FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Monday, April 27, 1998

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[English]

The Chairman (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I'd like to call the meeting to order. As you all know, the order of reference is Bill C-36, an act to implement certain provisions of the budget tabled in Parliament on February 24, 1998.

This morning's witnesses will be dealing primarily with parts 1, 5 and 10 of the bill, and according to my witness schedule we should have representatives from the Canadian Federation of Students here: Mr. Brad Lavigne, president, and Jennifer Story, vice-president.

Welcome, Ms. Story and Mr. Lavigne.

We also have representatives from the Canadian Alliance of Student Associations with us: the president, Hoops Harrison, and the Quebec regional director, Ms. Lisa Phipps.

We also have from

[Translation]

the Fédération étudiante universitaire du Québec, vice-president Pascal Bérubé

[English]

and outgoing vice-president Atïm Léon Germain.

Welcome, everyone. We look forward to your comments. As you know, you have approximately ten minutes to make some introductory remarks, and thereafter we will engage in a question-and-answer session.

We will begin with Mr. Hoops Harrison and Ms. Phipps.

[Translation]

Ms. Lisa Phipps (Quebec regional director, Canadian Alliance of Student Associations): Thank you, Mr. Chairman.

My name is Lisa Phipps, and I'm regional director of the Quebec chapter of the Canadian Alliance of Student Associations, as well as vice-president for External Affairs at the McGill University Students Association.

Before we begin, I would also like to introduce my colleague, Hoops Harrison, President of the alliance.

[English]

Mr. Richard (Hoops) Harrison (National Director, Canadian Alliance of Student Associations): Thank you very much, Mr. Chair, members of the committee, and fellow witnesses. We'll be very brief this morning and direct most of our comments towards the question-and-answer session. I think that's where we're both looking forward to most of the dialogue today.

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First, we'd like to take the opportunity to thank the Government of Canada for a very student-friendly budget. While there are always improvements to be made in priorities in government, we found that the focus this year on learning and education and, most importantly, student issues is very receptive to most of our members.

As for the matter at hand today, Bill C-36, we were very happy to see that the committee and the government were listening. I'm not sure if it happened through the finance committee with our presentation just prior to the announcement of the budget, or if it happened through some of our discussions with departments and ministries, but the fact that a student has now been guaranteed one of the millennium foundation directorships is very good to see.

Also in that respect, we're happy to see that there are segments within Bill C-36 that focus on need, which was easily our largest priority in dealing with the millennium scholarship fund. The disbursements should be focused on need more than on merit.

We have very brief recommendations for you today, because I understand from the clerk that you have some 90 witnesses presenting on this bill, so we wanted to make our presentation to you as direct as possible.

We have a list of five recommendations on the bill that are straightforward word changes or additions or amendments with respect to what we would like to see changed, but during the question-and-answer period following this we will have some questions and also some more large-scale concerns about issues.

Without going into too much detail with them, as in board of governors representation for students at universities, or even on student finance boards in provincial governments, student representation is quite often shorter than regular representation because students have a shorter lifespan in terms of a chosen field at the moment and then move on to other work, so we're recommending that the term for the student represented on the millennium fund be set at a maximum of three years.

Second, we have many questions on how this millennium fund person or persons is or are going to be chosen, because the budget says it's a minimum of one student. We have some concerns. This person should be as representative and as qualified as possible, so we wanted to add a few subparagraphs to paragraph 8(2)(b). They're listed on our brief.

We also wanted to state that in Bill C-36 not only will the board have a general knowledge of post-secondary education and learning, but also of student financial issues, which is why the millennium fund was started in the first place. It's because of the financial crisis that has developed over the past few years. So in order for them to be able to deal with the issues we're most concerned about, they must have a knowledge of that.

The last thing I'm going to speak to before I pass it over to Lisa again is that with what was outlined in the budget—a maximum of $15,000 per student and on average, $3,000 per year disbursements—we think it best that a student be eligible for millennium scholarships not only in the first four years but in the first five years, not only because the average time it takes for a student to graduate from university is now up to five years; it also seems to fit more in the mandate of $3,000 a year times five equals $15,000. It sort of fits.

Those people in financial need most often take longer to graduate from an institution because they have to take a reduced course load or they have to work at a part-time job, and these people would perhaps be the most likely to receive the scholarship fund in the first place.

Ms. Lisa Phipps: Last, CASA recommends that the foundation have the ability, where deemed appropriate, to grant scholarships for the purpose of student debt reduction, even after the completion of studies. The rationale behind this is the interpretation of clause 28, which claims that scholarships will complement provincial programs.

We conclude that in the case of Quebec, for example, where a well-developed system of upfront grants already exists, the foundation should be able to meet its objects and purposes stated in subclause 5(1) by granting deferred scholarships to lower student debt incurred during study, in addition to the regular upfront scholarships. This deferred granting will increase access, because the further learners go into debt the more they question their own continued enrolment.

Debt relief upon completion of studies is very much an incentive to complete a degree, certificate or diploma program. We believe this recommendation is most efficient because it ultimately prevents overlap, especially in the case of Quebec.

Mr. Hoops Harrison: Thank you very much. We look forward to your questions.

The Chairman: Thank you for a very interesting presentation.

Mr. Lavigne.

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Mr. Brad Lavigne (National Chairperson, Canadian Federation of Students): Thank you.

I'd like to start off by thanking the committee for inviting the federation to offer its thoughts on some of the provisions contained in the federal budget.

As committee members will know, we made many interventions in the fall during the pre-budget consultations. At that time, we stressed a number of various topics. These topics primarily concern the challenges and difficulties our members are facing, based on previous budgets.

These include skyrocketing tuition fees; underfunded colleges and universities; overcrowded classrooms, with students sitting in the aisles; departmental closings; crippling student debt upon graduation; and unacceptably high levels of youth and student unemployment.

Today we offer our thoughts on one particular provision within the bill—that is, the Millennium Scholarship Endowment Fund. I'd like to put those comments into the context of how we see general trends taking place with respect to federal policy towards public post-secondary education.

We cannot look at this budget in isolation. It is crucial that we take a look at budgets previous and at what we need to do in budgets of the future in order to ensure that we have a public system of post-secondary education that is accessible to all Canadians.

Since 1993 approximately $2.9 billion has been cut from post-secondary education transfers to the provinces. In addition, billions of dollars have been cut from our training programs, which primarily go to fund seats in the various community colleges for students and Canadians who are upgrading their skills.

As a result of these decisions...

[Editor's Note: Technical difficulty]...50% since 1993, and the average debt upon graduation has approximately doubled from about $13,000 per borrowing student to $25,000 this year. Meanwhile, the infrastructure is suffering, even though fees are going up. Institutions and provinces are turning to us to make up for the shortfalls, yet the system is still suffering. Entire programs are being closed and professional programs are being made full cost-recovery or privatized outright. Library holdings are outdated and inadequate. Classrooms are overcrowded, and buildings badly needing repair are operating in sub-standard conditions.

As the federal government has been cutting back, provinces and institutions again have been turning to us to make up the shortfall. This has forced a greater number of students into a greater amount of debt.

I believe our membership across the country over the last couple of years has done an excellent job in highlighting the issues facing them to make accessibility and student debt number one priorities. It is in this context that we take a look at the millennium scholarship fund as well as other provisions.

This budget to us exemplifies a particular trend that has emerged in public policy for post-secondary education—that is, a reduced emphasis on funding the system, with an attempt to make up for that shortfall by directing transfers of funding to individuals. This is a very dangerous trend, whereby piecemeal provisions are put in place in an attempt to make up for shortfalls within the system as a whole.

This trend is of great concern for two primary reasons. One, it erodes universality and accessibility. Two, within the two-tiered decision-making process, federal and provincial, it is quite simple for the other order of government, the provinces, to undermine or drastically reduce any benefits that come from direct transfers from the federal government.

With high tuition fees, what we're seeing is a shift from the system being for everyone. Tuition fees are going up, yet our response at the federal level is going to be small, piecemeal, specific categories for some people. The question then becomes, what about everyone?

This is somewhat of a disturbing trend, a trend that we can see has been developed and entrenched in the United States of America. That is something our membership rejects outright.

On the specifics of the millennium scholarship fund, the eligibility criteria and student input are the two areas I'd like to focus on today, with direct reference to Bill C-36.

Within the bill, it states:

5.(1) The object and the purposes of the Foundation are to grant scholarships to students who are in financial need and who demonstrate merit

In the presentations and in the one-on-one meetings we've had with government officials over the last few months, we've been a very strong proponent in favour of the needs criteria being either the exclusive or the largely overwhelming criteria for who will get these.

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There's no infrastructure in place at the federal level and, I would argue, very few mechanisms at the provincial level that will actually be able to adequately access merit. We do have needs criteria in our provincial and federal student loans, and at the provincial level, where they exist, the grants loans, but there is no infrastructure for determining merit.

Secondly, we question the establishment of the fund in its generality. That is, why would we establish a program in which public money starts up a foundation and seeks private money? With whom are we going to be competing for these private moneys? Is there going to be more private sector funding for scholarships that already exist? We do not believe the establishment of the millennium scholarship fund is going to create new room within the private sector for funding.

As well, in some levels, when we take a look at the board and those people who'll be making decisions, we see somewhat of a conflict that could potentially emerge. This is something that we feel could be remedied within the bill. That is, if there are two goals or mandates of the members of the board of the millennium scholarship fund, one is to seek outside sources of funding and the second is to allocate the money to needy students.

If we take a look at an example that's already in place in Ontario, the Ontario Student Opportunity Trust Fund—the brief goes into more detail, but I'll just elaborate briefly and then I'll go on to the next item—we see some conflicts emerging. Primarily, the way this trust fund in Ontario works is that institutions, both colleges and universities, go out to the private sector to compete for private donations from corporations and businesses. What's happening is, even though they have as vague a criteria as does the millennium scholarship fund in this bill, we're starting to see competition on campuses as to which provisions should take the lead. Should it be merit, or should it be need?

Basically, the crux of the argument is businesses would like to see specifically targeted scholarships go to certain places. In many cases, they don't necessarily want the funds to go to the most needy; they would rather see them go to the brightest. So we have a contradiction between whether or not we should take the poorest among the brightest or the brightest among the poor. I think that's a contradiction we can work with the government to ensure....

Finally, on the notion of minimal student representation on the board, I believe it is fundamental that any representation should be higher than one-fifteenth. Student population and student needs are diverse, and the Millennium Scholarship Foundation board should reflect that diversity. The federation is committed to working with the government to ensure that a mechanism is established to ensure that diversity is met. One out of fifteen will not achieve this ultimate goal.

Thank you, Mr. Chair.

The Chairman: Thank you very, Mr. Lavigne and Ms. Story.

[Translation]

Our next witnesses are Mr. Germain and Mr. Bérubé, representing the Fédération étudiante universitaire du Québec. Please go ahead.

Mr. Atïm Léon Germain (Outgoing Vice-President, Fédération étudiante universitaire du Québec): Thank you, Mr. Chairman. Since we have little time and have quite a long presentation, I will cut my remarks short and go straight to our main issues.

I would like to thank you and your colleagues for your generous invitation to appear here today. The FEUQ is a Quebec organization that brings together over 135,000 university students. It was established in 1990, and its mission is to defend the rights and interests of students in their dealings with educational and government authorities.

I will leave it with a short introduction, and go directly to the concrete issues. Our presentation will be in two parts: the first is on that part of the bill dealing with the Canada Millennium Scholarship fund, and the second on that part of the bill dealing with the Bankruptcy and Insolvency Act; it amends an article that specifically affects student debt.

We don't need to say much about the Millennium Scholarship fund, since most people here know what it is. So I will go directly to our response.

When the fund was officially announced, and even before it was officially announced, the Quebec student movement declared itself against the initiative. Let me explain our three fundamental reasons for opposing this initiative at the outset.

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In our case, the top financial priority both in Quebec and elsewhere in Canada is to reduce student debt. We do not feel that scholarships, regardless of whether they are based on merit or need, are the best way of reducing student debt.

Two types of measures can be applied to reduce student debt: one type focuses on reducing debt's capital, the other on debt reimbursement. We ourselves have put forward four measures likely— at least in Quebec—to significantly reduce student debt. These measures include reduction of the loan ceiling; remission of debt after graduation; a reimbursable tax credit on the interest on the debt, recently announced by the federal government and in the last provincial budget—that is great; and improvement of the interest relief program—this was also done in the last budget.

The criteria used to grant scholarships also create difficulties. I'm on page 7. Three of the criteria are a problem. The first is the issue of merit. The second is the issue of granting scholarships to part-time students, something that in our view fails to take Quebec's situation into account. The third issue is the restriction of scholarships to undergraduate students; this in our view fails to meet accessibility objectives established by Quebec, with which the student movement has always agreed.

