Budget 2008

Is giving more students less money really a success?

Many groups in the know are applauding (some more cautiously than others) yesterday’s announcement to replace the Millennium Scholarship Foundation with a government-run grant program. But many questions remain and the changes will lead to some casualties that have been overlooked so far.

As previously reported, Finance Minister Jim Flaherty confirmed the death sentence that has been hanging over the head of the Millennium Scholarship Foundation (MSF) when unveiling plans for a new grant system in the 2008 budget. The MSF’s $350 million annual budget along with the $138 million currently distributed through Canada Access and Study Grants will be rolled together into one big national grant program to be administered by the Canada Student Loan Program.

Although the Liberals are painting the move as a simple rebranding, the end of MSF will certainly change the landscape of student financial aid in Canada—if not only for the seemingly positive changes (the transparency of being a government program) but also for the smaller functions of the Foundation that have been quietly left out.

The Canadian Alliance of Student Associations (the Canadian Federation of Students’ rival) was quick to point out that the Foundation was not only about delivering grants, but also about research. “The Foundation was the only group that was doing research on access issues. Looking at Aboriginal students, low income students, and first generation students,” said Zack Churchill, CASA national director. “We haven’t seen any indication from the government that the federal research will be picked up.”

And while Churchill’s critics might argue that we have, say, StatsCan for post-secondary research, the Foundation’s unique approach to research will surely be missed.

Alex Usher, vice president and director (Canada) of the Educational Policy Institute, said that the government program will likely focus only on financial aid research. “There will nobody speaking for access anymore in terms of research,” he said.

Another Foundation program that was not mentioned in the budget was its merit-based scholarships. MSF awarded $12.6 million in scholarships annually. The scholarships were unique in that they took community involvement into account as well as marks.

Franca Gucciardi, executive director of the Canadian Merit Scholarship Foundation, said that this program was very important in terms of supporting talent and leadership. “As Canadians, we’re good at need, but not as good at merit,” she said.

Although the budget included a new and prestigious merit-based scholarship program for doctoral students, it doesn’t replace merit-based support for undergraduate students. “You don’t get to do your PhD unless someone supports you to do your bachelors,” Gucciardi said.

Although the Educational Policy Institute said the changes were largely a good news story, it found a couple of major holes in the proposed program. The potentially costliest problem is whether independent students are eligible for the grants. As it stands, it appears that independent students (those out of high school for long enough that they are not required to include their parent’s income when applying for grants and loans) will be able to apply.

Because the grants will be based on family income rather than need (costs minus resources), almost every independent student who applies will be eligible because their income will fall below the line. There may be as many as 500,000 independent students currently enrolled in Canada. But the budget for the new grant program only aims to provide funding to 240,000 students. Whoops! This could make the program cost well over $1 billion.

Usher also pointed out that at least two Canada Study Grants seem to be missing from the mix: funding for students with dependents, and female doctoral students. From the Educational Policy Institute’s discussions with Canada Student Loan officials so far, it appears that the $70 million in grants for students with dependents has been rolled into the new grant money. Officials did confirm that grants for students with disabilities will continue to be awarded.

One thing that everyone seems to agree on is that basing the grants on income instead of need is a positive step. The Foundation’s grants were awarded according to the amount of money needed for the student’s educational program minus the student’s resources. Basically, if two students had exactly the same family income, but one chose to go to an expensive university and move away from home and the other chose to attend their community college and live with their parents, the first student would receive more grant money. It meant that students were being rewarded for making more expensive choices.

The new system will not take into consideration the costs of education, but only the family income of the student. The indirect result will be that more money will flow to college students in comparison to university students.

So although student groups can breathe a sigh of relief that the existing money going into grants in Canada won’t be axed along with the Canadian Millennium Scholarship Foundation, they should probably crunch the numbers before declaring victory (as the CFS did oh so quickly). MSF distributed an average of $2000 to 120,000 students each year. The new program plans to hand out grants to 245,000 students next year, but with no new money. So the individual student recipients will be getting less cash. Victory?

But critics say that the targeted funding announcements hurt basic research

The relatively thin federal budget released today did have some treats in it for research funding, including direct funding to the University of Calgary and University of Saskatchewan and a major funding announcement for Genome Canada.

Canada’s research granting councils will receive $80 million in new funding. $34 million will flow to the Natural Sciences and Engineering Research Council, $34 million to the Canada Institutes of Health Research, and $12 million for the Social Sciences and Humanities Research Council of Canada.

