Vol. 148, No. 24 — November 19, 2014
Registration
SOR/2014-255 November 7, 2014
APPRENTICE LOANS ACT CANADA STUDENT FINANCIAL ASSISTANCE ACT
Apprentice Loans Regulations
P.C. 2014-1245 November 6, 2014
His Excellency the Governor General in Council, on the recommendation of the Minister of Employment and Social Development with the concurrence of the Minister of Finance, pursuant to section 12 of the Apprentice Loans Act (see footnote a) and section 15 (see footnote b) of the Canada Student Financial Assistance Act (see footnote c), makes the annexed Apprentice Loans Regulations.
APPRENTICE LOANS REGULATIONS
INTERPRETATION
Definitions — Act and Regulations
1. (1) The following definitions apply in the Act and in these Regulations.
“acknowledgment of liability”
« reconnaissance de responsabilité »
“acknowledgment of liability” means
- (a) a written promise to pay the money owing, signed by the borrower or his or her agent or other representative;
- (b) a written acknowledgement of the money owing, signed by the borrower or his or her agent or other representative, whether or not a promise to pay can be implied from it and whether or not it contains a refusal to pay;
- (c) a part payment by the borrower or his or her agent or other representative of any money owing; or
- (d) an acknowledgment of the money owing made by the borrower, his or her agent or other representative or the trustee or administrator in the course of proceedings under the Bankruptcy and Insolvency Act or any other legislation dealing with the payment of debts.
“apprentice”
« apprenti »
“apprentice” means
- (a) other than in section 5, a person who
- (i) is a Canadian citizen, a permanent resident as defined in subsection 2(1) of the Immigration and Refugee Protection Act or a protected person as defined in subsection 95(2) of that Act,
- (ii) is not a high school student, and
- (iii) is registered with a province as an apprentice in an eligible trade; and
- (b) in section 5, a person who is described in subparagraphs (a)(i) and (ii) and who is enrolled in a program of study that is mandatory in order to enable the person to register as an apprentice with a province.
“apprentice loan”
« prêt aux apprentis »
“apprentice loan” means a debt obligation incurred by an eligible apprentice on entering into an apprentice loan agreement that is owed to Her Majesty in right of Canada, as represented by the Minister.
“borrower”
« emprunteur »
“borrower” means a person to whom an apprentice loan is made under the Act.
“eligible apprentice”
« apprenti admissible »
“eligible apprentice” means an apprentice who is enrolled at a technical training provider for technical training in an eligible trade and whose primary occupation during the technical training period is to participate in that technical training.
“severe permanent disability”
« invalidité grave et permanente »
“severe permanent disability” means a functional limitation caused by a physical or mental impairment that prevents a borrower from performing the daily activities necessary to participate in an apprenticeship program and in the labour force and is expected to remain with them for their expected life.
“technical training”
« formation technique »
“technical training” means formal instruction or training that is offered by a technical training provider and that is determined by a province to be an essential element of an apprenticeship program in that province and required for the practice of an eligible trade.
“technical training period”
« période de formation technique »
“technical training period” means a continuous period of technical training that begins on the first day of the month in which technical training begins and ends on the last day of the month in which the training ends.
Definitions — Regulations
(2) The following definitions apply in these Regulations.
“Act”
« Loi »
“Act” means the Apprentice Loans Act.
“apprentice loan agreement”
« contrat de prêt aux apprentis »
“apprentice loan agreement” means an agreement entered into between an eligible apprentice and the Minister under section 4 of the Act that is in the form determined by the Minister and includes the social insurance number of the apprentice.
“apprenticeship program”
« programme d’apprentissage »
“apprenticeship program” means a program of practical experience, technical training and certification examination that must be undertaken — as determined by the province — by an apprentice in an eligible trade.
“common-law partner”
« conjoint de fait »
“common-law partner”, in respect of a borrower, means a person who is cohabiting with the borrower in a conjugal relationship, having so cohabited for a period of at least one year.
“confirmation of continued apprenticeship”
« confirmation d’apprentissage continu »
“confirmation of continued apprenticeship” means proof that a borrower is still registered with a province as an apprentice in an eligible trade.
“confirmation of enrolment”
« confirmation d’inscription »
“confirmation of enrolment” means proof that an apprentice is enrolled in technical training with a technical training provider.
“family income”
« revenu familial »
“family income” means the aggregate income — including income from employment, social programs, investments and monetary gifts — of the borrower and their spouse or common-law partner, as the case may be.
“financial assistance”
« aide financière »
“financial assistance” means any form of financial aid provided under the Act, including apprentice loans.
“fiscal year”
« exercice »
“fiscal year” means the one-year period that begins on April 1 in any year.
“guaranteed student loan”
« prêt garanti »
“guaranteed student loan” has the same meaning as in subsection 2(2) of the Canada Student Financial Assistance Regulations.
“permanent disability”
« invalidité permanente »
“permanent disability” means a functional limitation caused by a physical or mental impairment that restricts the ability of a person to perform the daily activities necessary to participate in an apprenticeship program or the labour force and that is expected to remain with them for their expected life.
“provincial loan”
« prêt provincial »
“provincial loan” has the same meaning as in subsection 2(2) of the Canada Student Financial Assistance Regulations.
“student loan”
« prêt d’études »
“student loan” has the same meaning as in subsection 2(1) of the Canada Student Financial Assistance Regulations.
Schedule 1 — Eligible trades
(3) For the purposes of subsection 2(1) of the Act, eligible trades are those that are listed in Schedule 1 to these Regulations.
OBTAINING AN APPRENTICE LOAN
Conditions
2. Subject to section 6, the Minister may make an apprentice loan to an eligible apprentice if the following conditions are met:
- (a) the apprentice has entered into an apprentice loan agreement for a technical training period on or before the last day of technical training;
- (b) confirmation of enrolment is submitted to the Minister;
- (c) in the event that more than six months have passed between the day on which interest started accruing and the first day of the current technical training period, the apprentice pays to the Minister the unpaid interest accrued under their apprentice loan agreement to the day before the first day of that technical training period; and
- (d) in the event that more than six months have passed between the day on which interest started accruing and the day on which the apprentice enters into an apprentice loan agreement for the current technical training period that began within the six-month period that began on the day on which interest started accruing, the apprentice
- (i) pays to the Minister the unpaid interest accrued under their apprentice loan agreement to the day before the day on which the apprentice enters into the current apprentice loan agreement, or
- (ii) directs the addition of the interest referred to in subparagraph (i) to the outstanding principal.
INTEREST-FREE PERIOD
No interest accrues
3. Subject to section 6, no interest accrues under a borrower’s apprentice loan in respect of the following periods:
- (a) in the event that no interest has accrued when a technical training period begins for which confirmation of enrolment is submitted to the Minister, the period that begins on the first day of the technical training period and ends on the day that is 12 months after the last day of that technical training period;
- (b) in the event that six months or less have passed between the day on which interest started accruing and the day on which confirmation of enrolment is submitted to the Minister for a technical training period, the period that begins on the day that interest started accruing and ends on the day that is 12 months after the last day of that technical training period;
- (c) in the event that more than six months have passed between the day on which interest started accruing and the first day of a technical training period for which confirmation of enrolment is submitted to the Minister, the period that began on the day that the technical training period begins and ends on the day that is 12 months after the last day of that technical training period, in the case where the apprentice pays to the Minister the unpaid interest accrued to the day before the first day of that technical training period;
- (d) in the event that more than six months have passed between the day on which interest started accruing and the day on which confirmation of enrolment is submitted to the Minister for a technical training period that began within the six-month period that began on the day on which interest started accruing, the period that begins on the day on which confirmation of enrolment is submitted and ends on the day that is 12 months after the last day of that technical training period in the case where the apprentice
- (i) pays to the Minister the unpaid interest accrued under their apprentice loan agreement to the day before the day on which confirmation of enrolment is submitted to the Minister, or
- (ii) directs the addition of the interest referred to in subparagraph (i) to the outstanding principal;
- (e) in the event that no interest has accrued when confirmation of continued apprenticeship is submitted to the Minister or six months or less have passed between the day on which interest started accruing and the day on which confirmation of continued apprenticeship is submitted to the Minister, the period that begins on the day that interest started or starts accruing and ends on the day that is 12 months after the last day of the month in which the confirmation of continued apprenticeship is submitted; and
- (f) in the event that more than six months have passed between the day on which interest started accruing and the day on which confirmation of continued apprenticeship is submitted to the Minister, the period that begins on the day on which the confirmation of continued apprenticeship is submitted and ends on the day that is 12 months after the last day of the month in which the confirmation of continued apprenticeship is submitted, in the case where the apprentice
- (i) pays to the Minister the unpaid interest accrued under their apprentice loan agreement to the day before the day on which confirmation of continued apprenticeship is submitted, or
- (ii) directs the addition of the interest referred to in subparagraph (i) to the outstanding principal.