The criteria used to determine merit do not appear in the bill. However, you will agree that the term "merit" refers to either academic excellence, or to educational determination, or to some other type of educational effort, that is somehow special or out of the ordinary.

We wanted to emphasize that there are already public and private organizations dealing with the issue of excellence. We have calculated that over $10 million are handed out as excellence scholarships in Quebec each year, particularly to undergraduate students.

Our second point was that the financial assistance system, as it exists in Canada today, serves primarily to guarantee a social and economic right, not to reward educational effort. On this topic, I would like to draw the committee's attention to the footnote on page 8, containing an excerpt from the International Covenant on Economic, Social and Cultural Rights, which in Canada has been in force since August 19, 1976. I consider paragraph (c) extremely interesting. It reads as follows:

(c) Higher education shall be made equally accessible to all, on the basis of capacity, by every appropriate means, and in particular by the progressive introduction of free education;

That is something for us to think about.

So as I was saying, there should be two goals: rewarding educational effort, and ensuring and guaranteeing a social and economic right. In our view, the latter should prevail over the former.

The second criterion on which we disagree was the one relating to part time students. In Quebec, part time students have no access to financial aid. What people in Quebec are saying today is that any financial aid to which part time students could be given access would be in the form of loans, not scholarships. So there would be some incompatibility there.

The third criterion on which we do not agree is the one relating to post graduate students, who would not have access to millennium scholarships. On this point, we should point out that the financial aid system designed in Quebec is accessible to students at all levels of post-secondary education. We consider that the principle whereby access to aid is guaranteed for students at all levels of post secondary education is truly important. We do not feel the focus should be solely on the undergraduate level.

Now we come to the third issue that we feel poses a problem, and that has been rather visible in the media—administration. You are well aware that Quebec already has a bursary and loan program, so obviously by its very existence the millennium fund will create duplication in the area of education.

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We have provided a table showing the sections of the bill we believe should be amended. Our comments focus on section 5, paragraphs (1) and (2), and on sections 8, 20, 27, 28, 29, 33 and 34. These appear on pages 9 and 10. We have provided a comment on each section of the bill that we believe should be amended.

In order to move quickly through this last part, I would just point out that budget cuts in recent years have had a severe impact on the post-secondary educational system in Quebec. We therefore feel that resources earmarked for the millennium scholarship fund will be put to better use within existing post-secondary structures and budgets in Quebec, and particularly within the Quebec student financial aid system.

Now, I'll let Pascal Bérubé have the floor and tell you about student bankruptcies.

Mr. Pascal Bérubé (Vice-President, Fédération étudiante universitaire du Québec): Thank you, Mr. Chairman. Among other things, Bill C-36 amends the Bankruptcy and Insolvency Act provisions dealing with the relief of debt arising from a student loan.

Section 178(g) of the bill was already amended last year to make it impossible for a former student to declare bankruptcy within two years of finishing his education; with the new amendment, a former student will have to wait ten years after completing his education before being permitted relief through bankruptcy from a debt arising from a federal or provincial students loan.

In our view, this amendment to clause 178 is discriminatory. Why? Because it is a discriminatory exception with regard to clause 10 of the Quebec Charter of Rights and Freedoms which forbids any discrimination based on the social condition of a person which governs this kind of contract. We maintain that being a student in our society is recognized as being a social condition. In fact, there is case law to this effect.

On the other hand, it is important to point out that the ex-students who go bankrupt are those who didn't manage to find a job. Thus, it would be relevant to consult the Human Rights Commission on this matter.

Student debt stems from an investment in human capital. This investment, the debt, is made in terms of human investment as could be the case for any business investing in real estate. The government would thus want to make an exception for people investing in their own education while all kinds of debts are forgiven without any question as to why they were contracted.

We maintain that debts flowing from student loans should be considered as debts flowing from real investment in human capital which is directly or indirectly of benefit to the whole community.

This prohibition from discharge is not a real solution to the problem. And this brings us to the real underlying question of this whole debate: the possibility for ex-students to reimburse their loans. Let's just look at a few Quebec figures on this. I'll mention a few: the average loan has gone up 70% since 1987, in other words 37% more than inflation; the student debt in Quebec represents some $3 billion; the debt swallows from 20 to 50% of ex-students' incomes. The real problem is that the government is incapable of efficiently slowing down the problem of excessive debt for a growing number of students and guaranteeing graduates more efficient integration into the job market.

This amendment to clause 178 makes no allowances for the situation in Quebec because the 10-year duration of the prohibition seems to have been adjusted in accordance with the changes brought to the Canada Student Loans Program in the same bill. On the other hand, the Quebec legislation on financial help for education staggers access to a deferred payback program over five years only. From that point of view, the change to clause 178 would put Quebec students at a disadvantage compared to the others. In this respect, it is clear that the amendment to clause 178 was put forth without consideration for the prevailing situation in Quebec.

Finally, these findings lead us to put several questions.

First of all, did the federal government consult the Human Rights Commission before putting forth a proposal to set up an exception for student debt in the Bankruptcy and Insolvency Act?

What is this government, which got elected on a political platform guaranteeing a substantial decrease in unemployment, doing to put the brakes on the real problem hiding behind student bankruptcies, that being the problem finding jobs?

Finally, why doesn't the amendment to clause 178 take into account the prevailing situation in Quebec?

In conclusion, the FEUQ finds it necessary that the Human Rights Commission be consulted before any exception is created in the Bankruptcy and Insolvency Act.

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Thank you.

[English]

The Chairman: We'll go back to the Canadian Federation of Students. You have five minutes, Ms. Story.

Ms. Jennifer Story (Vice-President, Canadian Federation of Students): I'm going to focus my comments on three passages. One is the Canada education savings grant changes. The second is the Canada Student Financial Assistance Act changes in terms of eligibility. The third one is the first that I'm going to touch on here, which is the changes to the Bankruptcy and Insolvency Act, which Pascal commented on.

In April 1997, Bill C-5 amended the Bankruptcy and Insolvency Act to disallow students from discharging their student loans in the event of bankruptcy for two years following graduation. This bill before us now recommends to amend that further, to 10 years. However, the previous bill at least went through three readings in a fairly public process; the same cannot be said for this amendment.

Most importantly, students do not declare bankruptcy in order to cheat the government or the Canadian public out of its hard-earned cash any more than commercial loan borrowers do. Perhaps it's even less. The statistics show us this. Students declare bankruptcy because there's no other option open to them. It's not a decision that a person, young or old, makes lightly. The process costs a minimum of $1,500. It takes a minimum of nine months to process. The effects of the process last seven years, and the stigma even longer.

The Canadian Federation of Students therefore calls on the removal of this passage in regard to bankruptcies and student loans. The incidence of this event, is without a doubt, on the increase. We need to look at the causes of the increases in bankruptcies and what changes we need to make to decrease them. We need to look at the systematic issues that caused the problem in the first place.

Why is the government targeting students when other types of governments loans have a much lower rate of repayment? Why have students been singled out of all individuals and corporations who receive loans from the government? If the federal government had made so many positive changes to the CSLP in this budget as they assert, then there should not be the need at the same time to impose these restrictions on bankruptcy.

The causes of the problem are well known by members of the committee. Look at the cuts to federal transfer payments leading to an increase in student debt. As well, youth unemployment is on the rise, therefore causing an increased difficulty in repayment. That set of events is really no surprise to any of us.

I want to comment on one more thing that people might not be so aware of. This is the role of the lending institutions and the interest rates they set that cause the inability to repay among so many students. The rate of interest charged on Canada student loans before 1995 was set by a formula based on the yield of Canada savings bonds. As of 1995, the interest rate is fixed by each lending institution. The most common one we're seeing now, at consolidation, is prime plus 5%.

The difference of a few percentage points in interest can have a devastating effect on the repayment of student loans. It's unjust that the lending institution should be allowed to charge 5% above prime to such a vulnerable market. These exorbitant interest rates contribute heavily to the burden of repayment. These rates are also a direct transfer of public funds at a point when students are in courses and the government is paying the interest—after payment, it's lower—and middle-income Canadians—directly to banks and their higher-income shareholders.

In summary, the financial burden of repaying a large debt at the beginning of one's working career for 10 to 15 years severely hinders a loan recipient's ability to take on future debts in order to finance the purchase of a house or car, or even save up for their own children's education. At the end of 15 years after graduation, the student who did not borrow would have a significantly higher net worth than the student who was forced into extended repayment. The circumstances for students who are borrowing exorbitant amounts are already severe enough to further stigmatize and limit their ability to declare bankruptcy where the necessity obviously arises. I think this is one of which we have to seriously consider the ramifications.

To illustrate this quickly, from the inception of the program in 1964 to 1996, $12.1 billion in loans were negotiated by 2.7 million full-time students, and figures for 1995-96 show that $10.7 billion of those loans had been repaid. So a full 93% of students are repaying their loans, while those who do default have higher than average percentage debt burdens, therefore bringing the percentage dollar value to 12%.

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Nonetheless, here's an example to show what happens after that point, where we're looking at initial default rates. In 1991, 29,000 students defaulted on their loans, but by 1995-96, 10,000 of those original defaulters had repaid the loan in full, and another 6,500 had resumed repayment. So we also cannot look to default rates to predict the impact on bankruptcy rates later on down the road.

I'm going to turn quickly now to part 10 of Bill C-36, which we've recently discovered potentially limits the eligibility of students based on their past credit history. This section is taken directly from the Library of Parliament's description and analysis of the bill. Under the proposed amendment to the Canada Student Financial Assistance Act, the governor in council would be able to make regulations to prescribe the circumstances in which a loan or a certificate of eligibility may be denied.

To date, a student's eligibility has been determined solely by their income and assets and the income and assets of their parents or spouse. This amendment would give the ability to disqualify students, based on a set of criteria defined we're not sure where, but we fear behind closed doors.

The federation is deeply concerned about this change and stresses the need to continue to judge a student's financial need and eligibility based solely on their own immediate economic circumstances. The eligibility criteria should be known to all students and their families, and this should not be left to the lending institution to determine.

Lastly, I want to touch on the issues around the Canada education savings grant.

RRSP savings grants are grants with no needs assessment, in comparison to the subsidies on loans that we currently provide.

Students from needy families must fulfil eligibility requirements, yet in this case there is no such assessment. There is no dollar limit on how much the federal budget will be used up by this grant.

Thirdly, the grant is without any criteria, and therefore cannot be budgeted.

The savings grant entrenches a two-tiered system of education, giving more public funds to some individuals who at this point may least need it, and therefore to fewer who can least afford the current exorbitant costs of education.

Fifth, public money given out to these grants takes away from the moneys available for transfer payments to the provinces for post-secondary education, or for the funding of needs-based grants, or even funds to sustain the current round of loan program improvements against the longer-term pressure of rising fees.

Sixth, it is providing money to families of higher incomes only. All individuals with earned income are credited with an RRSP contribution based on their level of income, yet only 30% of all taxpayers purchase RRSPs. According to StatsCan, 62% of all RRSP purchasers had personal income of $40,000 in 1995. Contributions to RRSPs were valued at more than $26 billion—a 74% increase. Over the same period, the numbers of contributors increased by 28%, from $4.7 million to almost $6 million.

Clearly, those individuals with higher than average incomes are able to take advantage of RRSPs. To reward mostly high-income families with a yearly savings grant will further disadvantage middle- and low-income Canadians. In no manner will the RESP savings grant help those who are denied access to post-secondary education currently due to economic barriers.

Another problem is that the Department of Finance cannot currently budget for RRSP provisions. A case in point: in the budget 1998 document where they ask who will benefit from the RRSP measures, the document provides no figures and no estimates.

In conclusion, concerning Bill C-36 as it concerns students, it is more focused potentially on debt production instead of debt reduction. The burden of the expenses associated with post-secondary education cannot be lessened by non-refundable income tax credits and ad hoc grants to more privileged families. Student loan defaults or bankruptcies cannot be made to vanish by penalizing destitute students.

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Increasing student loans repayment period increases and prolongs the amount owed. The only solution, therefore in, the long term to reducing and eventually eliminating student loan defaults and bankruptcies is for the federal government to work in cooperation with the provincial and territorial governments, to look at restoring transfer payments to the provinces and implementing a new formula based on dedicated funds for all sectors concerned, including post-secondary education, health and social assistance.

The federal government must look to instituting publicly managed upfront grants, and these choices must be made in favour of a truly open and accessible post-secondary education system.

Thank you.

The Chairman: Thank you, Ms. Story.

We'll now move to the question-and-answer session. Before I do that, I would like to thank everyone for their presentation. You certainly have given us a lot of food for thought here.

Mr. Harris.