But critics are concerned that the funding announcements have too many strings attached. James Turk, executive director of the Canadian Federation of University Teachers, said that while the new funding announcements were welcome, they missed the point by targeting the funding.

For instance, the money for the Social Sciences and Humanities is earmarked for environment related or northern development research. “That excludes maybe 95 per cent of the professors from having access to that money,” Turk said. By targeting funding, very little is left to basic research that often leads to important breakthroughs for industry, he said. “Our ability to predict what is going to pay off is very bad.”

Turk also criticized the government’s move to set aside $15 million in new funding to support the indirect costs of research, such as infrastructure, arguing that it is not enough.

Budget 2008 created 20 prestigious Canada Global Excellence Research Chairs that will receive $21 million over two years. The research chairs will be focused on key areas identified by the government, including the environment, natural resources and energy, health, and communication technologies. Each chair may receive up to $10 million over seven years.

The Conservative government increased research funding to some universities, targeting the funding on key priorities including health and engineering research. Calgary got $5 million for carbon capture research. Saskatchewan got an additional $10 million to maintain the Canada Light Source.

But the most significant funding announcement was $140-million for Genome Canada, a not-for-profit corporation that funds genomics research. In previous years, the organization has received $700 million from the government of Canada, according to the Genomics Canada website. The budget claims that this latest batch of funding will “build on Canada’s knowledge and people advantage in genomics.”

The budget also promises to create a new Automotive Innovation Fund, valued at $250 million over five years, to help the automotive sector “develop innovative, greener and more fuel-efficient vehicles.”

-with a report from Joey Coleman

New Canada Student Grant Program addresses major criticism of Auditor-General: will mean same grants for students, but more transparency and accountability to Parliament.

A decade after it was created, the Canadian Millennium Scholarship Foundation will be replaced by a new needs-based, non-repayable grant program to be called the Canada Student Grant Program.

The Conservative government says that, after a year-long review of student aid, it found the Foundation had limited success in encouraging more people to attend post-secondary education and did not provide students with predictable year-to-year funding. The new grant program will replace the Foundation which expires in 2009.

The Canada Student Grant Program will distributed according to income levels. Because the grants will be awarded each year of study, students will know how much to expect in support from year to year. The grants will range from approximately $250 per month for low income students to $100 per month for middle income students. 245,000 studens will benefit from the program each year.

Student groups were split on the issue. The Canadian Alliance of Student Associations, the second largest student lobby group in the country, was disappointed in the dissolution of the Foundation, but welcomed the dedication of its funding to a needs-based grant system.

“Today’s announcement marks the end of Canada’s tenure as one of the few western industrialised nations without a national system of grants,” said Amanda Aziz, chairperson of the Canadian Federation of Students. “It was long overdue.”

“We are cautiously optimistic about the delivery mechanism for the announced grant program and will move forward bearing the responsibility of ensuring that the Canada Student Grant Program is delivered in an efficient and transparent manner,” said David Simmonds, president of the Ontario Undergraduate Student Alliance.

The new program will distribute $350 million in student aid when it begins in the fall of 2009. This amount will match the funds currently provided to students by the Canadian Millennium Scholarship Foundation. Funding will increase by $80 million in 2012/13, to $430 million. This additional funding, which the government is describing as new, is above and beyond the current $138 million a year delivered by current federally-administrated grant programs such as Canada Access Grants and Canada Study Grants. The patchwork of federal grant programs will be integrated into the new grants program.

The government says the new grants problem will address concerns about the operation of the Scholarship Foundation.

“The new Canada Student Loans Program is just a rebrand of a Liberal program,” said Liberal post-secondary critic Mike Savage. “The last time they rebranded a program was with the Canada Summer Jobs program. Their rebrand was a disaster and they restored the Liberal program. We hope history doesn’t repeat itself.”

In the budget speech, Flaherty was critical of the Foundation, saying it “had limited success in encouraging more people to go to college or university, and did not provide students with predictable funding from one year to the next.”

The Auditor General has criticized the Foundation model for lacking the same accountability provisions as government department due to their “third-party” status. The government says that the new program, administered by Human Resources and Social Development, will be more transparent.

When created, the Foundation was seen as by some provinces as an intrusion into the provincial jurisdiction of education. The administration of the Foundation required that agreements between the provinces and Foundation be negotiated. Disputes resulted which resulted in delays in getting aid to students. The new grant program will be administered using the current federal student-aid framework. Provinces that do not participate in the Canada Student Loans Program will receive equivalent funding to administer their own needs-based program.

