CMSF-Joseph Berger 2007-Presentation: The Price of Knowledge 2006-2007

The Price of Knowledge 2006-07Access and Student Finance in Canada

Saskatchewan Institute

of Public Policy

Joseph Berger

Canada Millennium Scholarship Foundation

June 13, 2007

P. 2

The Price of Knowledge 2006-07

1. Why Access Matters

2. Barriers to Post-Secondary Education

3. Student Finance in Canada

4. Governments

5. Student Debt

P. 3


Why Access Matters

P. 4

Youth Population – Medium Growth Projection

Statistics Canada, CANSIM, table 052-0004 and Catalogue no. 91-520-X. Last modified: 2005-12-21.

2006 2011 2016 2021 2026

2006 Population 18- to 24-Year-Old Population

3.106 million

3.199 million

2.914 million

285,000 fewer

18- to 24-year-

olds between

2011 and 2021

P. 5

Youth Share of the Population and Dependency Ratio Projections

Statistics Canada, Population Projections for Canada, Provinces and Territories (December 2005).

14%13%

12%11% 11% 11%

0.440.47

0.51

0.57

0.61

0.44

0%

2%

4%

6%

8%

10%

12%

14%

16%

2006 2011 2016 2021 2026 2031

0

0.1

0.2

0.3

0.4

0.5

0.6

0.715- to 24-year-old share of the population Dependency Ratio

P. 6

Statistics Canada (2005), Projections of the Aboriginal populations, Canada, provinces and territories

Aboriginal Share (projected) of the 15- to 24-Year-Old Population in 2006 and 2017

70.4%

5.6%

62.8%

4.9%

4.5%

2.2%

23.9%

31.0%

8.8%

2.4%

5.9%

3.7%

1.8%

2.3%

19.4%

21.2%

7.5%

6.1%

% 10% 20% 30% 40% 50% 60% 70% 80%

Atlantic

QC

ON

MB

SK

AB

BC

Territories

CANADA

2006

2017

P. 7

Educational Requirements of Today’s Jobs

Bergeron, Louis-Philippe, et al. (2004), Looking Ahead: A 10-Year Outlook for the Canadian Labour Market, 2004-2013.

Management 11% Management 12%

University 26% University 22%

College 31%

High school or on

the job training

34%

High school or on

the job training

35%

College 29%

66% 65%

P. 8

Post-Secondary Participation Two Years After Graduating High School

Malatest (2006), Class of 2003; and Shaienks, Eisl-Culkin and Bussière (2006), Follow-up on Education and Labour Market Pathways of Young Canadians Aged 18 to 20 – Results from YITS Cycle 3

60%

52%

83%

31%

61%

72%

39%

48%

28%

17%

70%

40%

General

population

Parents - No

PSE

Parents -

Completed PSE

Parents -

University

Degree

Aboriginal Non-Aboriginal

Continuing or completed PSEDropped out of high school, never pursued PSE or dropped out of PSE

P. 9

Drolet (2005), Participation in Post-secondary Education in Canada: Has the Role of Parental Income and Education Changed over the 1990s?

Participation in Post-Secondary Education Among 18- to 24-year-olds Living with at Least One Parent in 2001 by Family Income and Parental Education

81%

49%

60%

76% 77%

53%

63%68%

Less than

$25,000

$25,000 -

$50,000

$50,000 -

$75,000

$75,001 -

$100,000

More than

$100,000

High school

or less

Some post-

secondary

University

P. 10

JDMD Groupe conseils (2006), Demographic and Economic Trend Analysis and Projections.

Projected Post-Secondary Enrolment in Canada by Demographic Scenario, 2005 to 2021

1,700,000

1,750,000

1,800,000

1,850,000

1,900,000

1,950,000

2,000,000

2005 2009 2013 2017 2021

Optimistic demographic scenarioPessimistic demographic scenario2005 enrolment

P. 11

JDMD Groupe conseils (2006), Demographic and Economic Trend Analysis and Projections.