PAYMENT OF PRINCIPAL AND INTEREST
Payment begins
4. The borrower must begin to repay the principal amount of any apprentice loan made to them, and interest, on the last day of the seventh month after the day on which interest started accruing.
SPECIAL PAYMENTS
Amount determined by Minister
5. (1) For the purposes of section 7 of the Act, the special payment amount for a province as determined by the Minister after consultation with the Chief Statistician of Canada is the amount for the fiscal year that is obtained by multiplying the total costs for the fiscal year for provinces where apprentices registered with those provinces are able to enter into apprentice loan agreements for the fiscal year, by the ratio of the estimated number of persons in the province in question who are at least 16 years of age but less than 65, to the estimated number of persons of those ages in provinces where apprentices registered with those provinces are able to enter into apprentice loan agreements.
Total costs
(2) In this section, total costs for a fiscal year means the amount determined by the formula
A + B − C
where
A is the estimated aggregate of all amounts paid by the Minister in that fiscal year to service providers under the Act and to collection agencies in respect of apprentice loans;
B is the estimated aggregate of
- (a) the amount of interest calculated at the rate of interest referred to in subsection (3) in that fiscal year in respect of outstanding apprentice loans referred to in the description of A made under an apprentice loan agreement,
- (b) the amount by which the outstanding principal in respect of all apprentice loans referred to in paragraph (a) has been reduced in that fiscal year in accordance with these Regulations,
- (c) the amount of the outstanding principal and interest in respect of all apprentice loans referred to in paragraph (a) for which the borrower’s obligations have terminated in that fiscal year as a result of the death or severe permanent disability of the borrower, and
- (d) the amount of the outstanding principal and interest in respect of all apprentice loans referred to in paragraph (a) for which the Minister has commenced collection action in that fiscal year, minus the amount of the outstanding principal and interest in respect of apprentice loans referred to in that paragraph for which the Minister has ended collection action in that fiscal year due to the occurrence of an event described in section 7 that resulted in the removal of restrictions to financial assistance; and
C is the estimated aggregate of
- (a) the amount of interest received by or on behalf of Her Majesty in right of Canada in that fiscal year in respect of apprentice loans, and
- (b) any amounts received by or on behalf of Her Majesty in right of Canada in that fiscal year pursuant to collection action taken by the Minister in respect of apprentice loans.
Rate of interest
(3) The rate of interest for the purposes of paragraph (a) of the description of B in subsection (2) is the average percentage yield, during the fiscal year in question, of Benchmark Bonds issued by the Government of Canada maturing in 10 years, as published by the Bank of Canada.
RESTRICTIONS ON OBTAINING FINANCIAL ASSISTANCE
Denial of loan
6. (1) An apprentice loan is to be denied to an eligible apprentice who
- (a) in the 36 months before the day on which they make their application for an apprentice loan, has been in default — in at least three instances — for over 90 days in paying an instalment under at least three loans or other debts each in an amount over $1000; or
- (b) is in receipt of a student loan for the same technical training period.
Definition of “applicable day”
(2) For the purposes of this section, “applicable day” means
- (a) if the Minister is informed that the borrower has failed to make a payment within the twomonth period after the day on which the payment is required under their apprentice loan agreement or these Regulations and they do not fulfil the requirements either of section 2, or of section 3 in respect of an interest-free period, the day following the day on which interest starts accruing in accordance with section 3;
- (b) if the borrower makes an assignment under the Bankruptcy and Insolvency Act that is filed and not cancelled, is deemed under that Act to have made an assignment, or is the subject of a receiving order, the earlier of the day on which a receiving order is made or the assignment is filed with the official receiver;
- (c) if the borrower makes a proposal under Division I of Part III of the Bankruptcy and Insolvency Act that is approved by a court under that Act, the day on which that proposal is approved;
- (d) if the borrower makes a consumer proposal under Division II of Part III of the Bankruptcy and Insolvency Act that is approved or deemed approved by a court under that Act, the day on which the consumer proposal is approved or deemed approved;
- (e) if the borrower applies for a consolidation order under Part X of the Bankruptcy and Insolvency Act that includes an apprentice loan, the day on which that order is issued;
- (f) if the borrower seeks relief under a provincial law relating to the orderly payment of debts that includes an apprentice loan, the day on which the document seeking relief is filed;
- (g) if the borrower is, by reason of his or her conduct in obtaining or repaying an apprentice loan, found guilty of an offence under any Act of Parliament, the day of the finding of guilt;
- (h) if the borrower fails to comply with subsection 11(1) or 13(1), section 15 or subsection 17(3), the 30th day after the last day of the applicable repayment assistance period;
- (i) if the borrower has been granted repayment assistance under subsection 13(2),
- (i) in the case of a borrower who has a permanent disability, the day that is 60 months after the day on which interest starts accruing under section 3; or
- (ii) in any other case, the day on which the repayment assistance begins;
- (j) if the borrower has been granted interest-free periods for a cumulative period of six years, the day after the last day of that period;
- (k) if any of paragraphs 15(1)(b) to (i) of the Canada Student Financial Assistance Regulations apply to the borrower, the applicable day set out in the paragraph in question;
- (l) if a measure is taken in respect of the borrower under subsection 20(1) of the Act or under section 17.1 of the Canada Student Financial Assistance Act, the day after the day on which 60 days’ notice given under subsection 20(2) of the Act or subsection 17.1(3) of the Canada Student Financial Assistance Act expires;
- (m) if five disbursements have already been made to the borrower under these Regulations, the day after the day on which the borrower received the last disbursement under an apprentice loan agreement; or
- (n) the day on which the obligations of the borrower are terminated under section 10 of the Act or under section 11 or 11.1 of the Canada Student Financial Assistance Act.
Denial of loan or termination of interest-free period
(3) Subject to subsections (5) and (7),
- (a) if an event described in any of paragraphs (2)(a) to (n) occurs, the Minister may, effective on the applicable day for that event, deny the borrower a new apprentice loan; and
- (b) if an event described in any of paragraphs (2)(a) to (l) occurs, the Minister may, effective on the applicable day for that event, terminate any interest-free period under all outstanding apprentice loans made to the borrower.
Termination of repayment assistance
(4) If an event described in paragraph 2(g) or (h) occurs, the Minister must terminate any repayment assistance granted to the borrower under section 10 or 12 and refuse to grant further repayment assistance.
Loan received erroneously
(5) If an event described in paragraph (2)(a) occurs in respect of an apprentice loan made to a borrower and, subsequent to that event, the borrower erroneously receives an apprentice loan,
- (a) the borrower is entitled to the apprentice loan; and
- (b) the measure referred to in paragraph (3)(b) takes effect on the last day of the technical training period for which the apprentice loan was made.
New loan or interest-free period
(6) If, before the last day of the apprenticeship program in which the borrower is registered at the time the event occurs, an event described in any of paragraphs (2)(b) to (f) occurs in respect of an apprentice loan made to a borrower, the borrower is entitled, if otherwise eligible, to a new apprentice loan or an interest-free period for that apprenticeship program.
