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

Pouvez-vous expliquer la radiation d’un montant de $212,5 millions de dollars en prêts canadiens aux étudiants?

Access to post-secondary education is key to building a strong middle
class. In 2023-2024, the Government of Canada provided $4.6 billion in
Canada Student Loans and $2.7 billion in Canada Student Grants to help
students with the cost of their education.
• The write-off of $212.5 million in 2023-2024 is for student debts for
which all reasonable collection efforts have been exhausted. The
percentage of write-offs represents approximately 1 percent of the total
direct loan portfolio.
• The Government of Canada has continued to take steps to support
borrowers and to make post-secondary education more affordable by:
➢ Permanently eliminating interest on Canada Student Loans (CSL)
and Canada Apprentice Loans (CAL);
➢ Increasing non-repayable Canada Student Grants (CSG) by 40
percent over pre-pandemic amounts for the 2024-25 school year and
permitting borrowers the flexibility to use the current year’s income
instead of the previous year’s to determine eligibility for CSGs;
➢ Making improvements to the Repayment Assistance Plan (RAP),
including increasing the annual income thresholds to ensure that no
borrower is required to repay their student loan until they are earning
at least $40,000 per year; reducing the cap on monthly Canada
Student Loan and Canada Apprentice Loan payments from 20
percent of household income to 10 percent; and indexing the income
thresholds to inflation (effective November 1, 2022);
➢ Expanding eligibility for disability supports to students whose
disabilities are persistent or prolonged, but not necessarily
permanent (effective August 1, 2022);
➢ Enhancing CSL forgiveness to incentivize in-demand professionals
to work in eligible rural and remote communities. As of November
2023, the available loan forgiveness for doctors and nurses
increased by 50 percent. Budget 2024 announced the Government’s
commitment to adding ten new occupations to eligibility for the
benefit, starting in 2025-2026 (pending legislative and regulatory
changes).
• Together, these initiatives are expected to further reduce the financial
burden on student borrowers and are expected to continue to decrease
future loan write-offs.

Removing these direct student loan debts from Program accounts reduces the portfolio
size, providing room within the portfolio’s regulatory limit, allowing for more student loans to
be available to Canadians.
• Measures implemented by the Government of Canada have led to a steady decline in the
projected future net default rate over the last ten years, as provided by the Office of the
Chief Actuary. Specifically, the future net default rate declined from 11.4 percent in July
2013, to 6.9% as at July 2023.
• Similarly, the three-year default rate, which looks at recent performance, has declined from
19 percent for the 2004-2005 cohort, to 7 percent for the 2020-2021 cohort.
• Most loans that are written off have been deemed unrecoverable due to the expiry of the
legislated statute of limitations under the Canada Student Financial Assistance Act; once
six years elapses without payment or acknowledgement of the debt, the Government can
no longer undertake legal activity to recover Canada Student Loan debt. Other reasons for
write-off include bankruptcy, exceptional financial hardship, and compromise settlements.
• The 2023-2024 write-off of $212.5 million is less than the previous year ($220.6 million).
The decrease is due to two factors: 1) the Government of Canada implemented a
temporary freeze on the accrual of student loan interest which became permanent on April
1, 2023. As a result, no new interest accrued on loans during this period and accounts sent
for write-off therefore had a lower value than if interest had accrued on them and 2) an
increase in collection efforts and the reinstatement of the set offs resulted in increased
recovery of debts in collections.

Direct Canada Student Loans write-offs are approved by the
Treasury Board under section 25(2) of the Financial Administration
Act (FAA). The amount of Write-Off for 2023-2024 is $212.5 million
($220.6 million in 2022-2023).
• The write-off amount represents less than 1 percent of the total
direct loan portfolio. This is consistent with the proportion of write?offs from previous submissions and the trend is expected to
continue.