Conseil supérieur de l'éducation
 
Spring report by the Advisory Committee on the Financial Accessibility of Education

By Paul Vigneau
Coordinator of the Advisory Committee on the Financial Accessibility of Education

In April, the Advisory Committee on the Financial Accessibility of Education adopted two briefs and forwarded them to the Minister of Education. The first dealt with the proposed increase in the ministerial cap on admission fees for CEGEPs in Québec, while the second examined amendments to the Regulation respecting financial assistance for education expenses.

No increase in the ministerial cap on admission fees

At the request of the Minister of Education, the Advisory Committee on the Financial Accessibility of Education prepared a brief on the proposed increase (from $30 to $40) of the ministerial cap on admission fees charged by CEGEPs under section 24.5 of the General and Vocational Colleges Act.

The Committee recommended that no increase should be authorized.

Currently, the admission fee for regional admission services is set at $30, the maximum amount. Increasing the maximum would allow each regional admission service to increase the amount charged, if necessary, to balance its financial situation.

The regional admission services have helped to make the admission process fairer and to improve access to college education, but the recent drop in the number of applications for admission has created financial problems for the regional services. In addition, MEQ demographic forecasts point to a further decrease in the number of college students in coming years.

In the view of the Committee, the proposed increase is directly associated with the drop in student numbers. However, the Government has already made a commitment to mitigate the negative effects of this decrease, and has set up measures and announced $15 million in funding to provide financial support for CEGEPs that experience a drop in enrollment.

As a result, the Committee encourages the CEGEPs affected to use some of the funding allocated for decreased enrollment to provide financial support for the regional admission services that are experiencing financial difficulties. As a short-term measure, if absolutely necessary, the Minister could envisage a minimal increase in the cap on admission fees and reassess the situation in a few years.

Remuneration for financial institutions and indexing of parameters for the student financial assistance program

The second brief submitted to the Minister dealt with amendments to the Regulation respecting financial assistance for education expenses concerning the remuneration of financial institutions and the indexing of parameters under the student financial assistance program.

Remuneration for financial institutions

At the request of the financial institutions concerned, the Government has begun negotiations concerning the remuneration offered to encourage financial institutions to grant student loans under the student financial assistance program. A cooperative agreement has recently been signed with the Government's main partners, but amendments to the Regulation respecting financial assistance for education expenses will be required to make it effective.

Outstanding loans represent a substantial amount of money- roughly $1.3 billion for the loans on which the Government pays the interest, and roughly $2 billion for the loans on which the borrowers pay the interest. Given these amounts, it is clear that the rate of interest charged on the loans is also important.

The proposed changes concern, first, the rate of interest for the loans on which the Government pays the interest, rate A. Currently, this rate is set at the rate of bank acceptances, plus 80 basis points. It will be increased by 40 basis points in 2002-2003, and by a further 30 basis points in 2003-2004, when it will reach the rate of bank acceptances plus 150 basis points. According to the Aide financière aux études service at the MEQ, this measure will cost $4.4 million this year and $7.7 million in subsequent years. Given that the Government has chosen to continue its partnership with the financial institutions, the Committee is satisfied the additional remuneration appears reasonable.

In addition, two amendments will affect rate B, for loans on which the borrower pays the interest: (1) the current fixed five-year rate will be replaced by a variable rate of interest; and (2), the reference base will no longer be the rate of 5-year Government of Canada bonds plus 125 basis points, but rather the prime business lending rate plus 50 basis points.

The Committee recommends that the Minister of Education adopt the proposed variable rate, because it will be advantageous for a majority of borrowers. Since some may be penalized by a flexible rate, however, the Committee recommends that borrowers be allowed to choose between a variable and a fixed rate.

Indexed parameters

For the fourth consecutive year, some of the parameters of the student financial assistance program have been indexed. The rate of increase, effective from the 2000 summer quarter, is 2.7%. The Committee recognizes the need to index the parameters of the student financial assistance program, but is disappointed that the amounts for single-parent families have not been indexed. Last, the Committee reminds the Minister of Education that one of its previous recommendations concerned a periodic review of student needs to ensure that the parameters of the student financial assistance program match the actual needs of students. The MEQ is currently preparing a study of this topic, which should be completed by the fall.

Panorama • Volume 7, Number 2 • June 2002

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