All Posts Tagged With: "canada student loan program"

New legislation may be needed to increase financing limits to meet demand for loans

The federal government rushed through a last-minute change in its student loan funding in order to make sure 50,000 post-secondary students would have enough money to go to school this fall. Legislation caps the amount Ottawa can have outstanding at any one time at $15 billion, and that limit was about to be breached this month, federal documents showed.

So Human Resources Minister Diane Finley quietly and quickly used an order-in-council on Aug. 20 to have the wording of that limit changed. “Had this amendment not been made, the economic and social implications for those who would have been unable to pursue post-secondary education as a result could have been quite significant,” the minister’s analysis statement says.

The change fiddles with the wording of the $15-billion lending limit so that it no longer includes risk-shared loans that the government used to disburse in the 1990s. So now, Ottawa has room to lend out an extra $2 billion as students head back to school next week. Federal officials figure they’ll only need about $300 million of that — enough to fund about 50,000 students, the government documents say.

But the documents also make it clear that the change is not a long-term fix for inadequate funding set aside to cover growing demand for student loans. New legislation may be necessary, the documents say.

The sudden increase in demand for student loans was not foreseen. In an actuarial analysis of the Canada Student Loans Program, tabled just two months ago, officials did not expect to bump up against the $15-billion cap until 2015. The actuaries’ report foresees a gradual rise in demand for loans, partly because tuitions are increasing, and partly because there are more students — especially in the wake of the recession.

But the report does not mention a sudden surge this summer. Nor does the order-in-council explain why federal officials saw outstanding loans spike from $12.3 billion on July 31, to more than $15 billion less than two months later.

Officials pointed to the recent recession prompting more people to return to school for training as part of the reason for the unanticipated rise in loans outstanding. Despite the last-minute reprieve for students, the Canadian Federation of Students is upset. Issuing more loans on an ad-hoc basis does nothing to resolve the growing financial burden placed on students, and is only a temporary fix, says David Molenhuis, the association’s national chair. “They’re trying to sweep the situation under the rug,” he said. “It’s telling that it was done at the absolutely last minute.”

He would rather see government make post-secondary education more affordable than increase students’ already huge debt loads. “It’s a situation that’s increasingly unsustainable. It’s bad policy begetting bad policy,” said Molenhuis.

A spokesman for Finley, however, says the raising of the loan cap is just one more thing the federal government is doing to foster a better-educated workforce. “As a result of the programs that our government has introduced, more students now have access and the flexibility they need to government programs so they can attend post-secondary education,” said spokesman Ryan Sparrow.

The Canadian Press

“Nobody has any idea how student aid works,” says post-secondary expert

Alex Usher, who raised a stir this week by suggesting that tuition fee increases are an acceptable means of raising additional funds for institutions hard hit by the economic downturn, has responded to his detractors in the Educational Policy Institute’s Week in Review.

Those with an interest in tuition fee and student financial aid policy should read the whole piece, but the two following passages are particularly well done and are central to Usher’s argument:

“Apparently, no amount of empirical, scientific findings about the determinants of access will change the debate about tuition fees. Over the last ten years, a lot of time, money and effort has gone into trying to figure out the effects of finances on access to PSE, and they have been very hard to find. Basically, at current levels of tuition and current levels of student financial aid, the effects of tuition as a barrier to education appear to be tiny or non-existent. I won’t bore you with the econometric data, but consider the weight of experience: BC raised tuition by 55% in two years in 03-05 – more people went to PSE after the cuts than before. Same with the 50-60% increase in tuition in Ontario in the mid-90s. Same with the 130% increase in Quebec in 90-91. As for the question of *who* goes to school – some of the worst results in terms of access from low-income youth come from Newfoundland, where tuition is quite low. Ontario does pretty well in comparison, even though tuition is around double here what it is there. But absolutely none of this matters, apparently. In the public mind, (and that of politicians, apparently), access is always and everywhere about money.

Nobody has any idea how student aid works. Many people evinced genuine concern about the less fortunate in case if a tuition rise. And of course, they’d be right…if we were to ignore the effects of student aid entirely. But the fact is that the less well-off are to a substantial extent protected by student aid. If their need rises, they don’t automatically get more debt; in many cases, grant and remission programs kick in more aid to help them. I think student aid is going to be called on to help an awful lot of new clients in the next few years – and it will be important for everyone who cares about fairness to defend these programs vigorously in the next little while, because I guarantee that the resulting explosion in program costs is going to make politicians eager to start cutting away at them. And if that means sacrificing programs which are more likely to benefit the wealthy, such as tuition tax credit programs, then so be it.”

New study says the real cost of university is falling. One province is even paying its students

On Nov. 5, the streets of downtown Ottawa were flooded with angry students frantically waving red-and-black “Drop Fees” signs. Nationwide, thousands rallied, demanding protection from what everyone knows are skyrocketing tuition fees. This is probably the image that springs to mind when you think about the price of a university education in Canada: students protesting, and tuition fees that just keep going higher and higher.

But according to a new report by Canada’s only higher education think tank, the cost of a university education for the average Canadian is actually going down: when inflation and a growing list of federal and provincial tax breaks are taken into account, a degree is now slightly cheaper than at the turn of the century. The real cost of an education has fallen in most provinces. In Manitoba, real tuition costs are down more than 100 per cent in the last eight years—which means that the average student in that province is effectively being paid $51 a month to go to school.