Mr. Dick Harris (Prince George—Bulkley Valley, Ref.): Thank you, Mr. Chairman, and thank you all for your presentations. They were very well done.

I want to ask a couple of questions that came out of your presentations, particularly talking about the Millennium Scholarship Endowment Fund. Mr. Lavigne had mentioned that $2.9 billion had indeed been taken out of the transfer payments for education since 1993, and he's right. It's just coincidental that the amount of the Millennium Scholarship Endowment Fund is exactly what's been taken out of the transfer payments for education.

The thing that bothers me about this Millennium Scholarship Endowment Fund is where the $3 billion was taken out; it was $3 billion that benefited everyone in the post-secondary education. The $3 billion going into the Millennium Scholarship Endowment Fund is going to benefit just a small percentage of students, I think the number is 6% or 7% or 8%.

Do you think the $3 billion planned for the Millennium Scholarship Endowment Fund could be better spent in a broader way; let's say, using that $3 billion to relieve the interest on student loans, which would result in a benefit to everyone who had a student loan, or a combination of principal relief plus interest relief? Certainly, repaying the interest loans is a major challenge for students considering the low opportunity to earn a lot of money when you come out of university.

I just want to get your comments. Do you think the $3 billion for the Millennium Scholarship Endowment Fund could be better spent if it was spread more broadly, and in particular to help out on interest relief on student loans?

Mr. Brad Lavigne: Before I answer, I would add that while the numbers might be close, the $2.9 billion taken out since the 1994 fiscal year, the $2.5 in scholarships has to last over 10 years, where this has been only about four budgets, I believe.

We would not engage ourselves in a discussion about an arbitrary figure like the millennium scholarship fund and its $2.5 billion, and then ask where would that go. Perhaps it could also go into our health care system or our new child care program, which we're anxiously awaiting. It could go into a lot of things. I think I would answer it by saying the idea of transferring funding to individuals is crucial but you cannot rely solely on the transfer, whether it be through interest relief or through an upfront grant, which we strongly advocate for. We cannot solely have the federal government transferring funding just to individuals; we have to do both.

What we would rather see is, within limited confines for the first step, it needs to go to do both; replenishing the system so that tuition fees and debt don't increase. I think we can do something like that by regulating the interest rates from the banks much better than that, and it shouldn't necessarily come out of the taxpayers' pockets.

Mr. Dick Harris: I have to agree with you on the interest rates to the banks. The banks' prime plus 5% is about what the worst-risk scenario in small business would pay to a bank, and it's unfortunate that students are automatically tagged as a bad risk and given the prime plus 5% rate. That is basically saying that you are a poor risk right upfront and we don't expect to be paid back.

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I want to ask any of you whether you see any other alternatives for that amount of money that has been set aside for the millennium fund, an alternative that might be of benefit to more students rather than a small few.

[Translation]

Mr. Atïm Léon Germain: I can answer in Quebec's case. If you put those funds through the existing structure, it will automatically benefit far more students. The percentage of beneficiaries in Quebec, at the university level, is about 49 to 51% of full-time students. So we're talking a lot more people than only those students for whom the Millennium Scholarship Foundation was created.

On the other hand, as I have suggested here, there are many ways of spending that money which would allow us to decrease the debt capital or make repayment easier.

[English]

The Chairman: Mr. Harrison would like to add to that.

Mr. Hoops Harrison: Perhaps I could first point out a couple of things.

The prime plus 5% is a fixed rate. If a student, when they complete their studies, wants to set up a fixed rate over their entire repayment period, they can settle on that prime plus 5%. Or if they want to go on a floating rate, in which their interest payments would go with what prime does, they can settle in on a prime plus 2.5% rate. So that's for the information of the committee.

As concerns the millennium fund and the money going to a select few rather than to everyone, the Canadian Alliance of Student Associations is concerned mostly with debt reduction and then ultimately having students have as little debt as possible. Even though the millennium fund is going to a select few, it is our hope that this is going to be to the neediest, the people who have the most financial need, and it is targeted directly towards them.

As for the millennium fund going towards transfers to the provinces, I do not think it's likely that CASA will support that until either the federal government goes back to targeted funding to education or the federal government gets together with the provincial ministers of education and sets up a pan-Canadian agreement in terms of quality and accessibility for education. Otherwise you're looking at a situation in some provinces where even an increase in transfer payments would not even touch education. That's why we were so adamant this year that money go to students directly.

Mr. Dick Harris: So if we did go back to targeted education funding to the provinces from the federal government, that would be a scenario that would be appreciated by your organizations, but also it would allow a broader benefit to students, rather than a benefit targeted to a select few, as you put it.

I have a problem with a very small few receiving the benefit from the millennium fund. I would rather that a larger portion of students would benefit overall by any type of special funding that was set up by the federal government.

The Chairman: Thank you, Mr. Harris.

Who wants to answer that question?

[Translation]

Mr. Atïm Léon Germain: One of our proposals, in Quebec, is to forgive debts at graduation. Once the student has graduated, you forgive him part of his debt, either 15, 20 or 25%. It's also an incentive to graduate.

The Chairman: Thank you, Mr. Germain.

[English]

Thank you, Mr. Harrison.

[Translation]

Mr. Crête.

Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, BQ): Thank you for your presentations. I think the FEUQ brief, amongst others, demonstrates that the bill setting up the Foundation was conceived in almost total ignorance of the Quebec law and the choices of Quebec in matters of post-secondary education. I think you've demonstrated that rather eloquently.

I'm also impressed by the fact that Ms. Phipps said that the Act would create major overlapping.

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There was a debate at the outset to the effect that the federal government considers student financial aid as not being part of the field of education. I'd like you to elaborate on that. Mr. Lavigne's examples demonstrate the same thing but in the case of a provincial government which has adopted a different way of doing things. Do you think that this affirmation according to which financial aid is not part of the field of education is acceptable or defensible?

Mr. Atïm Léon Germain: In our presentation, we explain that basically financial aid has been a provincial jurisdiction in Quebec since 1964 under Mr. Lesage's government. There was an agreement between the two governments that Quebec would manage its own student aid program. Several times since 1964, the federal government has suggested amendments to that agreement. It even went ahead with certain initiatives with a view to changing the situation somewhat.

Each time, and this Millennium Scholarship Foundation is yet another example of this kind of initiative, the situation had to be clarified and clear explanation given that Quebec's financial aid program was different from the federal one and that the federal government had to respect the agreement signed with the Government of Quebec on that matter. Today, many political players view the creation of a private foundation as being a trick. It is not a program, so the Quebec government does not have the right to opt out. On the other hand, the goal is attained. You've managed to penetrate an area of provincial jurisdiction which was affirmed by all players in the field of education.

So, in our eyes, it is clear that this poses a serious problem, not just a problem of principle, but also an administrative one.

Mr. Paul Crête: I'll now turn to the Canada-wide associations. In your case, the fact that Quebec got a right to opt out with full compensation, some 30 years ago, that it exercised its right and will continue to do so in the future, is that embarrassing for you? Do you consider the regime set up in Quebec, generally speaking, to be more generous or less generous for students than the other programs elsewhere in the rest of Canada?

[English]

Mr. Brad Lavigne: Quebec does have the most generous provincial grants program in Canada. In fact, Quebec and British Columbia are the only provinces today with any form of comprehensive grants program.

We point to Quebec, both in terms of higher participation rates with the CEGEP system, where there are no user fees for the first two years, as well as the comprehensive grant system—debt upon graduation in Quebec is drastically lower than it is in the rest of Canada. I believe the average graduating student who borrowed owes approximately $8,000 or $9,000, whereas the Canadian average is approximately $25,000, and it can be much higher in different provinces. So we look to the Quebec policies to promote access and to ensure that debts are kept low.

What would we propose for debt reduction measures across Canada? We propose a comprehensive system of needs-based grants that would be tied to existing loans programs. A province that wanted to opt out of the Canada student loans program, as Quebec and the Northwest Territories have done, would have that option available to them.

But for us the key issue is that a comparable program be put in place. We are satisfied that Quebec's program is much better than the current Canada student loans program because it has a grants element to it. We would be satisfied that the funding for those provinces that wished to opt out would go to further enrich and expand the grant system in Quebec, the Northwest Territories or any province that wished to do that. That's what we were advocating, because we find it fundamentally crucial that any debt reduction measure be tied to those who need it the most, which means those who are on the Canada student loans program, not those folks who have gone through the system debt-free.

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[Translation]

Mr. Paul Crête: And the system proposed for the Foundation does not attain that objective in its present form. If I understand you correctly, the direct link between the conditions of repayment and the possibility of obtaining a scholarship and the model proposed for the Foundation for the rest of Canada is not the ideal model, in your opinion.

[English]

Mr. Brad Lavigne: No, it is not what our members have been asking for since the late 1950s, which would be a national system of grants that would be tied to existing student loans programs.

[Translation]

The Chairman: Thank you, Mr. Crête.

[English]

Ms. Phipps, would you like to address it?

Ms. Lisa Phipps: I would like to add one other thing. I don't want to reiterate what anyone else said, but we definitely believe that Quebec has an all-encompassing program, and that it addresses a lot of problems as compared to the other provinces. We believe it should be the federal government's priority to reduce duplication as much as possible and to help the greatest number of students. That's why we recommended the deferred scholarships as opposed to the upfront scholarships. It is number five in terms of recommendations.

The Chairman: Thank you, Ms. Phipps.

Madame Gagnon.

[Translation]

Ms. Christiane Gagnon (Québec, BQ): Good morning, it's a pleasure to be able to put a few questions to you this morning.

A motion was passed in the House on Quebec as a distinct society, and we in the Bloc Québécois said that the motion was meaningless, because it did not actually recognize Quebec's uniqueness. We see a flagrant example of that in this case.

The government is trying to force us to pass this bill, but we disagree, because we know that under the bill—I believe it's clause 29—it will be impossible to transfer this authority to Quebec. The Foundation will not have the legal authority to do so. The government wants to pass the bill very quickly, around May, and yet we know that there are negotiations underway at the moment between the Quebec Premier and the federal Prime Minister. So we are being pressured to pass the bill, but we know that it will be impossible to transfer the authority to Quebec. We know that Quebec will be unable to opt out of the program with compensation, unless the legislation is amended later on.

Why is there such a rush to pass this bill given that it will be impossible to respect Quebec's wishes? Some Canadian and Quebec manufacturing and exporting associations appeared before the committee to ask the government to respect Quebec's wishes, because of the duplication and the infrastructure already in place.

I think Quebec also has a more general problem with the bill, because it does not deal with the whole issue of student debt. We in the Bloc Québécois will not vote for the part of the bill on the Millennium Scholarships.

What do you think of this contradictory situation in which this bill is placing us?

Mr. Atïm Léon Germain: The first point I would make, and I would like this to be clear, is that we think Canada needs scholarships. Canada is one of the few OECD countries that does not have scholarships. Thus we hardly think the initiative is unjustified.

However, in the case of Quebec, there is an obvious duplication. This is a typical example of a situation in which one province, namely Quebec, is in a unique position, and the federal bill should try to adapt to that rather than try to adopt a steam- roller approach and say that everyone is the same and the same system will apply throughout the country.

Quebec has had a unique system for 30 years, and the federal bill, if it is passed without any amendments, in its present form, will not take this unique system into account. That would be deplorable.

[English]

The Chairman: Ms. Phipps.

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Ms. Lisa Phipps: I think it's pretty obvious the federal government wants to put this in place. It's almost sort of a bonus system for them to try to advocate. This plays into a lot of unity issues and they're getting a lot of credit for this. In terms of the overlap with Quebec, it's a sensitive issue, but as long as we try to prevent overlap as much as possible and we allocate the money in such a way that we affect individual students who are in need, that's the bottom line.

[Translation]

The Chairman: Thank you, Ms. Gagnon.

[English]

We'll have to move to the next question.

Mr. Brison.

Mr. Scott Brison (Kings—Hants, PC): Thank you, Mr. Chairman.

Thank you for your thoughtful and insightful presentations this morning.

I have a couple of points. One is that tuition costs have increased by about 50% over the past several years, and during the same period the debt level has increased by 100%. Is the student unemployment level the primary cause of that or is it also the decrease in the disposable incomes of parents? There's been a 6% drop in disposable incomes. I'd like to get your feedback on that before my next question, because I've got an idea on that.

The Chairman: Mr. Lavigne.

Mr. Brad Lavigne: I think you can point to a number of different reasons. One of the most significant ones was that in 1994 the federal government—the same party but previous government—were listening to us in that we were living on weekly allowances established by the Progressive Conservative government in 1984. They had not increased until 1994. While we welcomed that, they brought in no debt reduction measures. We went from approximately $105 maximum per week to about $165 per week, so $60 a week for a full year. That was a significant jump, and obviously more and more students were on student loans as costs increased.