Participation Rate of Youth in the Bottom Four Income Quintiles Necessary to Maintain 2005 Enrolment Levels by Demographic Scenario, 2006 to 2021

42%

44%

46%

48%

50%

52%

54%

56%

2006 2011 2016 2021

Optimistic Scenario Pessimistic Scenario

P. 12


Barriers to Post-Secondary Education

P. 13

Barriers to Access and Persistence

Malatest (forthcoming), Class of 2003

33%

31%

19%

8%

13%

11%

22%

14%

29%

27%

9%

12%

10%

Finances Career

indecision

Lack of

interest

Program not

what expected

Employment Academic

challenges

Personal/family

Never attended Discontinued

P. 14Financial BarriersAmong those who cited financial barriers to access (33%) or persistence (22%)


25%

21%

18%

7%

24%

18%

16%

12%11% 11%

6%

15%

Concerned

about too much

debt

Not enough

money to

attend

Program too

expensive

Too expensive

to leave home

Benefit not

worth the cost

Want to earn

money right

away

Never attended Discontinued

P. 15

Financial Barriers: The Pull of the Labour Market

54% 53%

43%

49%

34%

26% 25%

20%

Alberta Manitoba Saskatchewan New Brunswick

15- to 19-year-old average employment rate

Percentage who worked immediately following high school


P. 16

Academic Barriers: Literacy Scores at Age 15 and Post-Secondary Education

89%

98%95%

77%

62%

88%

76%

62%

45%

28%

Lowest level Level 2 Level 3 Level 4 Highest level

Literacy proficiency level

Graduated high school by age 19 Enrolled in post-secondary by age 19

Knighton, and Bussière (2006) Educational Outcomes at Age 19 Associated with Reading Ability at Age 15.

P. 18

Informational/Motivational Barriers: Expectations and Reality

Prairie Research Associates (2005), Secondary School Student Survey, 2003-04 Pan-Canadian Student Financial Survey

74%69%

16%

35%

73%

31%

59%

83%84%

0.4%

43%48%

86%

76%

Income from work Parental support Scholarships Government aid Co-op income

High school seniors expect

First-year full-time dependent universitystudents receive

Full-time dependent college studentsreceive

P. 19

Informational/Motivational Barriers: Family Discussions About PSE

Canada Millennium Scholarship Foundation (2006), Closing the Access Gap: Does Information Matter?

13%

38%

84%

Talking to their kids

about government

student aid

Talked to their kids

about financing PSE

Talking to their kids

about PSE

Parents reported…

P. 20

Low-Income Families: Planning

Acumen Research (2004), Ontario University Applicant Survey

23%19%

38%

43%

32%

Less than

$30,000

$30,000-

$50,000

$50,000-

$90,000

$90,000-

$120,000

More than

$120,000

Family Income

Proportion of Ontario university applicants discussing finances with their parents before grade 10

P. 22

First Generation: Planning

Prairie Research Associates (2005), Secondary School Student Survey

17%18%

22%23%

26%

33%

17%

10%11%

13%15%

18%

8%

11%9%

8%10% 10%

8%

16%15%

Grade 6 Grade 7 Grade 8 Grade 9 Grade 10 Grade 11 Grade 12

No PSE Both Parents College Both Parents University

High school students who plan to work after high school and study later

P. 23

First Generation: Attitudes

80%

69%

76%

64%

48%

61%

76%

65%

71%

Need post-secondary to get a

good job

Paying for post-secondary is a

good investment

There are other benefits to post-

secondary besides a good job

No PSE College/apprenticeship University (both parents)

High school seniors’ attitudes about PSE by parental education


P. 24

Aboriginal Youth: Academics

Mendelson (2006), Aboriginal Peoples and Post-Secondary Education in Canada

61% 61%

46%

58%

27%

44%

60%55%

40%

71%

CANADA NL NS NB QC ON MB SK AB BC

On-reserve Aboriginal population with less than high school education, aged 20 to 24 in 2001

P. 25

Aboriginal Youth: Barriers

Canada Millennium Scholarship Foundation (2005), Changing Course: Improving Aboriginal Access to Post-Secondary Education in Canada

