NEW DEVELOPMENTS in STUDENT FINANCIAL AID from the B.C. MINISTRY of ADVANCED EDUCATION Aboriginal Student Funding Workshops February-March 2008 Dave Rogers

NEW DEVELOPMENTS in STUDENT FINANCIAL AID from the

B.C. MINISTRY of ADVANCED EDUCATION

Aboriginal Student Funding Workshops

February-March 2008

Dave RogersStudentAid BC

[email protected]

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StudentAid BC www.studentaidbc.ca

Mission: “To reduce financial barriers to post-secondary education by providing students with

equitable and consistent access to funding.”

Student Aid is “needs-based”. You use it after you have used your own savings and other income sources, yet still have need.

It does not replace Band funding for living expenses. Which means…

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Band funding impacts a student loan — depending on its origin.

The ‘usual’ Band funding from INAC in support of…

… reduces the amount of loan a student can receive.

The first $1800 in scholarships¹, such as a…

… does not impact student loan eligibility.

Declare all merit-based scholarship awards on the “Scholarship” line, not the ‘Native band funding’ lines.

Band-awarded Scholarship

Tuition, Books, or Living Expenses

¹ This slide corrected on March 31, 2008

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Student Financial Assistance Statistics 2007/08

Total Applications Received and Processed 65,444

Number of Students receiving SFA 53,138– No. of Students attending Private Institutions 5,564

– No. of Students attending Public Institutions 47,574

% Awards to students studying within BC 90%– 8% study elsewhere in Canada, 2% outside Canada

% of Applications submitted online 85%

Average total award, all loans & grants $7,930

Number of First Nations clients ??– But we’re working on it…

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A Bit of Old News

StudentAid BC has no funding specifically for First Nations or Métis students.

The closest things we offer are…– ABESAP– YEAF

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YEAF

StudentAid BC awards the “Youth Educational Assistance Fund” for Ministry of Children & Families

For students at a public postsecondary institution in BC in a certificate, diploma, or degree program

Who were a Youth in Care until they turned 19 — or were in continuing guardianship for at least five years until being adopted.

Provides $5000/year bursary for full-time study, from age 19 through age 23. See www.studentaidbc.ca

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What’s New in Student Financial Aid?

1. Those Loan Forgiveness Programs — who qualifies, exactly?

“If you take this job, the BC government will forgive one-third of your BC Student Loan after each year that you stay in the job.”

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Some Examples…

BC Government Ministry

Regional Health Authority

Rural FN Social Services Agency

Rural Provincial School District

INAC-Funded Agency

Walk-In Clinic

Office Admin

TeacherSocial Worker

Health Worker or Tech Teacher

Typical Employers

Typical Positions (with postsecondary

training)

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Loan Forgiveness Program #1



FN Social Services Agency

Provincial School District

INAC-Funded Agency

Walk-In Clinic

Clerical Worker


(Rural) Health Worker or Tech

Teacher

#1. BC Loan Forgiveness

Program

For certain professions in underserved parts of BC

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Loan Forgiveness Programs #1 & #2



FN Social Services Agency

Rural Provincial School Dist.

INAC-Funded Agency

Walk-In Clinic

Clerical Worker



Teacher


ProgramFor certain

professions in underserved parts of BC

#2. Pacific Leaders BC Loan Forgiveness ProgramFor all employees of Prov. Government

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Loan Forgiveness Programs #3 & #4

Students in eligible Residential Care Aide and Home Support Worker programs in the 2007/08 program year will receive…

– forgiveness of up to $2,500 of their B.C. student loan upon successful completion of their program.

– Awards will be made automatically this fall.

Early Childhood Educators who graduated in 2007 or will graduate in 2008 will be eligible for…

– B.C. Student Loan forgiveness of up to $1,250 after each of the first and second years of employment in the licensed child-care sector.

– Graduates can begin applying Jan. 1, 2008.

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Loan Forgiveness Programs #1 – #4


Regional Health

Rural FN Social Svcs Agency

Rural Provincial School Dist.

Licensed Child Care Facility

Clerical Worker

Res. Care Aide, Home

Support

Early Childhood Educator


Teacher


ProgramFor some work in underserved

parts of BC

#2. Pacific Leaders BC Loan Forgiveness ProgramFor all employees of Prov. Government

#4 +

#3

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1. Loan Forgiveness Programs

2. BC Loan Reduction Program, now in its fourth year [Best-kept secret in gov’t financial aid.]

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Loan Reduction Program Example

You enrolled from Sept. 06 to April 07 (34 weeks). You have a small child and limited means. No more

INAC benefits. Your Gov’t Student Aid is near the maximum:

– Canada Student Loan: $6,800 ($200/wk)– BC Student Loan: $7,140 ($210/wk)– Canada Study Grant for those with dependents: $1,360.

You finish the year successfully. In October 2007, StudentAid BC sends you a letter:

87% of your BCSL from last year—$6193—is forgiven. [Best-kept secret in gov’t student financial aid.]

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Loan Reduction Program

Uses a ‘pot’ of $71 million (soon $75 million) per year. Half from BC, half from CMSF.

Reduces the BC Student loan…– After the student completes a year successfully– Before the student has to pay a penny– Provided the student is in a two-year or longer program

...by paying off any loan amount above a certain weekly-loan threshold.

– In 2006-07, the threshold was $227.65/week.

Reduces burden for those with highest need

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Loan Reduction Program

So up to the threshold, the loan is a loan– In 2006-07, the threshold was about $230/week.– So a loan (CSL +BCSL) up to $7,800 for a school year needs

to be paid after graduation

Above the threshold, the loan becomes a grant– After the student completes a year successfully– Before the student has to pay a penny– Provided the student is in a two-year or longer program

Happens automatically to all student loans above the threshold. Any multi-year program, any school.