Youth unemployment is 17% now, and it has been in the double digits since the 1980s. Declining real incomes is another issue. Things like offering the banks more of a role in more lucrative.... The Bank of Montreal has its private student loans, and more and more students are turning to them to make up for the shortfall. There's a whole host of reasons why debt has gone up. I would offer the general answer that as governments have cut back, the costs have been absorbed by the individual, and that's being represented in the increased debt.

The Chairman: Mr. Harrison.

Mr. Scott Brison: Sherry Cooper of Nesbitt Burns, when referring to the millennium scholarship, tied it into the brain drain issue. She was saying the millennium scholarship has the potential of actually worsening the brain drain crisis—losing our best and brightest to the U.S. By maintaining within Canada a high tax regime and then increasing access to higher education, we're effectively going to educate more young, bright Canadians who will ultimately benefit the U.S. economy.

I would posit that the increase in taxes over the last several years, as well as the decrease in disposable incomes, is the reason for that disproportionate growth in student debt. What is your feeling in terms of the current funding or the millennium scholarship and whether it has the potential to worsen the brain drain crisis?

[Translation]

Mr. Atïm Léon Germain: I think the effect of a program like the Millennium Scholarship Foundation is marginal.

[English]

I think the effect is marginal

[Translation]

when the time comes to decide to leave a country, which is a major decision. I think salaries have much more to do with that. For example, a doctor who graduates from a decent university in the United States can expect to earn between $100,000 and $200,000 US, whereas starting salaries for doctors who graduate in Canada, particularly in Quebec, are between $50,000 and $60,000 CAN.

I think that is a much more important factor in the decision to leave the country.

[English]

Mr. Scott Brison: I have one last question.

The reason I'm focusing on the comparative statistics with the U.S. is because it is our largest trading partner, and as we enter the 21st century—information technology in a knowledge-based economy in a global-based environment—our commodity is going to be minds, and this ties in very strongly to student funding.

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I understand from some information I was given recently that the U.S. rate of student debt upon graduation from a four-year program at a top-tier state college in the U.S. is now under $18,000 Canadian. I believe that's unprecedented. The rate of student debt upon completion of a four-year program is actually higher in Canada than it is the U.S. by about $7,000 Canadian on average. Is that accurate?

Ms. Jennifer Story: Yes.

Mr. Scott Brison: What will be the impact of that rate of indebtedness on the competitiveness of Canada, given that the U.S. is our largest trading partner? How do you feel that will impact our competitiveness in the 21st century?

Ms. Jennifer Story: I think we need to look at one of the big reasons why those debt loads are lower. The United States actually invests more in national grants programs—one of the significant ones being the Pell grant program—than Canada does. The state governments also support grants better, notwithstanding the fact that the system is much more privatized and there are other ways that students are supported.

Those states and governments invest more with the understanding that to educate our own and to keep our own citizens well educated and trained for the domestic workforce is of utmost priority. I think that's what we're saying here, in the same relation, notwithstanding our concerns about the way the millennium fund may be implemented. Investing in a national system of grants is a crucial part of taking care of our own citizenry.

The Chairman: Mr. Harrison.

Mr. Hoops Harrison: First, to answer one of your earlier questions, I don't think the millennium fund has any impact on brain drain. I think it's a different scenario. I think there is a concern about the brain drain, but I don't think the millennium fund is directly linked to that.

In terms of what Jennifer said about Pell grants in the United States, I was in the United States recently and had a lot of questions about how the Pell grants operated. It was the same question your colleague asked earlier about whether the millennium fund could be better spent somewhere else. Although I certainly don't want to look at the United States as a model for almost anything, what we see there is that they are targeting the people who need it the most. If the millennium fund is structured so that the money is given to the people who need it the most, you will see the debt go down. You will see a system perhaps more like that in United States, which has a lower student debt because those people are the ones getting the support.

The Chairman: Thank you, Mr. Brison.

We'll have to move on to Ms. Davies.

Ms. Libby Davies (Vancouver East, NDP): Thank you very much.

My name is Libby Davies and I represent the NDP. I'm the education critic. I'd like to thank you for coming today. They were all excellent briefs.

There's certainly been a lot of discussion about the millennium fund as a result of the budget. All of you touched on a couple of underlying themes that are emerging very strongly, and the millennium fund sort of focuses this.

One is the increase in privatization, the lack of federal funding transfers to the provinces to the system itself, a public system, and this emphasis on scholarships or merit-based programs to a decreasing number of individual students. I think increasing privatization a key issue that's emerging. As you pointed out, we really don't have a clue what the criteria will be for this foundation in terms of dispersing this money.

Second, there's also a tightening of the eligibility, maybe as a result of this privatization, on individual students. The information that CFS has spoken about today under part 10, the fact that eligibility for loans or a certificate may be denied because of a previous credit rating—I'm not aware of anything like that having happened before. This has been fairly hidden. It's only now just coming to light, just as the changes in the bankruptcy laws from two to 10 years is much more punitive in terms of how it deals with the needs of individual students.

Those are the two trends. Would you like to discuss further and comment on the privatization side of it? I know there's information on how this opportunity trust fund in Ontario has been operating, and the negative and bad environment that has created as an example of what privatization is doing. Do you have any more information on that?

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Secondly, do you have any comments about what you feel the impact will be of this sort of increasing restriction for individual students, based on their eligibility, say, around this new section that we've seen come to light under part 10.

The Chairman: Mr. Lavigne, will you start?

Mr. Brad Lavigne: I'll tackle the privatization question, and then maybe Jennifer can comment on the tightening of eligibility.

For us, there is no question of the negative impact that the retreat of the federal and provincial role in post-secondary education is having, not only in the quality but also in the accessibility of post-secondary education. We've seen some great waves of privatization come in. We've seen entire programs be privatized.

At the University of Toronto, we see the banks now looking for more space, more authority over Canada student loans. When we see CIBC retreating from both the Nova Scotia and recently the Manitoba student loans programs, we know they're going to lobbying hard to see the kind of changes that they're going to want to see to make sure their interests are protected when the time comes to negotiate with the Canada student loans.

It goes right down from the student loans program to their own private loans, whereby interest is taken out of the bank accounts on a monthly basis. I myself have had to suffer under one private loan because the provincial and federal loans were inadequate. They weren't keeping pace with real costs.

As well, as to the decision making on our various campuses, if you take a look at the boards of governors around many of our college and universities, it is a who's who of corporate Canada. We find it very curious that we have CEOs of banks on our decision-making bodies raising our tuition fees. There are plenty of conflicts of interest there.

They're also having greater and greater control over curriculum. They're having greater control over who gets in, what gets taught and who teaches it, and this is a fundamental problem. As the federal government retreats from its traditional role, we're going to see corporate Canada further entrench itself into our system. I think that's going to be a concern to all Canadians because we're losing control. I think that's going to be the flag that's going to capture the imagination of many Canadians who do want to see a system in place for them when they need it, whether it's for themselves later to upgrade their training or for their children, in years to come.

Maybe Jen can talk about the tightening of eligibility.

Ms. Jennifer Story: To add to what Brad was mentioning, the concerns about increased privatization, we seem to be moving from a way of defining and extrapolating on the funding and regulation of our social programs, from one where we would decide who would benefit the most and then act accordingly, to now when we ask ourselves how we can tighten control over individual violations and stop the gaps and at the same time increase the market control over how the system operates.

In our health care system, there's a raging debate in this country. I think it's a very exciting one, because health care is a life-or-death matter for most Canadians. The debate, therefore, over private control and tiering of the system is more crucial for each individual.

What we're seeing in post-secondary education is the same thing, only it's a more subtle effect. Because it might be a system that doesn't necessarily affect every individual Canadian directly, and it's more of a quality of life issue, the same effect is taking place in terms of increased private control and market control over the system, with less awareness of the long-term and short-term ramifications.

So it's specifically with respect to the eligibility criteria and the changes that you mentioned and the changes in the bankruptcy laws. That is indicative of moving away from a system where we decide what is best for the majority, how the problem arose, and how we can solve it in a systemic way; that is, the drastic increase in student debt paralleling quite neatly the increase in defaults and bankruptcies.

We should be looking at reversing the problem of student debt, and we'll see bankruptcies and defaults drop. We don't need to look at eligibility criteria in order to guarantee ourselves against defaults.

The Chairman: Thank you, Ms. Story.

[Translation]

Mr. Bérubé.

Mr. Pascal Bérubé: You referred to the matter of bankruptcies in your comments. However, we should look at the main objective of this initiative, which is to reduce abuse. If we look at the statistics, we see the non-recovery rate is only 3.5%. The figures from Industry Canada show that the rate is 6.38% for small businesses.

The current legislation makes it possible to reduce debts for credit cards, for purchasing a car or other consumer goods.

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However, as regards investment in the capital itself, which would be to the benefit of the community as a whole and make it possible to train individuals able to work around the world—and I come back here to Mr. Brison's comments earlier—so as to make Canada competitive, a distinction is made. Furthermore, I consider it unacceptable that students should be discriminated against because of their social status.

I therefore believe, and this is basically consistent with your objectives, that more money must be invested in human resources rather than in consumption.

[English]

The Chairman: Thank you very much, Ms. Davies.

We'll move to Mr. Szabo, followed by Mrs. Redman.

Mr. Paul Szabo (Mississauga South, Lib.): Thank you, Mr. Chairman.

I'd like to ask you to help me see whether we have any consensus on some numbers. I have six questions. The first five are all on numbers, while the last one is a policy question.

First of all, my understanding is that the percentage of the annual cost of post-secondary education paid for by the student is approximately 30% of the total cost. Is that about right?

Mr. Brad Lavigne: Yes.

Mr. Paul Szabo: Okay. As for the percentage of students who have a student loan as a percent of the total, is there a consensus about what that number is? What is it?

Mr. Brad Lavigne: It's 50% of all full-time university students. That's where the 50% figure comes from.

Mr. Paul Szabo: What's the average debt load of a student with a loan?

Ms. Jennifer Story: It's about $25,000.

Mr. Paul Szabo: That's the number I had down.

[Translation]

Mr. Paul Crête: Mr. Szabo, the situation is very different in Quebec.

Mr. Paul Szabo: That's what I think too.

[English]

What's the average cost of one's first new car?

Ms. Jennifer Story: We can't afford to buy one.

Mr. Brad Lavigne: We'll continue with the monthly bus passes.

Mr. Paul Szabo: Actually, you can get a brand-new Volkswagen for $23,000. About $25,000 would be right.

The Chairman: You could always buy a used car.

Mr. Paul Szabo: You could buy a used car, that's right.

So it appears that the average student debt load of an individual is about the cost of a first new car, and I don't know very many students who don't anticipate that they're going to have a car eventually. That's something they would aspire to have. This is so the debt load, relative to other things in life, is put into some perspective.

I thought that Jennifer's statistics on the repayment of debt was very interesting. There's the fact that, I think if I heard you correctly, 93% of students repay their loans, which means we're talking about only 7%, in terms of the number of students—forget about the dollars—who actually have difficulty. If we look at it and assume that half of the students....

Actually, the principal of University of Toronto at Erindale College in Mississauga told me that his figures were that only actually 25% of post-secondary students had debt, but I'll accept that there may not be a consensus on that. But even if only half of students have any debt, and of those only 7% default, that means we're talking about 4% of all students who have a problem here.

That's what I'm looking at. It brings me to the real question I have. You've argued very passionately about bankruptcy and massive debt, but we're talking about 4% of all students. I would like to ask you—anybody can answer it—whether or not you feel there is a greater need, in terms of federal government intervention, to try to assist secondary students to have access to post-secondary, as opposed to helping current post-secondary students reduce their debt, acknowledging that the unemployment rate in Canada for those with a university education is only 4.5%. Did you understand that? For university graduates in Canada, it's 4.5%.

So what's more important, or does a balancing act have to be done here for access to post-secondary as opposed to reducing the burden of debt for 4% of students?

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The Chairman: Monsieur Germain, you had your hand up first. Go ahead.

Mr. Atïm Léon Germain: I just wanted to mention that when you buy a car you usually have a job.

[Translation]

I would like to focus on your fundamental point. I believe that we are talking here—and I think that the Canadian Federation of Students would agree with me about this—about a matter of principle; why make an exception for student loans? The message being sent by the federal government is that we will pay in cases of bankruptcy for people who have three credit cards, who have purchased a car, who have consumer debts and have incurred all sorts of liabilities, whereas we will not pay for people who have contracted debts to get an education. I think therefore that there is a problem in the way we look at bankruptcy. When a judge decides whether someone is bankrupt, why does he or she never look at the reasons for the loan, the individual debt or debt load? What is the reason for someone using a credit card? What is the reason for taking out a student loan? And which position seems more reasonable in view of the objectives society seeks to achieve, that is improving living conditions, participation in the democratic process, etc?