59%

40%

25%20% 18%

27%

Neet to support

family

Lack of funds Don't want to

leave

community

Grades too

poor

No need for

PSE

Dislike school

On-reserve Aboriginal youth’s reasons for not pursuing post-secondary

P. 26

Interacting Barriers


38% said they faced a barrier related to poor school marks

54% said that they faced a barrier related to lack of interest or career direction

Of those who said they faced a financial barrier:

45% said they faced an academic barrier

67% said they faced a financial barrier

Of those who said that their lack of interest or career direction posed a barrier:

66% said they faced a barrier related to their lack of interest in further studies or career direction

68% said they faced a financial barrier

Of those who said that poor school marks were a barrier:

Senior high school students were asked whether various factors posed a barrier to them continuing their studies after high school.

P. 27


Student Finance in Canada

P. 28

Distribution of Student Expenditures by Type of Post-Secondary Education

21%

29%

14%

10%

16%

10%

33%

27%

7%

12%

8%

13%

Tuition and fees Accomodation

and food

Transportation Books/computer Debt payment Other

College students University students

2003-04 Canadian Student Financial Survey

P. 29

Financial Resources

• 2/3 of students rely on at least three sources, usually a combination of:

• Work

• Government loans

• Savings

• Parental contributions

P. 30

Making Ends Meet – Full-Time Students

Total Income and Expenditure and Balance over the Year (Before Borrowing)

-$2,000

-$1,000

$0

$1,000

$2,000

$3,000

$4,000

Baseline September October November December January February March

Income before borrowing

Expenses

Balance before borrowing


P. 31Making Ends Meet – Full-time Students

Total Income and Expenditure and Balance over the Year (After Borrowing)

-$1,000

$0

$1,000

$2,000

$3,000

$4,000

$5,000

Baseline September October November December January February March

Income after borrowing

Expenses

Balance after borrowing


P. 32

Parental Contribution by Family Income

$1,837

$2,169 $2,169

$2,856

$3,588

64%

72%

78%

84%

89%

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$30,000 or less $30,000 - $50,000 $50,000 - $73,000 $73,000 - $100,000More than $100,000

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%Average amount Incidence of parental contribution


P. 33

$11,284 $11,506 $11,595

$14,968

$9,048

$7,327

$11,555

$8,558

University Students College Students Private Career College

Students

All Students

Millennium Bursary Access Bursary

Assessed Need Levels of Millennium Bursary and Millennium AccessBursary and Grant Recipients by Institution Type in 2005-06

P. 34


How Governments Support Students

P. 35

Probability of Degree Completion in Relation to Annualized Aid

Lori McElroy (2005), Student Aid and University Persistence: Does Debt Matter?

79% 78%75%

62%

38%

59%

48%52%

28%

8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Under $1,000 $1,000- $1,999 $2,000- $2,999 $3,000- $9,999 $10,000+

Annualized financial aid

Proportion who completed a degree

Grant + Loan Loan Only

P. 36Dollar Value of Federal Education-Related Tax Expenditures, 1994- 2007

Christine Neill, Canada’s Tuition and Education Tax Credits

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Scholarship/bursary exemptionRESPs

Student loan interest creditCredits carried forwardTransferred credits

Education creditTuition credit

P. 37Total Need-Based Financial Aid in Saskatchewan, 1993-94 to 2003-04 (in millions of 2005 dollars)

Educational Policy Institute, The State of Student Aid in Canada

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04

Loans Grants and Remission

P. 38Total Universal Financial Aid in Saskatchewan, 1993-94 to 2003-04 (in millions of 2005 dollars)


$0

$20

$40

$60

$80

$100

$120

1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04

Tax Credits - Canada Tax Credits - Manitoba CESGs

P. 39Proportion of Repayable and Non-Repayable Need-Based Financial Aid in Canada, 1993-94 to 2003-04 (in millions of 2005 dollars)


%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04

Net Loans Grants and Remission

Ontario accounting change

P. 40Distribution of Total Need-Based and Universal Student Aid in Canada by Type, 1993-94 to 2003-04

%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04

Net loans Loan remission Grants Tax credits CESGs Merit/other


P. 41Total Universal Student Aid in Canada by Source, 1993-94 to 2003-04 (in millions of 2005 dollars)


$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04

Federal Governments Provincial Governments

P. 42Total Expenditures on Need-Based and Universal Student Aid by Type, 1993-94 to 2003-04 (in millions of 2005 dollars)