Subsection (3) measures delayed
(7) If the borrower receives a new apprentice loan or an interest-free period under subsection (6), the measures referred to in subsection (3) take effect on the earlier of
- (a) the last day of the apprenticeship program, and
- (b) the day that is three years after the applicable day for the event or, if that day falls during a technical training period, the last day of that period.
REMOVAL OF RESTRICTIONS
New loan, interest-free period, repayment assistance
7. (1) Subject to subsection (6), a borrower who has been subject to a measure taken under subsection 6(3) or (4) because of the occurrence of an event described in paragraph 6(2)(a) or (h), is entitled to a new apprentice loan, another interest-free period and further repayment assistance under section 10 or 12 if
- (a) an event described in paragraph 6(2)(g) or (i) has not occurred in respect of the borrower’s apprentice loans; and
- (b) the borrower, in respect of an apprentice loan agreement for which a judgment has not been obtained, paid the interest accrued under the apprentice loan agreement and fulfilled the terms of a repayment arrangement entered into with the Minister, and that arrangement imposes no monetary obligation on the borrower more onerous than the equivalent of six consecutive payments made subsequent to that day in accordance with the apprentice loan agreement.
Rights in subsection (1) apply
(2) Subject to subsection (6), a borrower who is subject to a measure taken under subsection 6(3) because of the occurrence of an event described in any of paragraphs 6(2)(b) to (f) has the rights referred to in subsection (1) if
- (a) an event described in paragraph 6(2)(g) or (i) has not occurred in respect of the borrower’s apprentice loans;
- (b) the borrower has complied with paragraph (1)(b), if the borrower’s consumer proposal has been annulled or deemed annulled or the borrower is no longer subject to a provincial law relating to the orderly payment of debts for a reason other than full compliance with that law, and none of the events described in paragraph 6(2)(b), (c) and (e) has occurred;
- (c) the borrower has been released from their apprentice loans for any reason other than one described in paragraph (b); or
- (d) the borrower is released from their apprentice loans by virtue of an absolute order of discharge that has been granted under the Bankruptcy and Insolvency Act and three years have passed since the date of the order.
Rights in subsection (1) apply
(3) Subject to subsection (6), a borrower who is subject to a measure taken under subsection 6(3) or (4) because of the occurrence of the event described in paragraph 6(2)(g) has the rights referred to in subsection (1) if
- (a) an event described in paragraph 6(2)(i) has not occurred in respect of the borrower’s apprentice loans;
- (b) the borrower has been released from their apprentice loans that were outstanding on the day of the finding of guilt;
- (c) in the event that the release referred to in paragraph (b) occurs by operation of an order of absolute discharge granted under the Bankruptcy and Insolvency Act, three years have passed since the date of the order; and
- (d) five years have passed since the day of the finding of guilt or a pardon has been granted in respect of that finding.
Rights in subsection (1) apply
(4) A borrower, who has been the subject of a measure taken under subsection 6(3) or (4), has received an apprentice loan as a minor and has refused to ratify that loan as an adult, has the rights referred to in subsection (1) if
- (a) the borrower ratifies the loan; and
- (b) to the extent that they apply, the requirements set out in subsection (1), (2) or (3) are met.
Rights in subsection (1) apply
(5) Subject to subsection (6), a borrower who is subject to a measure taken under subsection 6(3) or (4) because of the occurrence of an event described in paragraph 6(2)(i) has the rights referred to in subsection (1) if the borrower has paid in full the outstanding balance of their apprentice loans.
Judgment
(6) If a judgment has been obtained against a borrower, the borrower is not entitled to the rights referred to in subsection (1) unless, in addition to fulfilling the requirements set out in subsection (1), (2) or (3), the borrower has been released from that judgment.
APPRENTICE LOAN LIMIT
Maximum amount
8. The maximum amount of an apprentice loan for one technical training period is $4,000.
MAXIMUM AGGREGATE AMOUNT OF OUTSTANDING APPRENTICE LOANS
Prescribed amount
9. For the purposes of section 11 of the Act, the maximum aggregate amount of apprentice loans outstanding is $1.5 billion.
REPAYMENT ASSISTANCE PLAN
FIRST STAGE
Conditions
10. (1) Subject to section 6 of these Regulations and section 15 of the Canada Student Financial Assistance Regulations, the Minister must on application in the form determined by the Minister — including the borrower’s social insurance number — provide the first stage of a repayment assistance plan to a borrower for a period of six months if
- (a) the borrower resides in Canada;
- (b) no more than 120 months have passed since the day on which interest most recently started accruing; and
- (c) the borrower’s monthly affordable payment calculated in accordance with subsection (2) is less than their monthly required payment calculated in accordance with subsection (3).
Monthly affordable payment
(2) The monthly affordable payment is equal to
- (a) $0, if the borrower’s monthly family income is no more than the minimum monthly income threshold for their family size determined in accordance with the table set out in Schedule 2; or
- (b) otherwise, the borrower’s monthly family income multiplied by the lesser of the amounts determined by the following formulae:
0.2A
where
A is, in relation to apprentice loans, student loans, guaranteed student loans and provincial loans, the ratio of the borrower’s outstanding principal for which instalments are due to the sum of that amount and the outstanding principal for which instalments are due for any loan of the same type to a spouse or common-law partner of the borrower,
X is the borrower’s monthly family income,
Y is the monthly income threshold for the borrower’s family size determined in accordance with the table set out in Schedule 2, and
Z is the monthly increment for the borrower’s family size determined in accordance with the table set out in Schedule 2.
Monthly required payment
(3) The monthly required payment is equal to the sum of
- (a) the outstanding principal of the apprentice loans made to the borrower for which instalments are due, amortized over a period of the greater of
- (i) six months, and
- (ii) 120 months minus the number of months that have passed since the day referred to in subparagraph (1)(b) plus the number of months since that day during which the borrower received repayment assistance under this section; and
- (b) the monthly required payment calculated under
- (i) paragraphs 19(3)(a) and (b) of the Canada Student Financial Assistance Regulations, or
- (ii) paragraphs 20(3)(a) and (b) of those Regulations.
Maximum number of months of repayment assistance
(4) A borrower must not receive more than 60 months, in the aggregate, of repayment assistance under this section since the day referred to in paragraph (1)(b).
Payment of federal portion
11. (1) A borrower must, no later than the day that is 30 days after a repayment assistance period ends, pay to the Minister the federal portion of the monthly affordable payments calculated in accordance with subsection 10(2) in respect of that period.
Reduction of interest
(2) The amount of interest payable by the borrower for a month during a repayment assistance period on the outstanding principal of apprentice loans is to be reduced by the Minister by the difference between the monthly required payment calculated in accordance with paragraph 10(3)(a) and the portion of monthly affordable payment attributed to apprentice loans calculated in accordance with subsection (4). That reduction is to be made only in relation to the months for which the borrower complies with subsection (1).
Definition of “federal portion”
(3) In this section, “federal portion” means
- (a) if no instalments are due on account of outstanding principal under provincial loans, 100% of the affordable monthly payment; and
- (b) otherwise, the ratio of outstanding principal in relation to apprentice loans, student loans and guaranteed student loans for which instalments are due to the sum of this amount and the outstanding principal amount of provincial loans for which instalments are due.
Attribution of payments
(4) Payments made under this section are to be attributed in proportion to the outstanding principal of each apprentice loan, student loan and guaranteed student loan for which instalments are due.
SECOND STAGE
Conditions
12. (1) Subject to section 6 of these Regulations and section 15 of the Canada Student Financial Assistance Regulations, the Minister must on application in the form determined by the Minister — including the borrower’s social insurance number — provide the second stage of a repayment assistance plan to a borrower for a period of six months if
- (a) the borrower resides in Canada;
- (b) at least one of the following conditions is met:
- (i) the borrower has a permanent disability, and
- (ii) the borrower has benefited from a total of 60 months of repayment assistance referred to in section 10 or at least 120 months have passed since the day referred to in paragraph 10(1)(b) in respect of any apprentice loan made to the borrower; and
- (c) the borrower’s monthly affordable payment calculated in accordance with subsection (2) is less than their monthly required payment calculated in accordance with subsection (3).
