regarding the administration of the fund that we do not wish to get into at this time, but we do have some suggestions to ensure that the fund's objective is met.
[English]
Mr. Harrison: The actual criteria have not been discussed to any degree of having arrived at a consensus amongst our groups as a whole. However, we are all agreed on the criteria of need prevailing over a merit in the scholarship or in the Millennium Fund.
As an association, we have gone into great detail and we have outlined criteria in our real solutions document. Students will applaud any positive measure on behalf of the government. We have responded in kind with suggestions.
[Translation]
Mr. Killeen: This is an issue of fundamental importance to the college system and therefore, with your permission, I would like to answer that in English.
[English]
From a community college perspective, these are institutions which are not based on excellence. They are institutions where someone who had an unfavourable experience in high school, someone who left high school and went into the work force for five, six, seven, eight years, is coming back into a community college and looking to achieve a better life, is looking for the means to enable them to elevate their current status.
If we design a scholarship fund that makes academic excellence a prerequisite for access to the fund, this could effectively be a major barrier to addressing the needs of a large percentage of our post-secondary education population. If excellence is being able to raise a family or being able to survive at a minimum wage job for five, six, or seven years, then I do not think anyone around this table would have problems with that as being how we satisfy this notion of excellence.
We must understand that the philosophy that animates community colleges is one of providing access, providing a leg up to whoever wants it, as opposed to being able to choose the brightest and the best, and then promoting them.
Presently, a number of scholarships and programs in Canada reward excellence. What we have now is a student loan system that basically offers loans to individuals. What we need is some type of grant.
The debt levels in the post-secondary system are a clear illustration that the reliance on loans has been a mistake. We must realize that, in some circumstances, grants are the best way to go.
[Translation]
Senator Losier-Cool: I see here that the Canadian Alliance of Student Associations represents only anglophone universities. Which of your associations represents francophone minorities? To which association is the University of Moncton affiliated? Is Nova Scotia's Collège de l'Acadie a member of your association?
[English]
Mr. Harrison: We represent McGill University in Quebec, but it is an anglophone university. We represent largely anglophone universities and colleges across Canada. To my knowledge, the francophone students in Canada are largely represented by the FIQ, which is provincial.
Senator Losier-Cool: That is not my question. I am inquiring about those from outside Quebec; those who are the Canadian francophone minority.
[Translation]
Which association represents Canada's francophone minority?
Mr. Charron: We represent some of these students. The fact is that the majority of student associations at francophone institutions outside Quebec are not affiliated with any one association in particular. The Collège universitaire de Saint-Boniface and the Laurentian University Student Association are affiliated with our association. However, generally speaking, institutions in New Brunswick and Nova Scotia do not belong to any particular, although they may once have been affiliated with ours, although this is no longer the case.
[English]
Senator Forest: Are the students at the Faculté St. Jean at the University of Alberta represented by you as well?
Mr. Harrison: Yes, as well as students at the University of New Brunswick, Saint John; University of New Brunswick, Fredricton; and St. Thomas University.
Ms Ramji: Our association represents the graduate students at the University of Ottawa. More than 35 per cent of our graduate students are francophone from across Canada.
[Translation]
Senator Losier-Cool: Does your association represent university professors?
Mr. Léger: Yes, the professors at the University of Moncton, Université Sainte-Anne, the Centre universitaire Maillet in Edmunston and the Centre universitaire in Shippegan as well as those in Saint-Boniface are all members of the Canadian Association of University Teachers. Therefore, from that perspective, we represent Canada's francophone minorities very well.
[English]
The Chairman: I have a supplementary question to the one that Senator Losier-Cool asked about the Prime Minister's Millennium Fund. You seemed to have different viewpoints as we talked around the table. Did you discuss that at the conference you held?
Ms French: Yes, we did. What emerged, almost as a consensus, was that the Millennium Fund should be primarily based on need and should be tied to first- and second-year grants for students.
To echo what Mr. Charron said earlier, the issue is one of funding as a whole. That would be a start. It would be funding that could begin to address first- and second-year grants but it would not be sufficient to cover all the financial needs of our students in those years.
The Chairman: Is there any reason why you did not mention it in your brief?
Mr. Best: In fact, it is mentioned in the key elements document in the section on grants, which is on the first page.
The important point here is that our groups identified in January, and are again emphasizing the need for so-called "front-end grants" targeted to high need individuals. It is fair to say that one of the strongest messages coming out of the conference was that we have a debt situation now that must be addressed and that some types of debt remission measures and related measures are needed now.
There was also a strong sense that, at the same time, the government needs to look at a better system of front-end measures, grants, and perhaps work-study measures, to try to ensure that, in future, fewer people incur those high debt levels.