These surprising findings come from a recent report from the Educational Policy Institute (EPI). Alex Usher, director of the Canadian arm of the international think tank and the study’s co-author, says the commonly held view that university is becoming unaffordable is just plain wrong. “By any reasonable measure, education is a lot more affordable now here than it was 10 years ago,” says Usher.

More: Overview of federal/provincial tax credits and rebates

Tuition and related fees have been steadily rising in most provinces. But according to, “Beyond the Sticker Shock 2008–A Closer Look at Canadian Tuition Fees,” the tuition sticker price is not the real measure of the cost of university. Governments are offering a growing list of tax credits and rebates, targeted at students, which greatly reduce the real cost of university. It’s as if you walked into a car dealership and saw that the sticker price of a car was $20,000—but were also told all buyers would receive a $5,000 rebate. The real cost of the car would be $15,000, not $20,000.

That’s what’s been going with Canadian university costs: sticker prices are going up, but student tax credits and rebates are increasing, too. “Since 1999-2000, these credits have completely offset out the effects of any increases in tuitions,” says the report. “[Tuition] is no higher now than it was eight years ago.”

In order to accurately measure real tuition costs, Usher and EPI created a measure that takes into account inflation, as well as the growing amount of tax relief offered to students, calling the resulting number “Everybody’s Net Tuition”. Over the past few years, governments have introduced a number of large tax breaks targeted at higher education students. For example, for every month that they are enrolled, full-time students can claim a $400 tax credit from the federal government; part-time students can claim $120 per month. The textbook and technology tax credit, introduced in 2006, gives $65 off a month to full-time students and $20 a month to part-timers. Usher says taking such tax benefits into consideration and subtracting them from average tuition gives a more accurate picture of what university actually costs.

Value of Available Tax Credits per Full-Time University Student (click on charts to enlarge)

Maclean’s columnist Paul Wells on changes to student aid in Canada

From Alex Usher at the indispensable Educational Policy Institute, a grown-up assessment of the student-aid provisions in yesterday’s federal budget. Alex demonstrates real design flaws that should be fixed before the Canada Student Grants are implemented. But a few things are clearer today than they were last night.

Read Paul Wells’ blog “Inkless Wells” for more commentary

• Jean Chrétien’s Year 2000 bauble, the Canada Millennium Scholarships — designed to last a decade and scheduled to run out next year — will not leave a vacuum behind when they disappear. Despite major design flaws, the Millennium Scholarships were appreciated by student groups who worried mightily about their disappearance. (OK, try not to notice that only 621 people signed the CASA petition. Work with me here a bit.) And in retrospect, as millennium projects go — remember when everyone thought they needed a millennium project? Strange days — a massive investment in human capital did make a lot more sense than, say, a dome.

• Unlike the Chrétien-Martin formula of a one-time allocation to a “foundation” that is designed to be spent down to zero — and to produce a funding crisis in its last year — the Canada Student Grants are part of regular annual program spending. This means they are permanent, at least insofar as, like any other program, the only way to get rid of them is to shut down the budget line, which will get noticed if it ever happens. And the total amount in the grant program is budgeted, in the first few years, to increase every year, not to hold at a steady-state of about $350 million.

• The new grants reach massively more students than the Millennium Scholarships did, though they do it by giving each recipient less money. Whether you like that will depend on whether you would have qualified for one of the old awards. But the new grants also distribute the money in a different, smarter way: the CSG bursaries will be paid up-front, to keep students from incurring debt at the outset. Millennium scholarship money was typically paid after a student completed her studies, to help pay down debt that had already been incurred.

• The Millennium Scholarships suffered from more than a year of confusion at the outset because nobody could decide whether they were need- or merit-based. Chrétien wanted a substantial merit component. That eventually got sorted out, but the Tories avoid this confusion by launching two discrete programs: the CSG (income-based, which as Usher points out is different from need-based and, if your income is low, better) and the Vanier Canada Graduate Scholarships (scroll down, it’s in here somewhere). At first glance, these looked trivial to me — only 500 a year. But on a population basis, that makes the program comparable in size to the U.S. Fulbright program, and way bigger than the Trudeau Scholars program, which funds about 15 recipients per year. And those comparisons seem apt: the “merit” being rewarded here appears to be top-in-the-world merit, not garden-variety, you-win-if-you-get-an-A merit. Because the Vanier scholarships are international — foreigners can win them to study in Canada, Canadians can win them to help study abroad — they can, over time, constitute a powerful signal that Canadian universities aspire not only to house large student cohorts but, here and there at least, to encourage and welcome genius.

ON-THE-OTHER-HAND UPDATE: It looks like all the new money for the research granting councils is targeted toward specific fields of research. This is silly, and reflects the Harper government’s deep-seated conviction that surprise and individual initiative — whether it comes from the Tory back bench, the press gallery, or a laboratory somewhere — are bad news.

STRATEGY UPDATE: Still, wounded Liberals who don’t like being called chicken may ask, if on balance the budget does good things then why should the Liberals bring the government down?
Short answer: Because since when do Liberals want to be in the business of letting Conservative governments introduce useful budgets? If the opposition were working in its own interests, instead of second-guessing itself into a tailspin, it would already have defeated the Harper government before budget day.