Monthly affordable payment
(2) The monthly affordable payment is equal to
- (a) in the case of a borrower who has a permanent disability
- (i) $0, if the borrower’s monthly family income, less their monthly disability-related expenses not covered by their provincial health care or private insurance plan, is no more than the monthly income threshold for their family size determined in accordance with the table set out in Schedule 2, or
- (ii) otherwise, the borrower’s monthly family income multiplied by the lesser of the amounts determined by the following formulae:
0.2A
where
A is, in relation to apprentice loans, student loans, guaranteed student loans and provincial loans, the ratio of the borrower’s outstanding principal for which instalments are due to the sum of that amount and the outstanding principal for which instalments are due for any loan of the same type to a spouse or common-law partner of the borrower,
W is the borrower’s monthly family income less their monthly disability-related expenses not covered by their provincial health care or private insurance plan,
Y is the monthly income threshold for the borrower’s family size determined in accordance with the table set out in Schedule 2, and
Z is the monthly increment for the borrower’s family size determined in accordance with the table set out in Schedule 2; or
- (b) in any other case, the amount determined in accordance with subsection 10(2).
Monthly required payment
(3) The monthly required payment is equal to the sum of
- (a) the outstanding principal of the apprentice loans made to the borrower for which instalments are due, amortized over a period of the greater of six months and
- (i) in the case of a borrower who has a permanent disability, 120 months minus the number of months that have passed since the day referred to in paragraph 10(1)(b), and
- (ii) in any other case, 180 months minus the number of months that have passed since the day referred to in paragraph 10(1)(b); and
- (b) the monthly required payment calculated under
- (i) paragraphs 19(3)(a) and (b) of the Canada Student Financial Assistance Regulations, or
- (ii) paragraphs 20(3)(a) and (b) of those Regulations.
Payment of federal portion
13. (1) A borrower must, no later than the day that is 30 days after a repayment assistance period ends, pay to the Minister the federal portion of the monthly affordable payments calculated in accordance with subsection 12(2) in respect of that period.
Reduction of principal and interest
(2) The amount owing as outstanding principal of apprentice loans and interest on those loans for a month during a repayment assistance period by a borrower is reduced by the Minister by the difference between the monthly required payment calculated in accordance with paragraph 12(3)(a) and the portion of the monthly affordable payment attributed to apprentice loans calculated in accordance with subsection (4). That reduction is made only in relation to the months for which the borrower complies with subsection (1).
Definition of “federal portion”
(3) In this section, “federal portion” means
- (a) if no instalments are due on account of outstanding principal under provincial loans, 100% of the affordable monthly payment; and
- (b) otherwise, the ratio of outstanding principal in relation to apprentice loans, student loans and guaranteed student loans for which instalments are due to the sum of this amount and the outstanding principal amount of provincial loans for which instalments are due.
Attribution of payments
(4) Payments made under this section are attributed in proportion to the outstanding principal of each apprentice loan, student loan and guaranteed student loan for which instalments are due.
BEGINNING OF REPAYMENT ASSISTANCE PERIOD
Beginning of period
14. A repayment assistance period begins no earlier than the later of
- (a) the first day of the month that is six months before the day on which the borrower applies for the assistance, and
- (b) the day on which the principal amount and interest begin to be payable by the borrower.
CONDITION
Unpaid accrued interest
15. If any accrued interest remains unpaid on the day on which a repayment assistance period begins, the borrower must, on or before 30 days after the day on which the repayment assistance period ends,
- (a) pay the interest to the Minister; or
- (b) if they have not already done so, enter into a revised apprentice loan agreement for the payment of up to three months of the interest accrued and pay the Minister any remaining interest accrued.
RECONSIDERATION OF APPLICATION
Conditions
16. (1) The Minister must, on the written request of the borrower and based on documentary evidence provided by the borrower, reconsider a borrower’s application for repayment assistance if
- (a) the application was rejected for the sole reason that the borrower did not meet the condition set out in paragraph 10(1)(c) or 12(1)(c); and
- (b) unforeseen and unavoidable circumstances beyond the control of the borrower or their spouse or common-law partner have led to the borrower incurring extraordinary expenses.
Notice
(2) The Minister must provide notice of his or her determination to the borrower.
BORROWER ERROR
Cancellation or reduction of repayment assistance
17. (1) If repayment assistance is granted based on an error by the borrower in their application for the assistance or for reconsideration, the Minister may cancel the assistance or reduce the amount of assistance.
Notice
(2) The Minister must provide notice of the cancellation or reduction to the borrower, specifying
- (a) the date of the notice; and
- (b) the day on which the repayment assistance is to be cancelled or reduced.
Obligation of borrower
(3) The borrower must, within 30 days after the date of the notice,
- (a) repay to the Minister the amount of repayment assistance that the borrower was not entitled to receive; or
- (b) enter into a revised apprentice loan agreement for repayment of the amount referred to in paragraph (a).
EFFECT ON APPRENTICE LOAN AGREEMENT
Suspension
18. If repayment assistance is provided to a borrower, the apprentice loan agreement in effect between the borrower and the Minister on the day on which the borrower applies for that assistance is suspended until the earlier of
- (a) the day on which repayment assistance is terminated in accordance with section 6, and
- (b) the day after the last day of the repayment assistance period.
MEASURES
List of measures
19. (1) The following are measures for the purposes of subsection 20(1) of the Act:
- (a) denial of financial assistance for a specified period;
- (b) termination of any interest-free period;
- (c) denial, for a specified period, of deferral of payments of principal or interest, or termination of any such deferral;
- (d) denial, for a specified period, of any agreement to allow repayment of an apprentice loan on an income-contingent basis as provided for in sections 10 and 12, or termination of any such agreement; and
- (e) imposition of a requirement for repayment, without delay, of any outstanding amount of an apprentice loan obtained by reason of a false statement or misrepresentation or the provision of false or misleading information.
Specified periods
(2) Subject to subsection (3), the following are the specified periods for the purposes of paragraphs (1)(a), (c) and (d):
- (a) if the person is awarded an amount of financial assistance to which they were not entitled,
- (i) one year, if the amount is less than $4,000,
- (ii) two years, if the amount is $4,000 or more and less than $6,000,
- (iii) three years, if the amount is $6,000 or more and less than $8,000,
- (iv) four years, if the amount is $8,000 or more and less than $10,000, and
- (v) five years, if the amount is $10,000 or more;
- (b) if the person is not an apprentice, five years; and
- (c) if a measure described in subsection (1) has already been taken in respect of a person under subsection 20(1) of the Act, five years.
Specified period — five years
(3) If more than one period applies to a person under subsection (2), the specified period is five years.
Limitation or prescription — measures
(4) The Minister must not take any measure under subsection (1) later than six years after the day on which he or she becomes aware of the false statement or misinterpretation or the false or misleading information.
CONSEQUENTIAL AMENDMENTS TO THE CANADA STUDENT FINANCIAL ASSISTANCE REGULATIONS
20. Subsection 2(2) of the Canada Student Financial Assistance Regulations (see footnote 1) is amended by adding the following in alphabetical order:
“apprentice loan” has the same meaning as in subsection 1(1) of the Apprentice Loans Regulations (prêt aux apprentis);
21. Section 15 of the Regulations is amended by adding the following after subsection (9):
(10) Student loans and guaranteed student loans shall be denied and the interest-free period shall be terminated if
- (a) the borrower is subject to an event under paragraph 6(2)(a) or (h) of the Apprentice Loans Regulations;
- (b) the borrower is subject to a bankruptcy-related event referred to in any of paragraphs 6(2)(b) to (f) of the Apprentice Loans Regulations;
- (c) the borrower has been found guilty of an offence under the Apprentice Loans Act; or
- (d) the Minister has taken a measure under subsection 20(1) of the Apprentice Loans Act.