If we get the grant and related front-end measures right now, we may have less demand in the long term on the debt remission and repayment measures. When the Millennium Fund was announced, we saw it as a potential source of funds to do just that.
In the absence of much of the detail, we have been a bit cautious. We have suggested that that fund could well serve as the source of the types of grants that we have identified as a necessity. There was a clear message coming out of the conference from those who spoke to it at the end, and in the summaries of the sessions. The view widely held by the participants in the sessions was that the focus must be on need. If we get the front-end measures right, there may be less debt in the long term, fewer demands on the remission measures, and so forth.
Senator Corbin: I am glad to hear the comments made just now because I have always had an ongoing preoccupation with elitism in Canada. I think the government is facing a real dilemma here because we all know that the kid with two strikes against him is the poor one. It is not the one who is walked to first base. This Millennium Fund, in my opinion, should address that problem. Above and beyond the comments you made just now, I think you should pay special attention to that. Some of us in the Senate or in Parliament certainly will, because we all know that one of the obstacles to excellence is poverty.
I am reminded of some very intelligent school mates and college friends who did not make it to the end because they did not even have a decent pair of shoes. Yet, they were very bright students. They just dropped out after a while. They could not psychologically cope with their own condition.
I think of the sacrifices my family made to finance our education on their own, without borrowing, in the days I went through college.
I am expressing a wish, Mr. Chairman. I hope that the government of Canada will indeed avoid the trap of elitism when it breaks down the criteria for this program. It is a very real threat. We know how it operates in government circles. They have their own school for civil servants here in Ottawa. When you look at the people who are put through that, you cannot sometimes come to any other conclusion than it is part of a club mind-set. It is elitism. The one who does the real work never has an opportunity to improve himself or herself.
You must sharpen your pencils and give this matter some serious thought because, once the government breaks down its criteria, if you do not have your input prior to the defining of the criteria, many people will be left offside.
Senator Losier-Cool: You must be proactive.
Senator Corbin: Start now. Do not wait for the government to make further announcements.
You alluded earlier, Mr. Best, to the 25-per-cent default rate. Mr. Chairman, do we have a break down of that by region?
The Chairman: I believe we received some information on that from Statistics Canada. If not, we can get it.
Senator Corbin: I do not believe these people have seen that.My concern lies with the traditional have-not provinces.
Senator Forest: To return to the criteria for the Millennium Fund, I am rather confident, having carefully read the Throne Speech and some of the utterances of the Finance Minister, that needs will be a major criterion. It has been interesting to note how many of the Finance Minister's speeches in this last year have been dedicated to education. We have talked about the value of education in enhancing the life of the individual, but I think our government leaders are coming to realize that education is the key to enhancing the promotion and the well-being of the country as well, especially as we move to globalization.
I would support Senator Corbin and others who have suggested that you should make this a major point and that you have input in before the decision is made.
I reiterate that I am confident that needs will be a major criterion. I think it is the only way we can tackle this problem of accessibility. It is the only way this country will progress. We cannot do it through the education of a few. It must be the population in general.
The Chairman: Senator Andreychuk, do you have a second question?
Senator Andreychuk: No, I am not about to tackle the question of whether the government is doing a good job or not at this point. I have spent too many years working with families and children and I have heard too many politicians speak about education and children. I am waiting for actions, not words. Hopefully, our report will be of some benefit to them.
The Chairman: We might smarten them up. Do you have a comment?
Mr. Best: Yes, I would like to comment on what Senator Forest said. As we said in our opening statement, we are encouraged by what we have heard as well. That is why we are offering very concrete kinds of proposals. We are all encouraged by the announcement of the introduction of the Millennium Fund. We see it as, potentially, one part of the puzzle, but only one part. Even if it is properly designed with the emphasis on need, the message that we as seven organizations have been conveying since last fall is that there is no magic bullet. No single measure will solve all the problems. We need a series of measures.
In the Throne Speech, in the Prime Minister's speech, and in Mr. Martin's speech, there seemed to be recognition of that. It was very encouraging that, while there was great attention given to the Millennium Fund, there was also, usually in the same breath, emphasis on the need for further changes to the Canada Student Loans Program, measures dealing with repayment and so forth. That is the most important aspect here, whatever happens with the Millennium Fund. The Millennium Fund can be an important piece of the puzzle. It is but one part and it does not substitute for the other kinds of measures we are talking about here.
The Chairman: Honourable senators, Dr. Farquhar has a few questions. Do we have consent to allow him to ask some questions?
Hon Senators: Agreed.
Mr. Robin Farquhar, Education Consultant: I have a couple of short questions which will require only specific answers. I am sure that one person could answer them.