$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

1990-

91

1991-

92

1992-

93

1993-

94

1994-

95

1995-

96

1996-

97

1997-

98

1998-

99

1999-

00

2000-

01

2001-

02

2002-

03

2003-

04

Need-Based Universal

P. 43

Provincial Grants and Remission

$0

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

1994-95 1995-96 1996-97 1997-98 1998-99 1999-

2000

2000-01 2001-02 2002-03 2003-04

All Provinces

All figures in constant 2005-06 academic year dollars

P. 44


$0

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

1994-95 1995-96 1996-97 1997-98 1998-99 1999-

2000

2000-01 2001-02 2002-03 2003-04

Ontario Rest of Canada



P. 45


$0

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

1994-95 1995-96 1996-97 1997-98 1998-99 1999-

2000

2000-01 2001-02 2002-03 2003-04

Rest of Canada Ontario



P. 47

Provincial Student Aid Recipients in Canada, 1994-95 to 2003-04

0

100000

200000

300000

400000

500000

600000

1994-95 1995-96 1996-97 1997-98 1998-99 1999-

2000

2000-01 2001-02 2002-03 2003-04

522,723

415,239

P. 48


Student Debt:Trends and Consequences

P. 49

$8,337

$12,671

$20,286 $20,074

$11,636

$15,809

$23,329

$21,437

$24,047

45% 45%

56%59% 59%

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

1990 1995 2000 2003 2006

-5%

5%

15%

25%

35%

45%

55%

65%

Amount in current year dollars Amount in 2006 dollars Incidence

University Graduate Debt in Canada in 2006 Dollars, 1990-2006

P. 50More on University Student Debt

1. The amount of average debt has stabilized in recent years, but student aid policy changes are likely to lead to increases in the coming years.

2. There’s a need for additional borrowing not met by government. Thirty-nine per cent of all funds borrowed in 2006 came from financial institutions and family, up from 31 per cent three years earlier.

3. University graduates who plan on pursuing more education had less debt (about $3,200) than those who did not.

4. No apparent relationship between amount of debt and anticipated post-study income.

P. 52

Change in Accumulated Debt Among College Students with Debt outside Quebec, 2003-06

34% 35%

29%32%

15% 15% 14% 15%

17% 18%

29%

29%

31%

26%25%

0%

10%

20%

30%

40%

2003 (n=6,478) 2004 (n=7,202) 2005 (n=7,324) 2006 (n=6,846)

< $5,000 $5,000 - $10,000 $10,001 - $15,000 > $15,000

43% report no debt in 2006

P. 53More on College Student Debt

1. In 2006 47 per cent of college students who had no debt planned to pursue further post-secondary studies, compared to fewer than 40 per cent of those with debt and 21 per cent of students with more than $30,000 of debt.

2. College debt catching up to university debt?

P. 54Managing Debt: Approaches

1. The “eight per cent rule”: student loan payments should not exceed eight per cent of a graduate’s pre-tax earnings. (The bank’s perspective.)

2. Other approaches – “one size fits all” fits none.

3. Two principles and a conclusion (Schwartz and Baum):

1. Graduates with very low incomes cannot reasonably be expected to meet their repayment obligations.

2. The more a graduate earns, the larger the share of his or her income should be devoted to debt repayment.

3. Those earning lower (but not the very lowest) incomes should be expected to devote between five and ten per cent of pre-tax discretionary income to student loan repayment, with the payment-to-income ratio being capped at 18 to 20 per cent for those earning much higher incomes.

P. 55Conclusion

1. Post-secondary education and Canada’s needs

2. Overcoming barriers to PSE

3. Targeting public funds effectively

4. Post-secondary outcomes

P. 56


Canada Millennium Scholarship Foundation

Joseph [email protected]

1-877-786-3999

www.millenniumscholarships.ca

Documents

CMSF-Joseph Berger 2007-Presentation: The Price of Knowledge 2006-2007