In order to receive the new grants, students will be required to apply for student loan. If they received a loan, they will automatically be considered for the new grant. Low-income students will receive $2,000 for a eight-month school term and middle-income students will receive $800. The grant will be provided up-front to students.

The grants will be guaranteed for all years of an undergraduate or college program. The government hopes by providing the grants up-front and guaranteeing them for the length of a students program that more low-income students will enter into a post-secondary program.

The Canadian Alliance of Student Associations were also concerned that the research functions of the Millennium Scholarship Foundation would fall through the cracks. “The Foundation was the only group that was doing research on access issues. Looking at Aboriginal students, low income students, and first generation students,” said Zack Churchill, national director of the Canadian Alliance of Student Associations. “We haven’t seen any indication from the government that the federal research will be picked up.”

The government says it will ensure that students receiving Foundation bursaries in 2008-09 will be unaffected by the wind-down of the Foundation.

Despite expectations of sources close to the government, no interest relief in 2008 budget

After a year long review, the Conservative government announced only administrative changes to the Canada Student Loans Program in the 2008/09 federal budget.

Although sources close to government expected an interest rate cut, the Conservative government did not set student loan interest at prime. The federal rate will remain 2.5 per cent above prime, unlike Nova Scotia and Alberta that have recently announced plans to lower their provincial student loan interest rate to either prime or below prime.

The 2008 budget included plans to reform the administration of student loans but did not provide many details.

Monte Solberg, Minister of Human Resources and Social Development Canada, said in November to expect major policy changes. The announcements came as a disappointment to student loan advocates who participated in this year’s review.

“The federal budget completely ignores the key issue of reducing sky-high interest rates on borrowers in repayment. Our interest rates remain amongst the highest in the G8,” said Julian Benedict, co-founder of the Coalition for Student Loan Fairness. “The plan also ignores Canadians’ call for a national student loan Ombudsperson Office.”

The government plans to implement a “new service delivery vision” for student loans and increase the ability of students to manage their loans online from initial application until final repayment. The government will spend $23 million over four years to achieve this. The goal is to create a national portal for student loans where students from any province can apply for their loans and upon graduation, students will be able to use the site as a “one-stop” service to repay and track their loans.

The government says that students who presently deal with multiple payment points, such as students who currently negotiate their loans directly with the banks, will be able to make one payment to the website. One of the findings of the year-long review was that the current system is too complicated and many students are facing difficulty navigating the direct loan programs.

“Given all the time they had since forming government, I expected something more substantial and meaningful that just some administrative tweaking,” said NDP post-secondary critic Denise Savoie. “We are looking at the budget, but the devil is in the details and this budget was short on those details.”

The only non-administrative tweaks that were announced were the decrease of the expected spousal contribution and the increase to the amount of loans given to part-time students. These changes will cost the government $26 million over four years to implement.

Part-time students will now be able to receive up to $10,000 a year in student loans to fund their studies and will no longer be required to make monthly interest payments on their loans while studying. The government says that only about 2000 part-time students currently receive loans and they hope by making the changes, more adults will enter into part-time studies.

The government plans to spend $76 million over four years to assist graduates experiencing difficulty repaying their student loans. The government did not provide any details of what this support will entail saying they need to negotiate agreements with the provinces. The government says that only 50 per cent of students who qualify for interest relief are actually receiving it due to the complicated application process. The primary goal of the changes is to negotiate agreements with the provinces, which will result in students most in need of repayment support being able to easily access new support programs. The government is looking to create a system which will allow students facing difficulty repaying their loans to set their maximum payment to a percentage of their income.

The federal student loan program has received considerable criticism in recent months stemming from media reports claiming that the system is “broken.” For instance, Maclean’s reported that two thirds of applicants are being denied the student loan disability assistance program even if they receive disability support from their provincial government.

Critics also drew attention to the program’s interest rates and alleged poor customer service and communication. Some borrowers have been forced to file freedom of information requests to get information about their own loans. Others brought complaints directly to their MPs after not being able to resolve them directly with the program. This has lead to critics calling for a student loan ombudsperson.

Solberg’s review was announced in the 2007 federal budget. Although critics feared that the scope was too narrow — addressing only bureaucratic efficiencies.

-with a report from Erin Millar