The committee is not going to be able to recommend the government simply throw money at the problems that have been brought to the committee's attention, therefore, it will have to be extremely selective in what it chooses to recommend. For that reason, the fact you are a consortium is significant. I know from personal experience how difficult -- and I used to think impossible -- it is to get the groups together that you have united around this issue. That makes it a most significant issue and, therefore, worthy of the most serious attention we can pay.
Is your revised package the November 17 document?
Mr. Best: Yes.
Mr. Farquhar: Does that document update your views following the recent government actions as a result of the budget? Are these now the priorities?
Mr. Best: Yes.
Mr. Farquhar: I have not had an opportunity to read the package yet but I did not hear in your remarks any specific reference to income contingent repayment. Is that off the table, or did I simply miss it? Is it contained in the package?
Mr. Best: You are right, there is no explicit reference to income contingent repayment. These seven organizations recognized that they had a history when they got together last fall. Many of us had baggage, and part of the baggage included disputes over income contingent repayment. That term had become a very loaded term. It meant many different things to different people, but almost everybody seemed to get exercised about it. We chose to try to get beyond that and focus on the real needs of students and the real need for repayment assistance.
What is new here, in particular, is that these groups, after a number of months working together, felt confident enough to venture back into the area of repayment. It was a missing piece of what we put out in January. We chose not to come at it by focusing on whether we were in favour of income repayment or not. We chose to come at it from the angle of: What kinds and degree of flexibility in repayment are necessary? That led to this set of repayment measures. These measures have an income-related aspect to them insofar as certain of the measures are triggered, in part, by the debt-to-income ratios of individuals.
There is an income aspect but it is not in any sense traditional or pure income contingent related repayment. In a sense, it is income contingent relief. It is not the repayment schedule that is linked to income per se. It is the remission or the interest relief. The "R" in income related or income contingent has taken on a new meaning here.
Senator Andreychuk: Are you saying, therefore, "income contingent" is now part of a definition of "need" as opposed to "ability to pay"?
Mr. Best: No, "income contingent repayment" traditionally has meant that people pay as a proportion of their income. Pure ICR has been associated with very long repayment periods of up to 20 or 25 years, which we have rejected. It is associated with capitalization of unpaid interest or so-called negative amortization, so that people may be making minimum payments and their debt will grow. We have rejected that.
We are saying that, in deciding need in the repayment period for certain types of interventions, a key factor to be taken into account is ability to pay. Income is part of that. The total size of the debt is part of it.
Mr. Farquhar: I am uncertain about certain statistics, and debt is one of them. I understand that somewhere around half of the students who graduate from colleges and universities do so with some degree of debt. Do you know what the average debt is when you factor in all of those who graduate with zero debt?
Mr. Best: I do not have those figures. The only figures I have seen are Human Resource Development figures for debt on the part of those who borrow. I have not actually seen, broken down, the average debt of all students graduating.
Mr. Farquhar: That is an important figure as we try to get a grip on how big this problem is relative to the numerous other problems that have been brought to the committee's attention.
Ms French: Part of the difficulty with establishing that number is that it is difficult to include debt to family, debt taken through private bank loans, debt taken through credit card use, and those kinds of things. There is no one place where all of those figures are gathered.
Mr. Farquhar: You have limited your attention to debt to the government, and that is what I am doing. Half of the people have no debt to the government. I would like to know what the average debt of graduating students is to the government. I do not think even Statistics Canada can provide that, which is one of the elements on which the committee may wish to express a view.
My last question, Mr. Chairman, is related to Senator Losier-Cool's question. In the process of considering student assistance, it has been brought to the committee's attention that there are some categories of students whose post-secondary education simply costs more than others. This may be true of programs for francophone Canadians outside Quebec. It is definitely true of aboriginal students, and it is true in the case of the majority of students with disabilities.
As you have grappled with the issue of needs for student financial assistance, you have not, as far as I can see, included any of those special needs in your shopping list. Is that because they are not important to you collectively?
Mr. Charron: No. I think that some of the measures that we have tried to bring forward do involve some of these students in one way or another. For instance, francophone students from outside Quebec, especially those who live in the rural areas, will frequently have greater needs because they have to move to the cities.
I would argue, for instance, that rural students in general have this problem. They have to move to a major centre. They have to pay rent as opposed to living at home with their parents.
There are a number of categories which would receive some benefit from our package. There is what the government called "Special Opportunity Grants" for students with disabilities. We are in favour of that.
One other category of high-need student which has been identified is students with dependents. Last year we argued for a Special Opportunity Grant for them, and the government indicated that it would create one. This particular category is very salient when you consider the numbers. Students with dependents often have the highest debt. They have the most needs which are not met.
We may not have caught all the groups but we think we did a fairly good job in trying to identify them.
The Chairman: Thank you all for your attendance and your presentation.
The committee adjourned.