I believe that the rule preventing someone who has taken out a student loan from declaring bankruptcy poses some fundamental questions about the way we look at education. I recognize, however, that there may be abuses, even though I myself am not familiar with any in-depth study carried out by the government or any independent body on this issue in Quebec.

I would like to come back to what Mr. Bérubé said earlier. In Quebec, only 3.15% of students with debts declare bankruptcy. At the same time, the federal government is making loans to small business, an area with a bankruptcy rate of 6.38%, which is twice as high as that for students. That is never called into question.

[English]

The Chairman: Mr. Lavigne?

Mr. Brad Lavigne: I have a couple of comments as well as an attempt to answer the question as outlined.

Sitting at the finance committee today in 1998, you can say that the new Volkswagen car will cost about the same as a post-secondary education, that is, for students at graduation, around $25,000. Yet if we would have come to the finance committee a few years ago, for the average student it would have been $17,000, with which you could not have bought a new car. We could have come here in 1990, when the average student debt was $8,700. We could have come here in the early 1980s and it would have been drastically less. We could have come here in the 1970s and it would have been even less. If we continue on this trail that we're on now, if we come back in two years it will be $30,000, so it won't be a new bug that we'll be making a correlation to, it will be a new Cadillac—or an unequipped new Cadillac.

But we cannot make a correlation between the purchasing of a new car and access to post-secondary education. Access to post-secondary education should be a right; pursuing an interest with a car is something of a luxury, and I believe we even tax it as such. We reject the notion that it should be the same and people should take it out. What we're going to do under the current strategy—or lack of strategy—is ensure that if we are already saddled with $25,000 worth of debt, we're never going to buy that car, because that $25,000 has already been taken up in getting a degree.

The greater correlation isn't with what it's worth in life; the correlation between how much debt we're going into is the rate at which governments are cutting back and the rate at which tuition fees are increasing.

Also, we cannot look at the 4% or 4.5% of students who prior to last year have declared bankruptcy, where those moneys will never be recovered. Just because the individual pays it back doesn't mean that person is not in some sort of difficulty. That person is forgoing other purchasing and consumer activities, and people take 15 years to pay off their student loans. And again, $25,000 is the average. What are we going to do with somebody who has a debt of $60,000 or $40,000?

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Please, let's not assume that all post-secondary education student loan policy should be targeted at that 4%. Most of our members have the intention of paying it back, yet it's going to take them 10 to 15 years to do so, at great sacrifice. I think that is both economically and socially unsound.

Access to post-secondary education cannot be defined by that 4% having difficulty. Access is not enrolment and access is not the exceptional statistic at the end of the scale. Access is who gets in, and it's also about the experience that one goes through. Is it an accessible health care system if we have to sell our home in order to have a fundamental operation for our health? We decided as a country long ago that was unacceptable and we brought in universal medical insurance, and thank goodness. And we long for the day when we do the same for post-secondary education.

Should we focus on ensuring access to post-secondary students today as opposed to lowering the debts? We should do both. You can lower students' debts today in 1998 in this federal budget—or the next one—with direct transfers to the individual in the form of a grant, but if we want to ensure access for those secondary students—and we're seeing evidence in the secondary system that fewer and fewer individuals from low-income and moderate-income families are going to be choosing this option—we need to fund the system and we need to fund it in the general way, through the transfer payments.

And we're going to have to replenish what has been cut. We're going to be about $5 billion short in post-secondary education by the year 2000 and we're going to have to start replenishing that very soon if anybody in grade 9 today who's not rich is going to have access to a college or university education.

The Chairman: Thank you, Mr. Lavigne.

Mr. Harrison, briefly.

Mr. Hoops Harrison: Again, I won't reiterate some of the very good comments made already, but Mr. Szabo, I just get the feeling from you that you don't want to believe there might be a problem out there with student debt, that there might be some fudging of some numbers or that perhaps we're exaggerating the issue.

Mr. Paul Szabo: If I may, Mr. Chairman, I do have a son who just finished at Western. I have a daughter who is in her second year at Guelph and I have another one coming on. I know exactly what the costs are and I know what sacrifices we make. My car's ten years old.

Mr. Hoops Harrison: And your children are very fortunate that you have the ability to assist them in that respect, but there are some people in Canada who don't have parents who are affluent enough to help them, and this is why we're having the problem that we are now.

I would hope that you might perhaps be able to see it through our eyes. When I was going to school, I saw my tuition increase by 100%—and that's while I was going to school—and that's just not something we can adequately plan for. It's not something that even when you do not have parental support.... These are the cases where most people have student loans. The numbers are right. Roughly 30% of the cost of tuition is borne by the student and approximately 50% have government loans.

Now, what's also not been promoted to everyone is that there are private loans, and there are loans from relatives that you repay—without interest, mind you, but there are still debts incurred that are not glorified. A $25,000 government debt, on average, is, as Mr. Brison pointed out, higher than in the United States, where they have tuitions that are close to double ours.

With respect to the 4.5% unemployment rate that you talked about for university graduates, that's true, but there's an issue that we're very much concerned with, and it's called underemployment. People are graduating with degrees but are not getting jobs that are adequate to make even the minimum amount of loan payments, which is why we are concerned with interest relief.

In regard to your last question about whether we should do something for secondary students and not do something for reducing the student levels now, I would say no, you have to do something about student debt levels now, because that's why we're here talking about this. That's why it's an issue. I just don't think you can wash your hands of one generation of people who have suffered through government cuts and escalating tuition rates for the next generation.

The Chairman: Thank you. Ms. Redman.

Mrs. Karen Redman (Kitchener Centre, Lib.): Thank you, Mr. Chairman.

Mr. Harrison, back to the statistics for one minute, given that the average debt is $25,000, and the fact that somebody, I think, made a reference to 15 years to repay it, at the fixed rate which was already quoted, what would the monthly payment be?

Mr. Hoops Harrison: It depends. With a $25,000 loan, you're looking at approximately $300 a month.

Mrs. Karen Redman: It's $300 a month.

Mr. Hoops Harrison: For a $30,000 loan, it's $400 a month.

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Mrs. Karen Redman: I realize that's just an average.

In your presentation, one of the recommendations you made, actually part of the second one, was that the student representative represent student interests and concerns. Did you have discussion or any thought as to how that would be ascertained?

Mr. Hoops Harrison: Yes. If you want to represent university students, you either fill the board with enough people who adequately represent those interests or you try to take people who represent those interests as a course of their duties—if you have a limited number of spots. So you would have to go with some sort of representative person of interest.

I wouldn't want to proclaim ourselves, but we would probably be the more likely candidates because it's our job to find out what people are thinking. Our concern is if you just have one student who is perhaps an MBA from Western, they're not going to have the same perspective as the people who the millennium fund is designed to help.

Mrs. Karen Redman: Okay, thank you.

Mr. Germain, in your representation—which I only got in French, I was just listening to the interpreter as you presented—it sounded to me.... I certainly heard your concerns about overlapping with the province of Quebec, but you also said no to bursaries for part-time students, that there should be loans only and that just to undergraduate students was incompatible.

I wondered how you came to that conclusion. Did you survey your membership, or is it just because it doesn't conform with what exists in Quebec that you can make those statements?

[Translation]

Mr. Atïm Léon Germain: As regards the current situation in Quebec, we have a financial assistance program covering post- secondary education up to the doctoral level. This covers all students, except those studying part-time. There are a number of reasons for this, such as determining priorities for funding needs.

Since 1994 there have been a number of task forces, such as the MacDonald Committee which produced a very important report: it reviewed the whole structure of the Quebec funding assistance program. The MacDonald Committee was made up of students, professors, administrators, government officials, people from the department, etc. Given our funding priorities, they concluded that the best way of helping part-time students was to offer first loans and then bursaries in priority cases.

I myself find some inconsistency here. Why would someone suddenly decide to give bursaries to part-time students while loans, which many students have, should be given first? If that is done, there will be many full-time students in Quebec—in those cases where they qualify for financial assistance—to whom only loans could be offered, and at the same time there would be part- time students who would just have bursaries. I think there is a serious imbalance here.

[English]

Mrs. Karen Redman: Notwithstanding your answer, does it not speak to not having duplication if this is funding that is now available to Quebec students who legitimately would like to be in post-secondary education, albeit it on a part-time basis, who are not being addressed currently?

[Translation]

Mr. Atïm Léon Germain: I think that we must indeed ask ourselves that question. You can in fact see it this way. However, I would like you to understand first of all that the choices made in the area of education and financial assistance are first and foremost budget choices made in the Quebec National Assembly. We do not always agree with all of the choices made, however, we are aware—as are most of Quebec's student associations—that priorities must be set. Grants cannot be given to everyone. You can't do what you want to with these state programs. It seems to me that the first thing that we have to do, is to ensure that these choices are compatible with the decisions made in Quebec.

Indeed, you are creating a structure that will land on top of another already existing structure, which will throw the budget decisions made in Quebec off kilter.

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I would also like to answer your first question. On page 14 of my document, it states that student debt accounts for 20% to 50% of an ex-student's income, according to a very recent study conducted by the University of Montreal. On average, debt represents 20% to 50% of an ex-student's income.

The Chairman: Thank you, Mr. Germain.

[English]

Thank you, Mrs. Redman.

I just have one question in reference to declaring bankruptcy. Emotionally it must be a very difficult thing for any person to go through. I feel for the students who have to declare bankruptcy, because it must be a really horrible experience.

However, can you tell me when most students declare bankruptcy, how many months after the graduation or when they quit?

Ms. Jennifer Story: My understanding is that it's within the first two years.

The Chairman: This is where I have a problem. If they declare bankruptcy within the first two years, that means they're declaring bankruptcy during a period of time between.... Remember the amendment we made from 18 to 30 months where you have interest relief. To me this means they're not even giving themselves a chance. If they can find employment that all of a sudden pays good money, they should be paying back their loan.

Do you know why they should? Because it's really unfair to those who really work hard and play by the rules and pay the loan back.

I want to be very clear here. I understand that tuitions have gone up. I understand how difficult it is. And you're right. I'm not disagreeing with any of that. But I do have a problem with students who do not take advantage of the interest relief feature of the Canada student loans program and thereby really punish those individuals who are doing their very best to pay.

Also, I would love to see—and perhaps we can't access this because of the privacy issue—how many of these students have just the student loan as the item and the reason why they're declaring bankruptcy. If that's the only thing they have.... I can understand if you graduate and you owe $100,000 or whatever the case may be, an amount that, God, you're scared to pay back because it looks like an insurmountable task, but do you agree with me that students who declare bankruptcy prior to the 30 months you have to question?

[Translation]

Mr. Germain.

Mr. Atïm Léon Germain: I would also like to provide a brief answer.

There is, indeed, a problem. In Quebec, 75% of the ex-students who declare bankruptcy do so in the two years following graduation, without ever using the deferred repayment scheme, the interest relief scheme. There is, therefore, a problem. However, we are saying that the exclusion that will result from this amendment to the Bankruptcy and Insolvency Act is not the solution, because this exclusion will lead to discrimination. We are convinced that this will be the case and this is why we are asking you to consult the Human Rights Commission. We are convinced that there will be some discrimination. I do not think that the House of Commons would be willing to go ahead with this amendment if it creates discrimination.

Secondly, I think that there are ways that we can resolve the situation without having recourse to a total exclusion. I am sure that there are ways we could do this. We have not talked about these avenues here because we wanted to emphasize the principle of discrimination, but we know that there are ways to do this.

For instance, we could tell a student that his student loan will not be forgiven unless he has availed himself of the deferred repayment program. In my opinion, this approach seems to be much more logical.

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[English]

The Chairman: Mr. Harrison.

Mr. Hoops Harrison: I'll be completely upfront with you as well, Mr. Chairman. By your own rationale—and I agree with your own rationale—before a person should be able to walk away from it, they should at least be able to try. It's the compromise we're willing to make, because in order for us to ask for assistance in repayment or debt forgiveness, we have to get rid of the moral hazard fear that we're just going to walk around Europe for a couple of years and not make an attempt. We can understand the fear in the eyes of the government that that's something students might do.

However, by your own rationale, if students are declaring bankruptcy in the first two years and there is still assistance available for them, then that shouldn't be the case. Perhaps after there is no further assistance, and they're still in the need to declare bankruptcy, then they should be able to.

What is said in the legislation here is that now it's only after 10 years that they're going to be forgiven of that student loan, but there is an assistance going up to 10 years.

The Chairman: But there is one up to 30 months, right?