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1. Those Loan Forgiveness Programs

2. Loan Reduction Program

3. More Generous Loans for ‘Dependent’ Students

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‘Dependent Students’ …

Are commonly those who have been – Out of high school for less than four years, or– Working full-time for less than two years.

Need to list their parents’ incomes when applying for student loans.

Could be denied some or all of a student loan, if parental incomes were middle class or beyond.

Benefit from this year’s rule changes. An example…

Caution: numbers ahead!

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Sample Changes for Dependent Students

07-08 Program Year Change in the Calculation of Parental Contribution

Sample family income contribution, old and new formula.Take parental gross income of: $64,000

Family size (parents + kids): 5No. of dependent children in PSE: 1

06-07 Calc. 07-08 Calc.

Moderate Standard of Living (MSOL) from Table 53,560$ 66,156$ Discretionary Income, DI (after deducting MSOL) 10,440$ -$ Contribution rate (the change from 06-07 to 07-08) 50% 15%Base DI level [or bracket] for contribution calculation 7,000$ -$

Base Parental Contribution based on DI base level 1,750$ -$ Contribution based on income above base level 1,720$ -$ Required Parental Contribution… Annualized: 3,470$ $0

Per Week: 66.73$ $0If applied to a 34-week program 2,268.85$ $0

Contribution calculated as pct of: Family Income 4% 0%Discret'ry Income 22% 0%

Example: Parents earn $32,000 each

Large changes this year.

Parental Income not a factor in this loan example

in 2007-08

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What the Change Means

In 2006-07, from this middle-income family:– ‘Expected parental contribution’ would be $2269– Represents 22% of parents’ discretionary income– Maximum student loan reduced by this amount.

In 2007-08 and onwards:– These parents need not financially support the

student (from a student-loans point of view)– For student loans, this dependent student is

similar to an independent single student.

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1. Those Loan Forgiveness Programs

2. Loan Reduction Program

3. More Generous Loans for ‘Dependent’ Students

4. The Designation Framework

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Designation Framework

Multi-Year initiative between the Federal and Provincial Student Loan Programs

Works on quality issues like graduation rates and loan default rates.

Now in its third year of roll-out.Now in its third year of roll-out. Compares institutions to certain standards, such as

percent of graduates with defaulted student loans. We work with underachieving institutions, for

example to reduce their default rates:– So students at those institutions are at lower financial risk.– So the quality of PSE in B.C. improves over time. – To save the cost to taxpayers.

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Who Defaults on Loan Payments?

“Factors Affecting the Repayment of Student Loans” – by Constantine Kapsalis, Statistics Canada, March 2006

StatsCan Catalogue no. 81-595-MIE2006039 http://www.statcan.ca/bsolc/english/bsolc?catno=81-595-M2006039

For those who started repaying Canada Student Loans in 1994-95, Kapsalis linked…

– their loan repayment history for the next three years– their income tax records for the next three years

– The only such study ever done in Canada

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(colour of bar):

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(colour of bar):

What goes along this axis? What separates students who default from students who don’t?

50% to 80% of these students

defaulted.


defaulted.

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Average Annual Income in the Three Years following Loan Consolidation (after leaving school)


defaulted.


defaulted.

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What are the High-Default Programs?

Highest-default programs:1. Other (at Private Instns)

2. Admin (at Private Instns)

3. Trades (at Private Instns; not Appr’ship)

4. Arts/Community/Educ (at Prvt Instns)

5. Arts (at Public Colleges)

6. Health Sciences (at Pvt Instns)

7. Trades (at Public Coll.; Not Appr’ship)

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Designation

“Designated” educational institution: one where students may use student loans or INAC Band funding to pay for education.

StudentAid BC does the designating. All public institutions in B.C. are designated. Private institutions must first be accredited by a body

which ensures quality of programs. Either:

– accreditation (not just registration) through the Private Career Training Institutions Agency (PCTIA).

– degree programs which have their degree programs approved by the Degree Quality Assessment Board.

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Designation Framework

StudentAid BC monitors each designated institution – Current emphasis: the percentage of its students who later

default on their student loans – Sends the president an annual letter with their default rate,

compared to the average of comparable institutions

For institutions in the “red zone” (those with highest default rates):

– We work with them to lower their loan default rate– We make allowance for institutions in areas of high

unemployment

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What can an institution do?

1. Match its programs to needs of local job market.

2. Be more selective when admitting students with student loans. “Set them up for success.”

3. Help recent graduates to avoid default– Eg: Exit counseling. Or Call after six months: for those in

difficulty…– IR (Interest Relief Program) will pay interest for six

months; is renewable for years. Available Online!– DRR (Debt Reduction in Repayment) for severe cases will

reduce or even cancel the loan.

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If Institutions Can’t Meet Framework Requirements?

StudentAid BC does not shut down colleges Our aim is loan repayment success Only if there is no significant improvement in

the default rate after some years would we consider de-designating a school.– It remains in business but its students cannot use

student loans or INAC-funded aid.– Eliminates the student’s risk of entering default.– Protects the taxpayer from paying out many loans.

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For further information…

StudentAid BC www.studentaidbc.ca

Phones – Victoria: 250 387-6100 – B.C. Lower Mainland: 604 660-2610– Anywhere else in Canada/U.S. (toll-free): 1-800-561-1818 – TTY line for deaf and hearing impaired: 250 952-6832

Fax numbers– 250 356-9455– Toll-free in Canada: 1-866-312-3322

Documents

NEW DEVELOPMENTS in STUDENT FINANCIAL AID from the B.C. MINISTRY of ADVANCED EDUCATION Aboriginal Student Funding Workshops February-March 2008 Dave Rogers