NEW REGULATIONS!!!!!!!!!

GOOD NEWS!!!
It seems that the 2003 budget has finally been implemented. Have a look at http://canadagazette.gc.ca/partII/2004/20040602/html/sor120- e.html#REFa

Scroll down to see the "Regulator Summary"
We still have to deal with Edulinx screwing up and losing forms and not knowing the regulations though...
How will they train all those people all over again... sigh....

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

The 2003 federal budget included amendments to the Canada Student Loans Program (CSLP) aimed at increasing accessibility to debt management measures. Interest Relief and Debt Reduction in Repayment are debt management measures which operate in conjunction to provide assistance over the short- and long-term, to borrowers experiencing financial difficulty in repaying their loans. These measures help borrowers avoid default, encourage repayment and decrease the costs of collections for the Government of Canada, and provide a viable alternative to bankruptcy. Amendments will extend eligibility and increase the amount of assistance provided through the debt management measures. Additional amendments will adjust wording for ease of interpretation and administration, and act on recommendations provided by the Standing Joint Committee for the Scrutiny of Regulations. Regulatory changes are necessary to implement the proposed amendments.

Interest Relief (IR)

Borrowers who experience short-term financial difficulty in loan repayment, and who meet certain income criteria, may be eligible to receive Interest Relief (no payments of interest or principal). Currently, eligible borrowers may backdate their application for the benefit by two months and, if necessary, add up to an additional three months of accrued interest to their loan principal each time they apply for the benefit. Regulatory amendments will increase the number of months (six months) by which borrowers who meet the eligibility criteria may backdate an application while continuing to enable borrowers to add up to an additional three months of accrued interest to the loan principal. The ability to backdate an application will be available each time the borrower applies for the benefit; however, amendments will limit the ability to capitalize three months of accrued interest to once in the borrower's lifetime. This restriction is being placed on the benefit to prevent continued growth of the borrower's outstanding debt and to prevent a rise in costs to the Government of Canada.

Amendments recognize that certain borrowers may not be fully aware of their obligations under their loan agreements and/or the debt management measures which are available to them and, as such, fall into arrears to the point where repayment is unmanageable. The increase in the number of months in which a borrower may backdate an application for the measure will help these borrowers maintain their loans in repayment status and help them avoid collections activity.

Debt Reduction in Repayment (DRR)

The Debt Reduction in Repayment measure was implemented in 1998 to provide assistance to borrowers who face prolonged periods of financial difficulty. It has become apparent that the current design provides only a limited reduction to borrowers in dire financial situations, and the remaining amounts do not leave the borrower with a manageable debt. Amendments will increase access to the measure by expanding eligibility and by providing a greater reduction to those who qualify.

Amendments will introduce a Debt Reduction in Repayment Income Table, which includes more inclusive income thresholds which will allow more borrowers to benefit from the measure.

Currently, eligible borrowers who are a minimum of five years out of school may have their debts reduced by the lesser of 50 percent of the loan principal or $10,000. Enhancements will provide eligible borrowers with a first reduction in an amount up to $10,000 and up to two subsequent reductions in an amount up to $5,000 each in 12 month increments, providing borrowers with a maximum reduction of up to $20,000 in outstanding debt. This increase in available assistance will help reduce loan defaults and ensure that reasonable levels of affordable loan payments are in place for low- to moderate-income earners who have been unable to reap sufficient return from their investment in education. The reductions will provide borrowers with a more manageable monthly payment on their loans. As it is not the intent to provide a reduction to borrowers who are not abiding by their repayment obligations, amendments will require a minimum monthly payment between reductions. Flexibility may be possible in exceptional cases at the discretion of the Minister.

Due to the generous nature of the reduction measure, borrowers will only be eligible for these three reductions once in their lifetime. Eligibility will also be restricted to borrowers who are residents of Canada, in order to be more consistent with the eligibility requirements for Interest Relief and to provide for risk management. Borrowers will continue to be ineligible for the first five years after leaving school and will be required to exhaust at least 30 months of Interest Relief prior to receiving a loan reduction. These criteria are consistent with the overall CSLP debt management strategy.

Bankrupt Borrowers

Currently, borrowers who participate in a bankruptcy-related event (bankruptcy, consumer proposal, scheme for the orderly payment of debts) are restricted from receiving new loans, interest-free status, Interest Relief and Debt Reduction in Repayment. These restrictions force borrowers into default on their student loans and reduce the likelihood that they will complete their studies and find gainful employment. In addition, these borrowers are restricted, pursuant to the Bankruptcy and Insolvency Act, from discharging their student loans for 10 years after leaving school.

Amendments will extend eligibility for debt management measures (Interest Relief and Debt Reduction in Repayment) to borrowers who become subject to the Bankruptcy and Insolvency Act. This enhancement will help bankrupt borrowers avoid default on their student loans while encouraging repayment. The extension of benefit to this group of borrowers is consistent with CSLP debt management measures which are currently available to borrowers experiencing financial hardship in repaying their loans.

In addition, borrowers who declare bankruptcy while still in school will now be able to continue with, and conclude, their current program of study. Amendments will extend eligibility for new loans and interest-free status to bankrupt borrowers who are still in school. These borrowers will, however, be restricted from changing programs or starting new programs of study; allowing repeated programs of study would result in higher, and potentially unmanageable, debt loads. The enhancements will promote repayment of loans while increasing the ability of borrowers to do so.

Further Amendments to Clarify the Regulations

Regulatory amendments are also being pursued to provide for administrative ease and greater clarity in the Regulations. For the sake of administrative ease, all borrowers who are restricted from receiving further financial assistance will be required to undergo similar steps in order to remove those restrictions (pay outstanding interest and enter into a repayment agreement that is no more onerous than six consecutive payments), regardless of the type of loan they hold. In addition, amendments will be made to the eligibility criteria for Debt Reduction in Repayment in order to provide greater clarity in the Regulations. The term "in good standing" will be removed from the Regulations and replaced with specific requirements. This amendment is being pursued due to difficulties in defining and administering the requirement