Mr. Hoops Harrison: By the budget, it's going to be extended up to ultimately 54 months, which is almost five years, but that's not ten years. So even after all that is exhausted, there is—

The Chairman: If you're not working after 54 months and you have a university degree or you've attended—

Mr. Hoops Harrison: But it's not even university students.

The Chairman: Or whatever, post-secondary education. I think there's something fundamentally wrong. You're not going to—

A witness: It's the economy.

The Chairman: No, I know, and I understand it's the economy. The question remains, though, as Mr. Szabo pointed out, that the unemployment rate amongst post-secondary education graduates is approximately 4.5%, if your figure is correct. That's fairly low. That's almost full employment by today's standards.

Anyway, I take your point.

Mr. Hoops Harrison: People who have jobs still declare bankruptcy. It's a ratio—a mixture between debt, income, ability to repay. There could be underemployed people.

The Chairman: So you're saying these people just don't have the ability to repay.

Mr. Hoops Harrison: Yes, the debt loads might be too high.

The Chairman: And they did predetermine that, as well.

Ms. Jennifer Story: Off that point, I've encountered students who have their Ph.D. and are doing post-doctoral work who are considering what their options are. They're making an income, they're working in their field, but they still can't afford to make their debt payments. That's the issue. You can't just look at it in terms of unemployment, employment stability, etc. You have to look at the ratio of debt to income, first of all.

Second of all, there are a couple of other things we need to consider here. The first few years are when people experience their greatest employment difficulties—right? So it's no surprise necessarily that the rates of declaration of bankruptcy are higher in those first few years. I don't think we can necessarily assume, as I think some of us may...and I take from your comments that those people are just trying to write off their debts and take a holiday.

The Chairman: You don't get that from my comments.

Ms. Jennifer Story: Okay. Well, okay.

The Chairman: What you should take from my comments is the fact that some students declare bankruptcy before they exhaust all possible avenues.

Ms. Jennifer Story. Right, and the reason—

The Chairman: I think in life you need to exhaust all possible avenues before you give up.

Ms. Jennifer Story: Yes, but I think if we're going to apply criteria limiting the period of time after graduation, then we should look at applying similar standards to anyone who has the option of going forward and applying for bankruptcy protection. Why should students be singled out for that? Every borrower should prevent themselves accordingly. Singling students out I don't think is fair at all.

I think more importantly—and we've raised this concern with the National Advisory Group on Student Financial Assistance, and are going to continue to work on it—you'd be amazed at how many students are not aware of the provisions that are available to them.

Another option we can look at, which would be more positive than this kind of intervention, would be some intermediary step between a student experiencing difficulty in repayment and one who's applying for bankruptcy—making sure that they are aware of the options that are available to them, and spending some resources and some time and some energy in educating those borrowers about what their options are. That's simply not done as effectively as it could be, and I think that would make a huge amount of difference, especially for those few years you're talking about, where those people are experiencing un- or underemployment most severely.

The Chairman: As an organization that represents how many thousands of students...?

Mr. Brad Lavigne: Four hundred.

The Chairman: Are you going to get that message out?

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Ms. Jennifer Story: We're working on it. We're on the communications committee of the national advisory group.

The Chairman: I understand that, and we have a responsibility, but you also have the responsibility to get that message out.

Mr. Brad Lavigne: Sure. Canada student loans.... We didn't form ourselves as a student organization to do the government's work—

Voices: Oh, oh!

Mr. Brad Lavigne: —but I'm sure we could come up with something—summer grants programs, these kinds of things.

The Chairman: Well, you have to be doing something for the students.

Mr. Brad Lavigne: Sure. Oh no, we do advertise options, but we're trying not to get them into debt, first and foremost.

[Translation]

The Chairman: Mr. Germain.

Mr. Atïm Léon Germain: Just one detail. We have not yet had an answer to one question, namely, the role that will be played by the bankruptcy trustees and the judges. Why do bankruptcy trustees and judges accept bankruptcies if there are reasonable grounds for believing that the applicants are abusing the system?

[English]

The question needs to be raised, because how come judges accept bankruptcy so easily if there is a sort of abusive situation?

The Chairman: Okay. Point well taken.

On behalf of the committee, I'd like to thank you very much. It's been a very interesting round table, and the debate you've generated certainly speaks to that.

I just want to close with one final remark. The members of this committee assume that man or woman is good. It's not that we are assuming students are cheating the system. We just have to make sure students are aware of all the avenues available to them. And we're all, quite frankly, very sensitive about the fact that tuition fees have escalated as they have.

Thank you very much. We're going to take a 15-minute break. We'll suspend and come back at 12.30 p.m.

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The Chairman: I'd like to call the meeting back to order and welcome everyone back.

This afternoon we have the pleasure of having with us representatives from the National Association of Career Colleges and the University of Toronto. Representing the National Association of Career Colleges are Ms. Addie Jason, president, and Mr. Paul Kitchin; and representing the University of Toronto is Professor David Stager from the economics department.

I welcome you all. As you probably know, you have approximately 10 to 15 minutes to make a presentation, and thereafter we will begin the question-and-answer session. Welcome.

We'll first hear from the National Association of Career Colleges. Ms. Jason.

Ms. Addie Jason (President, National Association of Career Colleges): Thank you, Mr. Chair and members of the committee, for allowing us the opportunity to address you regarding Bill C-36.

My name is Addie Jason. I own and operate Hallcrest College, a private career college in Winnipeg, and I'm currently the president of the National Association of Career Colleges. Paul Kitchin, who is with me today, is executive director of our association.

We're here today to represent the views and interests of our group as well as of our current and future students. I'm going to, for a moment, turn this over to Paul to give you a little bit of background on our association.

Mr. Paul Kitchin (Executive Director, National Association of Career Colleges): Thank you.

I want to take a few minutes to talk to you about who our member institutions are at the National Association of Career Colleges, and to give a bit of a profile of the kinds of students we are seeing at those institutions.

We represent private post-secondary institutions that are regulated and licensed by provincial governments. There are acts and regulations that govern the operation of such institutions in each province. We're looking at an industry that has a history now of 130 years, with the first career college being established in Belleville in 1868, an institution that continues to operate even today.

The growth of that industry has been significant, to the point where there are 1,200 such career colleges in the country, enrolling approximately 180,000 students annually. They tend to be very small institutions that focus on specific program areas of skill training. They serve a niche of the population that I'll try to describe for you.

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Nearly one-third of the students are over the age of 35. They are people often caught in some of the downsizing and right-sizing that we've experienced in the last few years. Nearly half of the students have dependants, with one in five of those students being a sole-support parent.

Interestingly, when we surveyed about 13,000 students within the last two years, we found that almost half, 47%, of them identified that they had previously attended one of our community colleges or universities. In fact, 15% had graduated from a community college, and 5% had graduated from university. So we're looking at a population who, at their particular age and stage of life, have chosen a private institution to serve the needs they have at that particular time.

One of the attributes that many students point to is the shorter duration of programs, which is due to some very intensive training. Students can complete diploma programs in under a year, and then have a chance to be back out into the labour market to become productive people.

So that is just a very quick thumbnail sketch to give you a sense of who our members are and who their students are. I'll now turn it back to Addie to discuss some of the issues that have come to the fore for us in terms of the millennium fund and Bill C-36.

The Chairman: Ms. Jason.

Ms. Addie Jason: NACC represents the registered private vocational school industry, which has a long and proud history of serving Canadians, As the association representing that group, we have a great interest in the establishment of the millennium scholarship. We want to comment on a number of the issues involving that scholarship fund.

The first is the eligibility of the institutions. The second is the criteria for the recipients. The third is the method of selection of directors and members for the foundation.

I'll deal first with the eligibility of the institutions themselves. We support the federal government's efforts through the Canadian opportunities strategy to increase its accessibility to affordable and financially manageable post-secondary programs by all students at institutions of their choice.

The private post-secondary sector in Canada is deeply concerned about the approach being taken regarding the formation and operation of the Canada Millennium Scholarship Foundation. It seems that there is a deliberate effort to create a double standard within that post-secondary community.

The concern stems from the definition and wording in Bill C-36 that reflects the unacceptable position taken in the published budget background materials such that the recipients of these scholarships will include:

Canadians of all ages who are studying in publicly funded universities, colleges, vocational and technical institutes, and CEGEPs. Studies at private educational institutions may be included at the discretion of the Foundation, provided the institution has an established record of good performance in the course of studies in which the student is enrolled.

So clearly there is a distinction being made between public and private institutions there.

Our question is: why single out private institutions for discretionary scrutiny in the foundation? It sets a double standard such that students at public institutions are eligible even if those public institutions do not have an established record of good performance in the course of study in which the student enrols.

Clearly, this is not a reasonable approach. What is needed is a consistent approach to the eligibility of courses of study that is applied equally across the board regardless of whether or not the institution is a public or a private institution.

The list of recipients noted above should refer to Canadians of all ages who are studying in post-secondary institutions that are designated for Canada student loans. That would include private career colleges and would be consistent with a policy of allowing students at all designated institutions to access all of the other measures that are involved in the Canadian opportunities strategy.

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If the government is concerned about students enrolling in courses of study that do not have an established record of good performance, NACC would support a strengthening of the process for designating programs for CSL purposes—for all programs in all institutions. Of concern here would be the criteria that are used to determine that an institution has an established record of good performance. We need to define what that really means. NACC supports an accountability model for all institutions that measures student satisfaction and results related to completion or graduation rates and placement rates of graduates.

The bottom line is that the public or private nature of an institution has no bearing on the quality of its course offerings, and it is inherently wrong to categorize institutions for the purposes of determining program eligibility based on their source of operating funds. It is well understood that no two universities, no two community colleges, and no two private institutions perform the same way.

Once the need and merit criteria for the millennium scholarships have been set, students at all post-secondary institutions must be treated fairly and have equal access to these taxpayer-supported scholarships. Denying or restricting access to millennium scholarships for students who registered in designated private institutions would directly contradict the objectives of the foundation, as stated in clause 5 of part 1 of Bill C-36.

Therefore, NACC has included in the recommended amendment section a proposed amendment to Bill C-36 that makes the definition of an eligible institution fair and consistent with the objectives of the foundation.

In terms of the criteria for recipients, the stated objectives for the foundation are “to grant scholarships to students who are in financial need and who demonstrate merit...”. NACC believes the majority of the millennium scholarships granted should be targeted for students who are in financial need, regardless of whether or not they meet some scholastic merit criteria.

The last figures that NACC received from HRDC showed that approximately 17,000 Canada student loan recipients in 1995-96 were at the loan limit. This indicates that there must be a significant number of students who have unmet need after receiving their student loans. There must also be a significant number of people in need of post-secondary education and training who never enrol, due to unmet need through the student loan program.

Restricting scholarships to students who meet both need and merit criteria would be a disservice to many hardworking Canadians who may never be able to access the education or training they require.

Clause 28 of part 1 of the bill requires that:

28. The Foundation shall grant scholarships in a manner that complements existing provincial student financial assistance programs....

Targeting millennium scholarships to students with financial need would be consistent with the requirements of section 28 of the bill. NACC proposes in the recommended amendments section that Bill C-36 be amended to allow millennium scholarships to be targeted specifically to students with financial need, eliminating the requirement for merit.

As to selection of directors and members, Canada has three fundamental sectors within the post-secondary institutional environment: the university sector, the community college sector, and the career college sector. It is essential that when the post-secondary institutional community is being consulted the views of all three sectors are considered. This practice would be consistent with the stipulation in clause 14 of Bill C-36:

14. The appointment of members shall be made so as to ensure that

a) the membership is knowledgeable about post-secondary education and learning in Canada and the needs of the Canadian economy; and

b) members are drawn from the various regions of Canada.

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However, in its current form, Bill C-36 does not make consultation with all three post-secondary sectors mandatory. Rather, it leaves the consultation process for selecting foundation directors and members to the discretion of the existing members. Paragraph 8(2)(c) of the bill states that the composition of the board of directors must include:

nine persons appointed by the members, in accordance with the by-laws of the Foundation, after taking reasonable steps to consult with the provincial ministers and with representatives of post-secondary educational and learning organizations in Canada that the members consider appropriate.

Subclause 12(4) of part 1 of the bill stipulates that:

The six members appointed under subsection (2) shall as soon as possible after their appointment take reasonable steps to consult with the provincial ministers, and with representatives of post-secondary educational and learning organizations in Canada that they consider appropriate and, following those consultations, appoint nine further members of the Foundation.

In its recommended amendments NACC proposes that Bill C-36 be amended to require that members must consult with all three post-secondary sectors when selecting members and directors.

Based on these comments NACC recommends to the Standing Committee on Finance that Bill C-36 be amended as follows. First, the definition of eligible institution in the definition clause of Bill C-36 should be amended to read:

eligible institution means a public or private post-secondary educational institution in Canada that is designated for Canada Student Loan purposes and grants degrees, certificates or diplomas.

