Question Period Note: PUBLIC ACCOUNTS OF CANADA 2024 FOR EMPLOYMENT AND SOCIAL DEVELOPMENT CANADA

Could you explain the decrease of $1.5 billion in the
Canada Student Loans portfolio?

The decrease of $1.5 billion results from the issuance of $4.6 billion in
Canada Student Loans net of $2.1 billion in reimbursements received
from borrowers in repayment, $428.1M in write-offs and loan
forgiveness, and an unamortized loan discount of $3.6 billion.
 Excluding the unamortized loan discount, the portfolio actually increased
from $24 billion in 2022-2023 to $26.1 billion in 2023-2024; mainly due to the
temporary increase to the weekly student loan limit, from $210 to $300.

Since August 2000, the Canada Student Financial Assistance (CSFA) Program has been directly
delivered and financed by the Government. Since this date, the loans are disbursed to students,
through direct loans. Therefore, the students are indebted to the Government of Canada and, as
a result, the Government bears all risks for the entire duration of the loans.
The overall decrease in direct loans is mainly explained by the amount of loans disbursed to
students and reimbursements received from borrowers and the unamortized loan discount, as
illustrated in the following table:
Activity for 2023-2024
New loans and repurchases 4,600.2M
Reimbursements
Write-offs and forgiveness
Unamortized loan discount
(2,102.1M)
(428.1M)
(3,535.4M)
Total variance (1,465.4M)
Other factors include write-offs on defaulted loans for which all reasonable collection efforts have
been exhausted; and loans paid down under the repayment assistance plan (RAP). Also, loans
can be forgiven in the event of a borrower’s death or a permanent disability causing undue
hardship and for eligible family doctors, nurses and family medicine residents practicing in a rural
and remote community.
In the Fall of 2022, the Government announced the permanent elimination of interest on Canada
Student Loans and Canada Apprentice Loans. The accounting treatment of the permanent
elimination of interest was thoroughly analyzed. Interest on these loans was temporarily paused
from April 1, 2021, to March 31, 2023, and due to the temporary nature, the concessionary terms
were assessed as not significant. Legislation to permanently eliminate interest on these loans
passed on December 15, 2022, with an effective date of April 1, 2023. Due to the permanent
nature, the concessionary terms were assessed as significant thereby triggering a restructuring
of the loans. Notwithstanding the temporary pause in interest that was in effect at the time of the
legislation, the effective date of April 1, 2023, was selected as the restructuring date resulting in
a $3.3 billion concessionary transfer payment expense being recognized in the 2024 fiscal year.
If the earlier date of legislation had been selected as the restructuring date, the impact on the
year-over-year net financial position of the department was $57.1 million and is assessed as not
significant.

In Volume I of the Public Accounts of Canada 2024, the Department reports
a total amount of loans outstanding of $26.1 billion compared to $24.0
billion as of March 31, 2023.
 However, loans outstanding are reduced by an unamortized loan discount
of $3.6 billion to account for the permanent elimination of interest on loans,
effective April 1, 2023, for a carrying value of $22.5 billion.