Ten Things You Need to Know About Financial Support for ......2008/10/22 · Millennium Research Note #7 Written by: Joseph Berger and Andrew Parkin Ten Things You Need to Know

Millennium Research Note #7

Written by: Joseph Berger and Andrew Parkin

www.millenniumscholarships.ca

Ten Things You Need to Know... About Financial Support for Post-Secondary Students in Canada

joelrivard

Typewritten Text

October 2008

M I L L E N N I U M R E S E A R C H N O T E # 5 W W W . M I L L E N N I U M S C H O L A R S H I P S . C A

Canada Millennium Scholarship Foundation

The Canada Millennium Scholarship Foundation is a private, independentorganization created by an act of Parliament in 1998. The Foundation works toimprove access to post-secondary education for Canadians from all back-grounds; it encourages a high level of achievement and engagement in Canadiansociety; and it brings people and organizations together to understand barriersand improve access to post-secondary education in Canada. Each year, theFoundation distributes $340 million in bursaries and scholarships to studentsacross Canada.

The Research Program

The Millennium Research Program furthers the work of the Foundation byundertaking research and pilot projects aimed at understanding and reducingbarriers to post-secondary education. It ensures that policy-making and publicdiscussion about opportunities in higher education in Canada can be informedby the best available evidence.

Research Note Series

Part of the mission of the Canada Millennium Scholarship Foundation is toimprove access to post-secondary education so that Canadians can acquire theknowledge and skills needed to participate in a changing economy and society.

Higher education provides the prospects for personal fulfillment and economicadvancement to which Canadians from all backgrounds are entitled. TheFoundation carries out extensive research, collecting and analyzing data fromsurveys and pilot projects, so that we can better understand the barriers that pre-vent some students from making it to the post-secondary level and so that we canidentify means to alleviate those barriers.

Within the broad scope of our research, we uncover certain trends, questionsand issues that call for wider public dialogue. This research note, the seventh in an ongoing series examining issues of access and funding for post-secondaryeducation, seeks to inform this dialogue and the development of new programsand policies.

Ten Things You Need to Know...About Financial Support for Post-Secondary Students in Canada

1M I L L E N N I U M R E S E A R C H N O T E # 7 W W W . M I L L E N N I U M S C H O L A R S H I P S . C A

Introduction

Providing financial support for post-secondarystudents and their families is one of the keyways in which governments ensure that thecountry is prepared to face the future’s socialand economic challenges. Currently, studentsin Canada receive over $7 billion in stu dentloans and grants, scholarships, education taxcredits and savings grants from their federal,provincial and territorial governments and theCanada Millennium Scholarship Foundation.Until recently, however, no one knew the exacttotal of the financial support that students inCanada received from these various sources.This made it difficult for the public and policy-makers alike to engage in an informeddiscussion about how well existing programswere serving students and what policy changes should be considered. In recent years, however, the Canada Millennium ScholarshipFoundation’s research program has collectedand published data detailing how governmentssupport students and analyzed the implicationsof shifts in spending over time. This reportprovides data from 2006–07, the most recentyear for which complete data are available. Itupdates the information published in 2007 inthe third edition of The Price of Knowledge.

The addition of data from 2006–07 providesa clearer picture of the impact of several pro-gram changes that took effect in the previousyear, including the increase in maximum

student loan amounts and the introduction of the millennium access bursaries and theCanada and Ontario Access Grants. Thesechanges have resulted in a gradual and modestbut noticeable improvement in the need-basedfinancial assistance received by students.Recent improvements to the need-based system of student loans and grants, however,have not necessarily improved the financialsituation of students; rather, they have prevented their financial situation from deteriorating further in the face of risingcosts. Moreover, these improvements havenot been on the same scale as other increasesin spending, first on education tax creditsand, subsequently, on education savingsgrants, which are not allocated on the basis offinancial need. As the Foundation has notedon several occasions, there has been a steadyshift in focus away from need-based assistancewithin the envelope of government spendingon post-secondary students that does not yetshow any signs of slowing. This shift is evenmore pronounced if one takes into accountnew tax rebates for post-secondary graduatesrecently introduced in several provinces.

The main purpose of this report is to providea national1 overview of the amounts and typesof financial support that post-secondary stu-dents receive. In so doing, we acknowledgethat because of the significant differences inprovincial financial assistance programs and

Ten Things You Need to Know... About Financial Support for Post-Secondary Students in Canada

“ The CanadaMillenniumScholarshipFoundation’sresearch programhas collected and publisheddata detailinghow governmentssupport studentsand analyzed theimplications ofshifts in spendingover time. ”

1

1. Unfortunately, this report does not include data from the three territories, all of which operate student financial assistance programs.We hope to include territorial data in the next version, which will be published in 2009.


the different policy choices taken in eachjurisdiction, a national overview can obscureas much of the story as it clarifies. To take one type of example, when investments madeby some provinces occur at the same time as cuts made by others, a national portrait can give the misleading impression that, onaverage, nothing at all has changed. For thisreason, the report tries to note provincial aswell as national patterns wherever possible.