22. (1) The portion of subsection 19(1) of the Regulations before paragraph (a) is replaced by the following:
19. (1) Subject to section 15 of these Regulations, section 9 of the Canada Student Loans Regulations and section 6 of the Apprentice Loans Regulations, the Minister may, on application in the prescribed form containing the prescribed information, provide the first stage of a repayment assistance plan to a borrower for a period of six months if
(2) The description of A in paragraph 19(2)(b) of the Regulations is replaced by the following:
A is, in relation to student loans, guaranteed student loans, provincial loans and apprentice loans, the ratio of the borrower’s outstanding principal for which instalments are due to the sum of that amount and the outstanding principal for which instalments are due for any loan of the same type to a spouse or common-law partner of the borrower,
(3) Subsection 19(3) of the Regulations is amended by striking out “and” at the end of subparagraph (a)(ii), by adding “and” at the end of subparagraph (b)(ii) and by adding the following after paragraph (b):
- (c) the monthly required payment calculated under paragraph 10(3)(a) or 12(3)(a), as the case may be, of the Apprentice Loans Regulations.
23. Subsection 19.1(5) of the Regulations is replaced by the following:
(5) Payments made under this section shall be attributed in proportion to the outstanding principal of each student loan, guaranteed student loan and apprentice loan for which instalments are due.
24. The portion of subsection 20(1) of the Regulations before paragraph (a) is replaced by the following:
20. (1) Subject to section 15 of these Regulations, section 9 of the Canada Student Loans Regulations and section 6 of the Apprentice Loans Regulations, the Minister may, on application in the prescribed form containing the prescribed information, provide the second stage of a repayment assistance plan to a borrower for a period of six months if
25. (1) The description of A in subparagraph 20(2)(a)(ii) of the Regulations is replaced by the following:
A is, in relation to apprentice loans as well as student loans, guaranteed student loans, provincial loans and apprentice loans, the ratio of the borrower’s outstanding principal for which instalments are due to the sum of that amount and the outstanding principal for which instalments are due for any loan of the same type to a spouse or common-law partner of the borrower,
(2) Subsection 20(3) of the Regulations is amended by striking out “and” at the end of subparagraph (a)(ii), by adding “and” at the end of subparagraph (b)(ii) and by adding the following after paragraph (b):
- (c) the monthly required payment calculated under paragraph 10(3)(a) or 12(3)(a), as the case may be, of the Apprentice Loans Regulations.
26. Subsection 20.1(5) of the Regulations is replaced by the following:
(5) Payments made under this section shall be attributed in proportion to the outstanding principal of each student loan, guaranteed student loan and apprentice loan for which instalments are due.
COMING INTO FORCE
S.C. 2014, c. 20
27. These Regulations come into force on the day on which Division 30 of Part 6 of the Economic Action Plan 2014 Act, No. 1 comes into force, but if they are registered after that day, they come into force on the day on which they are registered.
SCHEDULE 1
(Subsection 1(3))
ELIGIBLE TRADES
| Column 1 Eligible Trades |
Column 2 Provinces |
||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Ont. | Que. | N.S. | N.B. | Man. | B.C. | P.E.I. | Sask. | Alta. | N.L. | Y.T. | N.W.T. | Nvt. | |
| Agricultural Equipment Technician | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||||
| Mécanicien de machinerie agricole | |||||||||||||
| Appliance Service Technician | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||||
| Technicien d’entretien d’appareils électroménagers | |||||||||||||
| Automotive Painter | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||
| Peintre d’automobiles | |||||||||||||
| Automotive Service Technician | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Mécanicien de véhicules automobiles | |||||||||||||
| Baker | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||
| Boulanger-pâtissier | |||||||||||||
| Boilermaker | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | |||
| Chaudronnier | |||||||||||||
| Bricklayer | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||
| Briqueteur-maçon | |||||||||||||
| Cabinetmaker | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Ébéniste | |||||||||||||
| Carpenter | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Charpentier | |||||||||||||
| Concrete Finisher | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||||
| Finisseur de béton | |||||||||||||
| Construction Craft Worker | √ | √ | √ | √ | √ | √ | √ | √ | |||||
| Manœuvre en construction | |||||||||||||
| Construction Electrician | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Électricien en construction | |||||||||||||
| Cook | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Cuisinier | |||||||||||||
| Drywall Finisher and Plasterer | √ | √ | √ | √ | |||||||||
| Jointoyeur et plâtrier | |||||||||||||
| Electric Motor System Technician | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | |||
| Électromécanicien | |||||||||||||
| Floorcovering Installer | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | |
| Poseur de revêtements souples | |||||||||||||
| Gasfitter - Class A | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||||
| Monteur d’installations au gaz (classe A) | |||||||||||||
| Gasfitter - Class B | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||||
| Monteur d’installations au gaz (classe B) | |||||||||||||
| Glazier | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Vitrier | |||||||||||||
| Hairstylist | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Coiffeur | |||||||||||||
| Heavy Duty Equipment Technician | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Mécanicien d’équipement lourd | |||||||||||||
| Industrial Electrician | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||||
| Électricien industriel | |||||||||||||
| Industrial Mechanic (Millwright) | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Mécanicien industriel (de chantier) | |||||||||||||
| Instrumentation and Control Technician | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | |
| Technicien en instrumentation et contrôle | |||||||||||||
| Insulator (Heat and Frost) | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | |
| Calorifugeur (chaleur et froid) | |||||||||||||
| Ironworker (Generalist) | √ | √ | √ | √ | √ | √ | √ | √ | |||||
| Monteur de charpentes en acier (généraliste) | |||||||||||||
| Ironworker (Reinforcing) | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||||
| Monteur de charpentes en acier (barres d’armature) | |||||||||||||
| Ironworker (Structural/Ornamental) | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||||
| Monteur de charpentes en acier (structural / ornemental) | |||||||||||||
| Landscape Horticulturist | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | |||
| Horticulteur-paysagiste | |||||||||||||
| Lather (Interior Systems Mechanic) | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||
| Latteur (spécialiste de systèmes intérieurs) | |||||||||||||
| Machinist | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Machiniste | |||||||||||||
| Metal Fabricator (Fitter) | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | |||
| Monteur-ajusteur de charpentes métalliques | |||||||||||||
| Mobile Crane Operator | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||
| Opérateur de grue automotrice | |||||||||||||
| Mobile Crane Operator (Hydraulic) | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||||
| Opérateur de grue automotrice (hydraulique) | |||||||||||||
| Motor Vehicle Body Repairer (Metal and Paint) | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | |
| Débosseleur-peintre | |||||||||||||
| Motorcycle Mechanic | √ | √ | √ | √ | √ | √ | √ | ||||||
| Mécanicien de motocyclettes | |||||||||||||
| Oil Heat System Technician | √ | √ | √ | √ | √ | √ | √ | √ | |||||
| Technicien de système de chauffage à mazout | |||||||||||||
| Painter and Decorator | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Peintre et décorateur | |||||||||||||
| Partsperson | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Préposé aux pièces | |||||||||||||
| Plumber | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Plombier | |||||||||||||
| Powerline Technician | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||
| Monteur de lignes sous tension | |||||||||||||
| Recreation Vehicle Service Technician | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||||
| Technicien de véhicules récréatifs | |||||||||||||
| Refrigeration and Air Conditioning Mechanic | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Mécanicien de réfrigération et d’air climatisé | |||||||||||||
| Rig Technician | √ | √ | √ | √ | √ | √ | √ | √ | |||||
| Technicien en forage (pétrolier et gazier) | |||||||||||||
| Roofer | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Couvreur | |||||||||||||
| Sheet Metal Worker | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Ferblantier | |||||||||||||
| Sprinkler System Installer | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Mécanicien en protection-incendie | |||||||||||||
| Steamfitter/Pipefitter | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Monteur d’appareils de chauffage | |||||||||||||
| Tilesetter | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||||
| Carreleur | |||||||||||||
| Tool and Die Maker | √ | √ | √ | √ | √ | √ | √ | √ | |||||
| Outilleur-ajusteur | |||||||||||||
| Tower Crane Operator | √ | √ | √ | √ | √ | √ | √ | √ | √ | ||||
| Opérateur de grue à tour | |||||||||||||
| Transport Trailer Technician | √ | √ | √ | √ | √ | √ | √ | √ | |||||
| Réparateur de remorques de camions | |||||||||||||
| Truck and Transport Mechanic | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | |
| Mécanicien de camions et transport | |||||||||||||
| Welder | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ | √ |
| Soudeur | |||||||||||||
SCHEDULE 2
(Subsections 10(2) and 12(2))
MONTHLY INCOME THRESHOLDS AND INCREMENTS
| Family Size | Monthly Income Threshold | Monthly Increment |
|---|---|---|
| 1 | $1,684 | $250 |
| 2 | $2,631 | $350 |
| 3 | $3,399 | $425 |
| 4 | $4,009 | $500 |
| 5 and over | $4,569 | $575 |
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Executive summary
Issues: In the last five years, vacancy rates in the skilled trades have risen sharply, largely on account of a growing mismatch between labour supply and demand. Evidence shows that despite steady increases to new apprenticeship registrations, the rate of successful completion of apprenticeship programs has been declining over recent years. Financial issues, including the costs of apprenticeship technical training, are a contributing factor. This lack of completion results in lower wages for non-completers and represents a loss to the economy and individuals alike.