Second, clause 5 of part 1 Bill C-36 should be amended to read:

The objects and purposes of the Foundation are to grant scholarships to students who are in financial need, in order to improve access to post-secondary education so that Canadians can acquire the knowledge and skills needed to participate in a changing economy and society.

And subclause 5(2) should be amended to read:

The Foundation shall grant scholarships in a fair and equitable manner across Canada.

Third, paragraph 8(2)(c) is to be amended to read:

nine persons appointed by the members, in accordance with the by-laws of the Foundation, after taking reasonable steps to consult with the provincial ministers and with representatives of post-secondary educational and learning organizations within the university sector, the community college sector and the private post-secondary sector in Canada.

Last, subclause 12(4) should be amended to read:

The six members appointed under subsection (2) shall as soon as possible after their appointment take reasonable steps to consult with the provincial ministers, and with representatives of post-secondary educational and learning organizations within the university sector, and the community college sector, and the private post-secondary sector in Canada and, following those consultations, appoint nine further members of the Foundation.

Those are our comments, and I thank you for hearing them.

The Chairman: Thank you, Ms. Jason and Mr. Kitchin.

We will now move to the next presentation. I would like to introduce to you Professor David Stager. Thank you to both organizations, by the way, for providing us with briefs. We certainly appreciate it.

Dr. Stager.

Professor David Stager (Individual Presentation): Thank you very much. I just want to comment that I am not representing the University of Toronto. Our president, Rob Prichard, has certainly been very supportive of the number of positions I have taken, but I have the happy situation of being an independent academic and therefore I am really reporting to you on the results of research in the economics of education for the last 35 years. It has been my special interest for research and teaching, and therefore I am very flattered and grateful to have the opportunity to come and meet with you.

I understood from the telephone conversation I had from your clerk's office that I was primarily expected to talk about the Millennium Scholarship Endowment Fund, I expect because I did write an article that appeared in the Globe and Mail soon after the budget. But I have researched, taught and written on several aspects of the economics of education, with special attention to post-secondary education. So I would certainly welcome any comments and questions that you might have there.

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To start, with respect to the millennium scholarship fund—and I say these things with a good deal of appreciation of the political reality—we've come a long way down the track on the project, but when we look at the stated goal, I believe, as a researcher and Canadian citizen, this is not really the best allocation of our funds.

The stated goal in the material I had on the budget address was to increase access to post-secondary education in Canada. I humbly submit this fund is not going to increase access. Certainly it will have an almost negligible effect if we are talking about increasing the probability of a student going on to post-secondary education.

Why do we say that? Well, intuitively one notes first of all that the amount granted is fairly small. I'm not trying to be mean-spirited about this, but it would represent a small portion of the student's annual costs when one takes into account the full cost of supplies, room and board, books, and other personal expenses. This is not even to take into account the cost in forgone earnings, which is a significant factor in a student's decision making.

More important, however, is access—and this comes from long and broad research in the area. I first did my work on student access back in 1969, as it happened, as a project for the federal government. If by access we mean the probability of a student going on to post-secondary education, many factors come into it.

The most important one is the parents' education, the influence of the parents because of their own education, together with the home environment and the school environment. These sorts of things are very powerful. That influence begins very early in life, and indeed it seems that students have pretty well made up their minds what their post high school plans will be by the time they are in late elementary or early secondary school. There are changes, of course, as to which field they will go into, but the notion of going beyond high school is pretty well set at that stage.

Another reason that access is so little affected by student grants or lower tuition fees—because these are the two sides of the cost effect—is that students look at post-secondary education primarily as an investment, as a lifetime investment. The government recognized that in the budget address. The Prime Minister and the Minister of Finance frequently refer to investing in the future of Canadians.

Students see it as an investment, and while they don't do the same calculations on the rate of return that we might do if we were looking at our RRSP funds, they do behave very much as if they have done those calculations. The calculations are quite impressive. I have been tracking the rate of return on investment in higher education, both university and non-university, since 1960, using the census data decennially, when it was decennial, and every five years since then. I have already put in a request for data to do it on the basis of the 1996 census data.

The outcomes here are quite consistent across time, across countries. In the case of Canada a university graduate can expect a rate of return on investment in the order of 12% to 15%. When we look at the rate of return on investments, it's the same as if we were looking at investment in physical capital or in financial portfolio analysis. We take all of the costs, including the costs of the student's forgone earnings, and we look at all the benefits in terms of the difference between the income as a university graduate and the income as a high school graduate. We then discount it to the present time.

This really is a minimal calculation, because it doesn't take into account other benefits that accrue to the student as graduate as a result of that exercise. I think the number I said was 12% to 15% for males. It's higher for females, which is always a surprise to people. It's usually a couple of percentage points higher both in general and across the various fields of study. The reason is that females as high school graduates are worse off than males as high school graduates. It had the double-barrelled effect that the opportunity costs of the high school graduate going on to university for the female is less and the proportionate gain for the female is greater.

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I have noted many times that post-secondary education really is of special economic interest to female students. Not surprisingly, then, we're seeing a rapid increase in the female participation rate in post-secondary education.

This is another reason why small changes in tuition fees, grants, and loan subsidies have virtually no effect, because they affect the cost in a very small way.

One of the exercises I conducted a couple of years ago was to look at the rate of return model and experiment with it. I assumed we tripled the tuition fee. The result was to decrease the rate of return by only one or two percentage points, so you can see what a small role something in the order of $3,000 a year plays in the calculation.

Another big factor in improving accessibility is the availability of places. The participation rate in Ontario increased at the same time tuition fees rose at their fastest rate, namely in the later 1960s. We had a rapid increase in the participation rate and a rapid increase in tuition fees. Why? There was also a rapid increase in the number of university places. This was the demographic bulge effect of the late 1960s, early 1970s. It happened right across the country. In the U.K., U.S., and other countries there was that demographic effect as well.

Finally I'd like to speak about students having information about what to expect, changing their expectations.

One reason students from higher-income families, higher-educated families, are more likely to go on is that they have a greater appreciation and awareness of what they can expect in terms of the quality of life, higher income, and so on. Therefore, more work needs to be done in dealing with the students of families that are not represented by the higher education levels.

Those are intuitive arguments, and they're borne out by evidence in research. Many studies have shown that grants are an inefficient way to try to change student participation.

Various numbers can be brought from these studies, but the simple outcome you get is that somewhere between one in five and one in ten students are affected by the grant. That is, you would have to give grants to ten students, or to five students, to get one who would not otherwise have gone. That's the ballpark. So you're getting an efficiency effect of, say, 10% to 20%.

A number of researchers in this area have concluded that public funds would be better spent by trying to target. On my sabbatical about three or four years ago I spent some time in Australia and New Zealand, especially in Australia, looking at what they were doing for post-secondary finance. There the buzz-word is “targeting”, and it's now spreading to other countries as well. They are really intensively taking the notion of targeting, of choosing a target group and putting funds there, instead of having this broader universal approach to the problem.

To the extent that around the world, certainly across the OECD countries, grants are replacing loans, partly through the research, leadership, and communication you get through the OECD organization, governments are recognizing that funds for accessibility are more effective by moving from grants to loans.

What's interesting is that student participation rates are highest where the use of grants is lowest. Why? If you give substantial grants, you've more or less used up a fixed part of the budget that might have been allocated to student assistance and higher education. You've used up that part of the budget for a fewer number of students. If you can take those dollars, or currency units, and spread them more widely, you have a greater effect.

The U.K. finally recognized that. They had a very rich support program for a very small part of the student population and consequently had a very low participation rate. They then made quite a change and have swung heavily to loans. Japan has virtually an all-loan program, Sweden has moved very strongly from grants to loans, and the situation is similar in other EU countries.

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That brings me to one of the topics I have worked on and been associated with for the whole of this period, and that is the income-contingent loan program.

I have been to Ottawa at several stages in my academic career. Sometimes there has been terrific interest in this, and at other times they would say with great sadness that they've decided to shelve it for a year or two.

I was talking with Bob Best from AUCC this morning, just as he was leaving, and asked where this stood. He said he thought it was pretty well dead on the Hill. I said I thought it was really the ideal long-term solution. I therefore have to take your time to bring it to your attention directly, as it were, from the advocate's mouth.

The notion of an income-contingent student loan is that students repay strictly in accordance with their ability to pay. Many of the problems you heard about this morning and we've been hearing about—in fact, 15 years ago I was talking about the same sorts of things with the Canada student loans people—such as the problems young graduates had in repaying and the problems of interest relief, loan remission, and bankruptcy, would be obviated by a program that said graduates will pay in accordance with their income.

After a period of time...and you do get exaggerated notions by critics of the program, who say the students will be indebted for life. My view is that this should not run for more than 15 years. We've done a computer simulation model, which shows that the great majority of graduates would repay within 15 years. Any who didn't repay for a whole variety of reasons would still be carrying the loan, the interest meter would be running, and there would be that much more to pick up at the end.

When I say “pick up at the end”, the notion is that there would be a deferred grant. Instead of the grant being upfront, based on the means testing of the student's parents, by and large a grant would be allocated at the end in the form of remission or loan forgiveness. We would say that since things didn't work out for perhaps the 5% suggested this morning, we would lift the burden and absorb the loan as a deferred grant, rather than having, as we have now, the inequities that arise when students who meet the means eligibility test go into a high-earning occupation and of course greatly benefit from the early grant. Had we had the reversal of means testing, those graduate students would have been helping the less fortunate students who were not able to meet their debts for whatever reasons, often because of unavoidable personal tragedy.

The loan programs have been much misunderstood and wrongly criticized as income-contingent loan schemes. I have provided through your clerk a short set of notes that I have presented to committees; I made much the same presentation to the Senate subcommittee on post-secondary education last year. It has been much misunderstood. There certainly is confusion about debt load, average debt, and so on, and I'd like to say that if I can do nothing else I'd like to strongly urge your committee to request that Statistics Canada establish, as one of its regular, ongoing, consistent series, data on the level of student debt so that we can work with clear definitions and have the same sort of data for such an important public policy area that I can get on egg production, hog production, and so on. We should have data we can all agree on, relate to and, if not feel comfortable with it, at least understand.

It's an important part. We don't have good data on student debt, because there are now at least three different sources of loans: Canada loans; provincial loans; and private loans, including banks, parents, relatives, whatever. We don't have a way of getting a good measure except through the national graduate survey, which is conducted on a sample basis both two years and five years after the student has graduated. It's not bad, and I highly respect what Statistics Canada is doing in that area, but we do need to ask StatsCan to focus on providing us with standard data on these important policy areas.

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As I said, the principle of the income-contingent student loan is, first of all, based on the ability to pay.

Second, the risk is shifted from the individual to society, so the individual no longer has to be risk averse and decide not to go to university in case he can't pay the loan. You're assured that if you can't pay after a certain period of years, the loan will be treated as an after-the-fact grant.

Third, it increases access, because you now have more public funds to distribute. I have worked through some numbers. If times permits and if you are interested, I will share them with you. They indicate that for the dollars we're looking at with the millennium fund, we could provide access to all university and, for that matter, all post-secondary education students...at about the same cost to the federal public sector alone.

Also, we wouldn't need the banks involved. It has troubled me somewhat that HRDC did a deal with the banks whereby the banks got a 5% premium on the lending, as you're aware, in order to take the collection responsibilities. In my view the premium should have been reversed, and the minister should have picked up a 5% premium from the banks.

We wouldn't need the banks. The banks do two things in the case of lending generally: they assess risk—the prudent banker wants the business plan, the assessed risk—and they collect. We won't have to worry about assessing risk; that's going to be done with eligibility criteria, by the government and the educational institutions working together. Collection would be done through the federal income tax system. I've talked to the tax people, and it could be done at virtually no additional cost.

I recognize the political reality. You're well along on the millennium fund. I've got major reservations about it. In my view we need to go back and take another look at the work that has been done by HRDC with respect to the income-contingent loan program.

At the very least, with the millennium fund, I would hope there may be room for some changes. If we can't reverse the tide, at least you can do a couple of things. You can shift the emphasis toward the non-university portion. It may seem heretical that a university person would say this, but this is the outcome of research work. There is where it has been shown that grants are more likely to be effective.

Second, a portion of the fund should be designated to do two things. The first is to conduct regular research on accessibility to see whether it's working. So often in public policy we create grand schemes and never go back to revisit their effectiveness. We would first have a portion designated to research on accessibility and related matters; and second, a portion designated for targeting to try to understand—I don't like to say the problem person, but you know what I mean—the student who is the candidate conceptualized by the program and to try to identify those people in real life and make the funds most effective.

I would end this presentation by saying I am concerned about a public policy issue that has had very little attention, and that is the distributional aspects: who wins, who gains, who subsidizes whom? Governments have fortunately sponsored a good deal of research in the economics of education but have done very little in pursuing the question of who subsidizes whom.

The very limited evidence does seem to suggest that the lower-income groups are subsidizing the middle- and the upper-income groups by virtue of who participates.

There's another issue, which is the cross-subsidization across the lower income group. There, participation is relatively low because it is from some families and the majority of families don't benefit in that sense. So there is a distributional issue in analysing this kind of public policy, which has been—

• 1315

The Chairman: Thank you. Could you just wrap up? Otherwise we won't get to questions.

Prof. David Stager: Thank you. Absolutely.

The Chairman: We're going to be limiting this to one question per individual.

Mr. Harris—and don't give me those three-part or four-part questions like you always do when I say this.

Mr. Dick Harris: Ms. Jason, this is one question.

You mentioned that the private career colleges were left out of the millennium fund stipulations, and you also stated that career colleges generally get their students into the workforce at a faster rate, that their students become taxpayers at a faster rate because of the more intensive training that you offer. I think the government is getting a good deal and I think it's a shame that you were left out, quite frankly.

Are your students eligible for student loans, and if not, are they eligible to use their tuition costs as a tax deduction at any time?

Ms. Addie Jason: Both. They are eligible for student loans and they can use their tuition as a tax deductible.

Mr. Dick Harris: So they can deduct their tuition.

Ms. Addie Jason: Yes.

Mr. Dick Harris: Okay. Whereas university students can't.

Ms. Addie Jason: No, but—

Mr. Dick Harris: As I understand it.

Ms. Addie Jason: —are you talking about a tax credit?

Mr. Dick Harris: Yes, a tax credit or a tax deduction.

Ms. Addie Jason: But I think universities do.

Mr. Dick Harris: The students.

Mr. Addie Jason: The students who go to university do.

Mr. Dick Harris: They do?

Ms. Addie Jason. Oh, sure. Yes, everybody has that.

Mr. Dick Harris: Okay.

Mr. Paul Kitchen: Just as a point of clarification too, when we talk about not being involved, I think the concern is really that there seems to be a double standard, that if you're a public institution, you're automatically eligible, and if you're a private institution, it's at the discretion of whoever the directors and members of the foundation are. And that gives us great concern.

Mr. Dick Harris: Okay. Thank you.

I have just one very brief question for Professor Stager.

Do you think we have too many university places now? Do we have more locations than we need?

Prof. David Stager: Not in total, although we do have a problem with diversity. In my view, there are too many of the general arts kind of programs and not enough of the more specialized professional programs. And that shows up in terms of the queues, the quotas and so on.

The Chairman: Thank you.

That's it, Mr. Harris? That's very kind.

Madame.

[Translation]

Ms. Christiane Gagnon: I have a question for Mr. Stager. I am also quite sceptical about the objectives behind the Millennium Scholarships, but not for the same reasons as you.

Did you consult with students and student associations about your proposal and the impact that it would have on the student debt? Is this an idea that comes from a student association or is this something that you thought of and suggested yourself?

[English]

Prof. David Stager: If you're referring specifically to the income-contingent loan fund, yes, I certainly have had communication with students on this, for about 35 years, usually from the sorts of organizations that you heard from this morning, and indeed, I have had difficulty in understanding why they criticize this. The usual comments are that if we have a better loan fund, then governments will be more likely to increase tuition fees.

The reality is that, first, tuition fees increased, and then the loan funds were made available to accommodate the increase. Second, even with the conventional loans such as Canada student loans, we have continually lifted the maximum that could be loaned so that the style of the loan would not affect the overall debt load. The major problem, as we all recognize, is the debt load for the low-income student, especially in the very early years after graduation, a problem that would be solved by the income-contingent loan.

Frankly, I have not seen a good, objective, analytical criticism anywhere, ever, of the income-contingent loans.

[Translation]

Ms. Christiane Gagnon: You know that in Quebec, student debt is nearly half of what it is elsewhere in Canada. This is owing to a large extent to the fact that we give student grants. Consequently, student debt is not felt as much there as it is elsewhere in Canada.

• 1320

I believe that the proposal you described to us this morning concerns loans only. We know that there have been cutbacks made to the Canadian Social Transfer. How are the institutions going to be able to keep tuition down?

I think that your proposal will put the institutions in a situation where they will no longer be able to charge students low tuition fees. With your proposal, I have the impression that the burden would be greater and that students would go more deeply into debt. However, if responsibilities were shared, it would be easier to invest money in the institutions and to help students with grants and loans.

[English]

Prof. David Stager: Okay. First of all, I would say—and this also is heretical—that students don't borrow enough. It's a good investment. We don't worry about even small businesses, provided there is a good business plan and they're aware of the risk and so on. Small businesses are encouraged to borrow by governments.

Students are in a similar situation. They should be borrowing more. I'm concerned about the student who is not able to go because the financing is not available.

Second, with respect to Quebec, of course Quebec has and has had for some time—that is, for the last 30 years—a lower tuition fee than in a number of the other provinces, lower than in Nova Scotia and in Ontario in particular. So the amount to be borrowed would be less. Also, there is a higher incidence of part-time attendance in Quebec rather than full-time. There's a lot of speculation as to why this is the case, and I won't go into that now, but I have been quite aware of the Quebec situation as well. These are two important reasons.

Another factor in the higher debt load on average in a province such as Ontario is that it is inflated, it's grossed up, by the borrowing of students in medicine, dentistry, law, commerce MBAs—the professional degree programs, where they're no longer eligible.... Back in the days when we had student grants in Ontario, they were not eligible for those and had to rely on loans. And second, they are in a better position to pay; they are the ones who repay most quickly. But it does show up as an increase in the student debt load. So it's important to separate the professional faculty borrowing from the undergraduate arts and sciences.

There are many comments on your question, and I hope I've touched on the main ones.

The Chairman: Thank you, Madame Gagnon.

[Translation]

Ms. Christiane Gagnon: Thank you.

[English]

The Chairman: Mr. Brison.

Mr. Scott Brison: Mr. Stager, you said in your introduction that any province could implement its own program in terms of the contingency repayment. A few years ago Ontario tried to introduce a contingency repayment program, but the federal government, Revenue Canada, refused to administer the program. So how can a province implement a program if Ottawa refuses to administer it?

Prof. David Stager: Well, if Ottawa refuses to at least collect, then obviously it's a non-starter.

In the Ontario case, with respect, that was not a true income-contingent loans game. It was put in in a hurry. There were a lot of criticisms of it. Certainly I would levy a lot of criticisms. Ottawa was quite right to not participate.

Mr. Scott Brison: Do you study education policy in primary, secondary, and post-secondary?

Prof. David Stager: Rather little on elementary and secondary, mainly because there are so many other policy issues at the post-secondary. It also happens to be my preference. I've done a little on elementary and secondary, but the other has been the most important.

Mr. Scott Brison: While the millennium scholarship fund only benefits 7% of students pursuing post-secondary education, when we're investing on behalf of Canadians to maximize the return to Canadians, very little study has been conducted on what the impact would have been in terms of restoring the funding to the provinces such that investment could be placed in primary and secondary education.

Are you familiar with some of the studies relative to the bang for the buck, or the return on societal investment, in primary versus secondary versus post-secondary education? Where is the best return to society in the long term?

Prof. David Stager: Thanks for asking that, because it is an area where I do want to spend some immediate attention, that is, for my own research work.

The best bang for the buck is before school. A splendid synthesis of the research in the whole area of human capital was done by a visiting professor at U of T this past fall. He, like myself, has spent a career doing this and has concluded, looking OECD-wide, that this is the greatest pay-off, for a number of reasons. The physical capital required isn't as great. You can have strong effects in those early childhood years—sort of two-, three- and four-year-olds. It has a double-barrelled effect in that these children then are in a better position to benefit by further education, and society gains by not having the sort of fallout that has to be dealt with.

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There is absolutely no doubt in the minds of anyone having looked at this that if we had an extreme shortage of dollars we ought to put it in preschool programs.

The Chairman: Thank you, Professor.

Ms. Davies.

Ms. Libby Davies: Thank you, Professor Stager. One comment you made that I did agree with was your opening comment that—

Prof. David Stager: Only one?

Ms. Libby Davies: Yes, that millennium funds were not the best allocation of funds—to go through the millennium funds.

But everything you said after that.... I really have questions and big concerns about your premise, because it seems to me that in promoting this idea of income-contingent loans, you're dealing with a crisis after it's developed.

First of all, the income-contingent loans I think really hurt low-income students, because we're talking about debt deferral, not debt reduction. If you link that to interest rates and if it's based on your income, then presumably you'd be paying for a much longer period of time, and if interest rates go up, you'd be paying a much greater rate. That would have the greatest impact on low-income students.

But it seems to me that the real issue here is to reduce the cost of education. The reason that is so high, even though you claim it's exaggerated—and I could show you cases in my own riding that are just horrendous—is because the tuition costs are so high because of the lack of public funding.

Would you agree that if we're dealing with limited public resources, what we really need to do is put confidence back into the public system by providing those funds to the system generally, in order to bring down the tuition fees and the cost of education? Would not that have the greatest impact on accessibility?

Prof. David Stager: Well, with great respect, I tried to find one of your comments that I could agree with, and I think there were one or two.

No, we don't want to reduce the cost of education. In fact, that's one of the worries—that we need to have more funds allocated to education, and higher education particularly, of which I'm speaking especially, because we need to do two things.

We need to enhance quality. We have a fairly homogeneous university system in Canada by comparison with the EU countries, by comparison with the U.S., and even by comparison with Australia, which is a smaller nation-state much like ours. We don't have the diversity of opportunities for students; hence some of our best students are going to the United States. We don't have the diversity in terms of programs, as I just said to Mr. Harris a few moments ago, and we don't have the quality of programs that are necessary to develop and attract our most able students. The type of institution we've had has resulted in a sort of homogeneous program, so cutting back on resources I don't agree with.

Second, with respect to interest rates increasing and therefore debt increasing, economic factors tend to go together. In periods of high interest rate we tend to have higher income increases—tend to, certainly across the working lifetime of an individual. I could go on, but that's not really a problem.

As I said before, it's the need to provide financing so that a student has the opportunity. That opportunity literally comes only once. The opportunity to undertake higher education when you're 22 years old only happens once in one's lifetime. By doing it then you also have a longer working lifetime to benefit by that, both in an economic and a psychosociological sense as well.

We need to make it possible to have the best opportunities for students, and to finance those opportunities. Had we put an income-contingent loan in place 10 or 15 years ago, we wouldn't have had any of the problems that you are addressing this morning, and indeed in this budget.

The Chairman: Thank you. Mr. Valeri.

Mr. Tony Valeri (Stoney Creek, Lib.): Thank you, Mr. Chairman.

Thank you for your presentations this afternoon. I can only say, Mr. Stager, that there are a number of people sitting behind you who I'm sure would love to be at the table right now debating with you in terms of what you had to say.

I just wanted to point out to you that the Canadian opportunities strategy involves more than just the millennium fund, and that there is a tax credit for interest on student loans.

Prof. David Stager: Sure, and I agree with a number of the other things that are being done.

• 1330

Mr. Tony Valeri: Yes, and there's also the interest deferral up to about 54 months now, which is also there for those students who are certainly in need.

In the second paragraph of what you handed out, you talk about the numbers and pose a question. You weren't quite sure how the 100,000 number and the 1:5 ratio was calculated.

What I would say to you is that really the calculation came from the fact that there is a pool of some 500,000 students who are using the Canada student loan or the Quebec student loan product. So as to the 100,000, if the millennium scholarship program focuses on need, as was clearly articulated by the witnesses before you, then it would give about 1 in 5 students the assistance we're proposing through the millennium scholarship fund. That's how that 1 in 5 figure was actually calculated, and that's why it was in the budget documents as well.

That's just as a point of clarification.

Lastly, on your comment about preschool and some of the research that you might be interested in doing, and that the limited resources government may have should be directed towards that, I would certainly be very, very interested in pursuing with you, as I'm sure would perhaps some members of this committee, or in working with or at least hearing from you on how you make out with the research in that area. So we certainly look forward to perhaps the opportunity of calling you back to discuss that, in a pre-budget consultation, perhaps.

Thank you.

The Chairman: On behalf of the committee, I'd like to thank you all for your presentation. It has been a good morning and afternoon thus far. We've certainly learned a lot, and many of the presenters have provided us with interesting perspectives on this particular bill.

We will be back this afternoon from 3.30 p.m. to 5 p.m., in room 269, West Block—this room.

The meeting is adjourned.