Description: The Apprentice Loans Regulations (the Regulations) are required to implement the Apprentice Loans Act (the Act) and to begin disbursements to eligible apprentices. Under the Act, apprentices registered in an apprenticeship program in an eligible trade will be able to apply for an interest-free loan of up to $4,000 per period of block release technical training, up to a maximum of five times. The list of eligible trades in the Regulations is comprised of Red Seal trades, which are designated by each province and territory across Canada. Subject to a maximum of six years of interest-free status from the first disbursement, a borrower’s total Canada Apprentice Loan balance will remain interest-free until the borrower completes or terminates his or her apprenticeship. Interest charges will then begin to accrue and the loan will enter a six-month non-repayment period, after which regular payments will start.
Cost-benefit statement: The Canada Apprentice Loan (CAL) will cost the Government of Canada (GoC) $74 million (present value) over 10 years, from 2014–2015 to 2023–2024. Benefits include income gains for additional apprentice completers as a result of the CAL. If a 10 percentage point increase in the completion rate due to the CAL were assumed, this would yield income gains of $185 million over 10 years, and net benefits to Canadians of $111 million (present value).
The CAL is expected to increase the supply of skilled journeypersons, with a positive impact on economic productivity, particularly in those sectors where there are shortages of skilled tradespersons. The CAL may also foster standardization of apprenticeship certification across provinces and hence facilitate labour mobility.
“One-for-One” Rule and small business lens: The “One-for-One” Rule and small business lens do not apply to this proposal.
Background
Vacancy rates in the skilled trades have risen sharply over the last five years and employers and stakeholders have identified the skilled trades as among the most difficult positions to fill. TD Economics has reported that vacancies in the skilled trades have risen sharply in relation to other occupations (TD Economics, 2013). Several contributing factors have been identified, including low apprenticeship completion rates and the financial costs of attending periods of block release technical training, which is a required component of the majority of Red Seal apprenticeship training programs. Some of these factors were discussed in the 2007 National Apprenticeship Survey, which identified four broad categories of barriers effecting the completion of an apprenticeship:
- — Job and labour market-related (e.g. economic conditions, distance to training institutions and job sites, and maintaining employment);
- — Financial (e.g. lost income when on technical training, costs associated with the program);
- — Skills-related (e.g. lack of basic education and skills and related difficulties with technical training and exam preparedness); and
- — Social and informational (e.g. family responsibilities and knowledge about the apprenticeship system).
Apprenticeship training is a key component of improving workers’ knowledge and skills, and for the development and sustainability of the Canadian economy. However, the costs associated with block technical training (e.g. foregone wages, tools/equipment, educational fees, and living expenses) can place a large burden on many individuals and their families.
A number of federal initiatives exist to help Red Seal (see footnote 2) apprentices complete their training and obtain certification, including up to $4,000 in Apprenticeship Incentive Grants and Apprenticeship Completion Grants; a tradesperson’s tool deduction of up to $500; the tuition tax credit; and employment insurance benefits during periods of technical training when they have to leave work.
The GoC, in the 2013 Speech from the Throne, committed to ensuring that Canadians are aware of the opportunities offered by the skilled trades, and to further assist apprentices with the cost of their training. Delivering on this commitment, Economic Action Plan 2014 Act, No. 1, which received Royal Assent on June 19, 2014, enacted the Act to assist apprentices with the costs they face while in periods of block technical training.
Issues
Employers and various organizations have identified an acute need for skilled tradespeople. Employer surveys indicate that skilled trades are among the most difficult jobs to fill. Job vacancy rates in the skilled trades (e.g. construction workers, mechanics and machine operators) have risen sharply since 2009 and the unfilled demand for skilled labour has been significant in many provinces and territories. Apprenticeship training and completion are essential to developing the pool of available labour in the skilled trades, with benefits to individuals and the economy.
Although the number of registered apprentices and new registrations have been increasing steadily, the rate of successful completion of apprenticeship programs has been low. Recent research found that the 10-year completion rate for apprentices who began their training in 1994–1995 was 50%, and an even lower 40% for those who began their training in 2000. Apprenticeship stakeholders have identified a number of underlying reasons for these low completion rates, including the financial expenses of attending periods of block release technical training.
The Act provides the necessary authorities for the establishment of the CAL and for the Minister of Employment and Social Development (the Minister) to enter into a loan agreement with an eligible apprentice, but many program processes and parameters must be established in regulations before the distribution of loans can begin.
Objectives
The objective of the Regulations is to bring into force program parameters for the disbursement of CALs as authorized under the Act, complementing other financial measures available to apprentices aimed at increasing the rate of completion of apprenticeship training.
Description
The Regulations specify the following program parameters that are essential to the administration and enforcement of the Act.
- Circumstances when CALs can be disbursed to eligible apprentices: These conditions include that the apprentice has entered a loan agreement and that the Minister has received confirmation of enrolment in technical training. This section also lists the circumstances in which interest must be paid on an apprentice loan before an eligible apprentice can obtain another disbursement.
- Amount of funding: An amount of up to $4,000 can be disbursed for each technical training period; the amount was set out in Economic Action Plan 2014. This is subject to a maximum of five CAL disbursements, one per technical training period, and is expected to meet the needs of most apprentices while promoting timely completion.
- Interest-free periods for CAL borrowers: CALs are interest-free throughout an apprentice’s apprenticeship program (which includes technical training and on-the-job practical experience), as long as the borrower continues to be a registered apprentice. This is subject to a maximum of six years of interest-free status from the first disbursement and is expected to meet the needs of most apprentices while promoting timely completion.
- Repayment Assistance Plan (RAP) for borrowers who experience financial difficulties repaying their CALs: This includes the calculation of a monthly affordable payment, which is based on gross family income and family size, and would not exceed 20% of gross family income. There are two stages of RAP for a maximum of 15 years of repayment assistance (only interest is forgiven in Stage 1, while both interest and principal are forgiven in Stage 2), after which a borrower would have no remaining loan balance. Any repayment obligations pertaining to Canada Student Loans issued under the Canada Student Financial Assistance Regulations (CSFAR) will also be considered in the assessment of RAP eligibility (payment obligations under both the Regulations and the CSFAR will be considered together in the assessment of affordable payments, so that borrowers are only required to pay what they can reasonably afford). Any payment made by borrowers through RAP will be proportionally allocated between apprentice loans made under these Regulations and student loans made under CSFAR.
- Circumstances when CAL funding or an interest-free period can be denied or terminated, including
- loan payments in arrears;
- bankruptcy related events;
- being found guilty of an offence related to the CAL;
- denial of further CAL disbursements when loan forgiveness has been granted, under the Act, due to a borrower’s severe permanent disability; and
- denial of financial assistance for similar reasons under the CSFAR.
- Administrative measures: The Act provides that the Minister may take measures against a borrower who has knowingly made a false statement or misrepresentation in an application or other document. The Regulations provide the measures that the Minister may take — denial or termination of financial assistance, as well as the duration of denial (a period of one to five years depending on the amount of CAL and interest benefit that was obtained by way of the false statement or misrepresentation).
- Limit on the total aggregate amount of CALs that can be outstanding: A limit of $1.5 billion has been set for the outstanding amount of CALs and is expected to meet the financial needs of apprentices for approximately 10 years before a regulatory amendment may be required.
- Special payment: Under the Act, a special payment is to be made to any province where apprentices are unable to access the CAL and the Minister is satisfied that the province has in place a program for a substantially similar purpose that provides financial assistance to apprentices. The Regulations provide for the manner of calculating the amount of this payment, which would be based on the ratio of the province’s 16- to 64-year-old population to the equivalent population in provinces where apprentices qualify for the CAL. This ratio would be applied to the CAL’s annual cost. (see footnote 3)
- List of eligible trades: The list identifies eligible trades for the purposes of financial assistance provided under the Act to an apprentice. The list is comprised of Red Seal trades, which are designated by each province and territory across Canada.
Consequential amendments to the CSFAR with respect to restrictions on financial assistance and RAP are as follows:
- Denial of student financial assistance: If an individual is restricted from further financial assistance under the Regulations, they would also be restricted from receiving financial assistance under the CSFAR; and
- RAP: Assessment of eligibility for RAP under the CSFAR will take into account CALs (payment obligations under both the Regulations and the CSFAR will be considered together in the assessment). Any payment made by borrowers on RAP will be proportionally allocated between apprentice loans made under the Regulations and student loans made under CSFAR.
Regulatory and non-regulatory options considered
The Regulations are required in order to implement the provisions in the Act. The Regulations are necessary to provide legal certainty in interpreting key terms in the provisions of the Act and to provide greater details of provisions outlined in the Act. No non-regulatory options have been considered for defining these terms for the purposes of implementing the Act.
Benefits and costs
The analysis of benefits and costs evaluates the anticipated “incremental” impact of the Regulations by comparing baseline (without CAL) and regulated (with CAL) scenarios. This comparison includes estimates of baseline and regulated apprenticeship completion rates, incremental completers, incremental income, and incremental costs. A sensitivity analysis shows the “sensitivity” of the results to changes in key variables (completion rate and apprenticeship income premium).
The analysis makes the assumption that CAL will result in a modest increase to the Red Seal apprenticeship completion rate. In addition to baseline completers (who would have completed apprenticeship without CAL), there would now be incremental completers (who, in the absence of CAL, would not have completed their apprenticeships) benefiting from increased income due to apprenticeship completion. While evidence suggests that apprenticeship completers earn a substantial income premium compared to discontinuers (and those who continue as apprentices without completing their apprenticeship program), ranging from $8,000 to $21,000 annually, it is assumed to be a conservative $10,000, in 2014 dollars, for this analysis.
Table 1 explains how the number of borrowers who will experience a gain in income due to the introduction of the CAL is estimated. Uptake for the CAL is assumed to be 50% of all Red Seal apprentices at different stages of their apprenticeship who participate in block release technical training each year (column b). In the first year, 2014–2015, (see footnote 4) uptake is lower as the CAL will only be available for three months. In subsequent years, it has been assumed that the growth rate in uptake will be 6% year over year, until 2019–2020. Based on available data, we then assume that 25% of CAL borrowers will enter repayment each year (column c).
Table 1 — Estimating the number of beneficiaries experiencing income gain
| (a) Fiscal year |
(b) Expected CAL uptake |
(c) Number of apprentices entering repayment |
(d) Number of baseline completers (40%) |
(e) Number of completers after the introduction of CAL (50%) |
(f) Incremental completers |
(g) Cumulative incremental completers |
|---|---|---|---|---|---|---|
| 2014–2015 | 10 560 | 2 640 | 1 056 | 1 320 | 264 | 264 |
| 2015–2016 | 27 984 | 6 996 | 2 798 | 3 498 | 700 | 964 |
| 2016–2017 | 29 663 | 7 416 | 2 966 | 3 708 | 742 | 1 706 |
| 2017–2018 | 31 443 | 7 861 | 3 144 | 3 930 | 786 | 2 492 |
| 2018–2019 | 33 329 | 8 332 | 3 333 | 4 166 | 833 | 3 325 |
| 2019–2020 | 35 329 | 8 832 | 3 533 | 4 416 | 883 | 4 208 |
| 2020–2021 | 35 329 | 8 832 | 3 533 | 4 416 | 883 | 5 091 |
| 2021–2022 | 35 329 | 8 832 | 3 533 | 4 416 | 883 | 5 974 |
| 2022–2023 | 35 329 | 8 832 | 3 533 | 4 416 | 883 | 6 857 |
| 2023–2024 | 35 329 | 8 832 | 3 533 | 4 416 | 883 | 7 740 |
Given that recent research indicates a 10-year apprenticeship completion rate of around 40% (for the cohort starting in 2000), it has been assumed that 40% of CAL borrowers who enter repayment would be baseline completers, that is, they would have completed their apprenticeships under baseline conditions, in the absence of CALs (column d). Therefore, the CAL will not impart any incremental benefits, in terms of higher earnings, to these borrowers as they would have completed the training anyway.
The subgroup of apprentices potentially benefiting most from the CAL would be those incremental completers who would have dropped out before completing the apprenticeship program if the CALs were not offered to them. It is anticipated that the CAL will facilitate program completion, for incremental completers, by easing their financial constraints. However, financial constraints are only one of several reasons for non-completion, and there are other forms of support, such as apprenticeship grants, that are already in place to ease financial constraints. The CAL is intended to augment these support measures. We project that the completion rate will increase by 10 percentage points (from 40% to 50%) due to the introduction of the CAL. This assumption gives us the number of apprenticeship completers after the introduction of the CAL (column e). Based on this assumption, column f shows the expected number of incremental completers, and column g shows the cumulative number of incremental completers from years 1 through 10.
Income gain due to completion is then obtained by multiplying the estimated number of cumulative incremental completers by the appropriate income gain profile ($10,000 in 2014 dollars). Lost earnings while an apprentice takes technical training have also been taken into account, and have been approximated at $4,000 per period of technical training for each incremental completer. As indicated in the cost-benefit statement below (Table 2), the resulting benefits due to the CAL include approximately $185 million in income gains over the 10-year period, present value, for approximately 7 740 new apprenticeship completers. (In the first year, 2014–2015, it is assumed there will be no income gain for incremental completers because CALs will only be available for three months.) Income gains beyond the 10-year period are not included.
On the cost side, the expected CAL disbursements are based on the assumption that each CAL recipient will be eligible to receive $4,000 of loans annually. However, since, over time, borrowers will be repaying the loans with interest, only a part of the amount of loans disbursed will result in costs to the Government. In order to calculate the costs of CAL, we need to account for a number of cost items: service provider fees; cost of funds (interest costs); repayment assistance measures; bad debt expenses; and a special payment to provinces where apprentices do not qualify for the CAL because of the structure of the apprenticeship system in that province. A portion of these costs is offset by interest revenue (paid by the borrowers during repayment) resulting in a net cost of approximately 11% of the disbursement amount.
It should be noted that the costs are incurred over the lifetime of a loan, extending to as long as 15 years; however, similar to benefits, only those costs that are incurred during a 10-year period have been taken into account for the purposes of this analysis. Thus, the CAL is expected to cost the GoC approximately $74 million, in present value, over the 10-year period. The Regulations are therefore expected to result in a net benefit to Canadians of $111 million (Table 2).
Table 2 — Cost-benefit statement (see reference *)
| Base Year: 2014–2015 | Final Year: 2023–2024 | Total (PV)(see reference **) | Annualized Average | ||
|---|---|---|---|---|---|
| A. Quantified impacts (in million Can$, 2014 present value) | |||||
| Benefits | Apprentices — income gains for new completers | $0 | $37 | $185 | $18.5 |
| Costs | GoC — cash cost of loans | $2 | $8 | $74 | $7.4 |
| Net benefits | $111 | $11.1 | |||
| B. Quantified impacts in non-dollars (e.g. from a risk assessment) | |||||
| Positive impacts | Apprentices — new completers | 264 | 883 | 7 740 | 774 |
| C. Qualitative Impacts | |||||
|
GoC
Provinces and territories
Apprentices
Employers
Canadian society
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Reference *
A discount rate of 7% was used for the analysis.
Reference **
Present value.
Table 3 summarizes the impact of using alternative assumptions on the benefit-to-cost ratio while holding the discount rate at the baseline value (7%).
Table 3 — Sensitivity analysis — Impact of changing the level of income gain and incremental portion of completion rate
| Completion rate increase | |||
|---|---|---|---|
| 10 percentage points (main estimate) | 5 percentage points | ||
| Annual real income gain | $8,000 | 1.8:1 | 0.9:1 |
| $10,000 (main estimate) | 2.5:1 | 1.2:1 | |
| $12,000 | 3.2:1 | 1.6:1 | |
A detailed copy of the cost-benefit analysis, completed in the development of these Regulations, can be obtained upon request to the contact identified below.
“One-for-One” Rule
The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.
Small business lens
The small business lens does not apply to this proposal, as there are no costs to small business.
Consultation
In April 2014, the GoC held a consultation with key stakeholder groups, including training providers, apprenticeship organizations and industry representatives (e.g. Canadian Apprenticeship Forum, Canadian Construction Association, Canadian Labour Congress, Polytechnics Canada) to provide them with an opportunity to contribute and help shape key program parameters for the CAL. Overall, stakeholders provided positive feedback and confirmed that they are supportive of the CAL.
The issues that were discussed included limits, such as maximum loans and interest-free periods, as well as the means of confirming enrolment in technical training and continued apprenticeship. There was general agreement with the regulatory limits on the CAL (e.g. maximum of five disbursements and six years interest-free), recognizing that some apprentices may take longer to complete their apprenticeship than others. However, they recognized that limits also promote completion within a reasonable timeframe, which is better for apprentices, employers, and society at large, as the skilled labour force will grow more quickly. Stakeholders were also supportive of treating CAL borrowers similar to student loan borrowers when their loans become repayable (i.e. similar terms and repayment assistance, when required).
From March through June 2014, the Department of Employment and Social Development (ESDC) engaged provincial and territorial members of the Canadian Council of Directors of Apprenticeship (CCDA) on program parameters. CCDA members are also supportive of the CAL given the potential benefits to apprentices and the skilled trades in their jurisdictions. A critical issue that was discussed was the means for determining when apprentices have terminated or completed their apprenticeship, to determine when the loans become repayable. Provinces and territories administer apprenticeships in their jurisdictions and may, therefore, be an essential player in providing related data to the GoC. Thus, during the discussions, their views were taken into account, and processes for exchanging the data, where possible, are being tailored to the capacities of each jurisdiction.
The CAL was also considered during parliamentary committee hearings regarding Part 1 of the Economic Action Plan 2014 Act, No. 1. During these hearings, no opposition to the GoC’s announcement was raised and there was strong support for this new measure.
Rationale
In the last five years, job vacancy rates in the skilled trades have been rising sharply, indicating a shortage of skilled tradespeople. Apprenticeship training and completion is essential to developing the pool of available labour in the skilled trades, with benefits to individuals and the economy. However, the rate of successful completion of apprenticeship programs has been persistently low (now approximately 40%).
A number of federal initiatives exist to help Red Seal apprentices complete their training and obtain certification, including up to $4,000 in Apprenticeship Incentive and Completion Grants; a Tradesperson’s Tool Deduction of up to $500; the Tuition Tax Credit; and Employment Insurance benefits during periods of technical training when they have to leave work.
With the introduction of the Regulations, the CAL complements these other financial measures aimed at increasing apprenticeship completion rates. The completion of apprenticeship training increases employment opportunities, the availability of skilled workers, and salaries. Apprenticeship programs are a key provider of the vital skills and knowledge necessary to power and grow the Canadian economy. If a 10 percentage point increase in the completion rate due to the CAL were assumed, this would yield income gains of $185 million over 10 years, and net benefits to Canadians of $111 million (present value).
Since the CAL was announced, there has been broad support for this measure from provincial and territorial governments, and apprenticeship stakeholders. For instance, the National Association of Career Colleges stated that it will help students “access in-demand skills training more easily and meet Canada’s growing need for skilled training faster,” and Polytechnics Canada indicated they are “pleased the Government acknowledged the important role apprenticeship training deserves alongside Canadian university and college education.” In addition, while developing the Regulations, stakeholders, provinces and territories were consulted on program parameters and no adverse views were expressed.
Implementation, enforcement and service standards
Beginning in January 2015, apprentices registered in an apprenticeship program in an eligible trade will be able to apply for an interest-free loan of up to $4,000 per period of block release technical training.
CALs will be delivered by the Canada Student Loans Program’s (CSLP) private sector service provider, under the name National Apprentice Loans Service Centre (NALSC). The NALSC will receive and process applications, manage disbursements, handle communications with clients throughout their apprenticeship training program, and help clients transition into repayment (including the administration of repayment assistance measures to clients in need). The contract with the service provider is performance-based, which creates an incentive for high service standards aimed at increasing borrower satisfaction. In 2013, four out of five borrowers surveyed said they were satisfied with the overall quality of the CSLP’s services.
The NALSC will include applications, eligibility requirements, and key messaging on their Web site to ensure that clients have access to clear information and online services with respect to CALs. General information will also be available through Service Canada channels and bundled with existing information on Canada Student Loans, Employment Insurance, the Apprenticeship Incentive Grant, the Apprenticeship Completion Grant, and other relevant federal, provincial or territorial programs.
Performance measurement and evaluation
The CAL will be included as part of the overarching evaluation and performance measurement of the CSLP. Its effectiveness and impact will be monitored, measured and evaluated through the CSLP Performance Measurement Framework and the CSLP Evaluation Strategy. Performance indicators will be developed and could include CALs disbursed, average amounts, repayment and default. The CAL will be included in ESDC’s Evaluation Plan for 2015–2016 to 2018–2019. In addition, the CSLP Performance Measurement Framework and the evaluation plan will be revised to reflect these new loans. These evaluations will be done as an addition to the CSLP’s Results-based Management and Accountability Framework and Risk-based Audit Framework.
Contact
Atiq Rahman
Director
Policy and Research
Canada Student Loans Program
Employment and Social Development Canada
200 Montcalm Street, Tower II, 1st Floor
Gatineau, Quebec
K1A 0J9
Telephone: 819-994-4518
Fax: 819-953-6661
Email: atiqur.rahman@hrsdc-rhdcc.gc.ca
- Footnote a
S.C. 2014, c. 20, s. 483 - Footnote b
S.C. 2013, c. 40, s. 234 - Footnote c
S.C. 1994, c. 28 - Footnote 1
SOR/95-329 - Footnote 2
The Red Seal Program is an interprovincial standard of excellence for the skilled trades that accounts for approximately 80% of all registered apprentices in Canada. - Footnote 3
At this time, Quebec is the only province where the structure of apprenticeship training is such that no apprentice would qualify for the CAL. Based on current population estimates (Census 2011), and provided that Quebec meets the conditions established in the Act, the special payment for Quebec would represent between 25% and 30% of the total cost of the CAL. - Footnote 4
The analysis uses a fiscal year from April 1 to March 31.