Finally, this report features a new element:data on undergraduate financial assistance pro-vided by universities and colleges. Informationon how much post-secondary institutionsspend on different types of bursaries andscholarships is very hard to come by. TheFoundation, however, recently commissioneda survey of institutions in order to attempt tofill this knowledge gap. While this survey wasnot able to cover all institutions, it did collectdata from colleges and universities thatinclude almost three-quarters of Canada’sundergraduate students, providing a goodbasis for a first look at this important piece ofthe puzzle.

Acknowledgements

The data on both government and insti tutionalaid presented and analyzed in this report was collected through two separate stu diescommissioned by the Canada MillenniumScholarship Foundation and carried out by the Educational Policy Institute (EPI). The original reports from both, The State ofStudent Aid in Canada and InstitutionalStudent Grants in Canada, are available uponrequest from EPI. The Foundation would like to thank EPI for its work in preparing the reports. It would also like to thank theprovincial and institutional officials who pro-vided data to EPI for inclusion in the reports.The authors would also like to thank their col-leagues Noel Baldwin and David Simmonds

for their contribution to the development ofthis report and Anne Blain for her work onpreparing the data tables.

Executive Summary

1. Students now receive more than $4 billionin need-based student financial assistance—more than ever before. Two main factorsare driving this increase: the number of student aid recipients has been increasing,and student loan programs have becomemore generous.

2. There has been a significant increase in the amount of financial aid that studentsare receiving on a per-recipient basis—thefirst significant real increase in a decade.This shows that the increase in the totalamount of loans and grants provided tostudents has more than compensated forincreases in the number of aid recipients.The increase in aid per recipient, however,has not necessarily improved the financialsituation of students; rather, it has preventedtheir financial situation from deterioratingfurther in the face of rising costs.

3. The proportion of need-based financialassistance that is non-repayable has reached30 percent, a level which is twice as hightoday as it was 15 years ago. This change is explained by two waves of programimprovement: the introduction of the millennium bursaries in 1999–2000, and thecreation of the millennium access bursariesand the Canada and Ontario Access Grantsin 2005–06. The proportion of non-repayableaid varies significantly from province toprovince, from a low of 12 percent in B.C.to a high of 48 percent in Manitoba. Thisvariation produces differences in theamount of repayable aid (loans) that stu-dents are left with in each province.


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4. In 2006–07, the federal and provincialgovernments provided $2.5 billion worthof tax credits for students and their familiesand education savings grants for prospec-tive students. The value of tax credits andsavings grants has continued to expandrapidly since the early 1990s. This is instark contrast to the increases in the valueof need-based loans and grants, which arerecent and relatively modest by compari-son. In 1996–97, for every dollar providedin need-based loans and grants, govern-ments spent 21 cents on education taxcredits and savings grants. By 2006–07,they spent 61 cents on tax measures andsavings grant for every dollar they providedof need-based financial aid.

5. An assessment of student support plansannounced in the 2007 and 2008 provincialbudgets reveals that many governmentscontinue to favour measures designed tobenefit all students rather than ones thatfocus on students with financial need. Anumber of provinces have introduced orexpanded post-graduation tax rebates,despite the absence of research indicatingthat the mobility of post-secondary gradu-ates is influenced by such policies. These tax rebates are expensive. For example,their announced cost in the provinces con-cerned is greater than the entire budget forthe federal access grant program serving low-income students and students withdisabilities.

6. In real terms, the amount of money provided to Aboriginal bands for post-secondary student support has decreased,despite two factors: a growing Aboriginalyouth population (particularly in WesternCanada), and the consensus on the impor-tance of increasing Aboriginal partici -pation in post-secondary education.Federal funding for Aboriginal studentswas 8.5 percent lower in 2006–07 than itwas ten years earlier. Once provincial aid

for Aboriginal students is combined withfederal aid, total support for Aboriginalstudents is only 5 percent lower than it wasten years ago.

7. Total annual government financial supportfor post-secondary students amounted to$7.1 billion in 2006–07, once all forms ofassistance, including need-based studentloans and grants, Aboriginal student assis-tance, education tax credits and savingsgrants, and merit scholarships, were takeninto account. Since the mid-1990s, totalfinancial support for students has increasedby 53 percent (27 percent in real terms).The share of this total targeted to studentswith financial need, however, has fallenfrom over 80 percent a decade ago to 61 percent today.

8. Fewer than one in five undergraduatesenrolled in Canada’s major universitiesreceive need-based support from theirinstitution.

9. Need-based institutional aid has been signi-ficantly influenced by Ontario governmentpolicies. Both the tuition set-aside policyand the Ontario Student OpportunitiesTrust Fund have succeeded in encouragingOntario institutions to be more generousin their student funding than institutionsoutside the province. It should be notedthat both these policies were introduced to assist students with covering the cost ofhigher tuition fees not met by governmentstudent aid programs.

10.The financial aid data portrait is incomplete.While most institutions react positively tothe need for better information, many lackthe capacity to produce comprehensivefigures about institutional spending on student support. In many cases, the dataonly exist at a very general level, making an analysis of which types of students arereceiving which forms of aid difficult, if not impossible.


3

“ The value of tax credits andsavings grantshas continued toexpand rapidlysince the early1990s. This isin stark contrastto the increasesin the value ofneed-based loansand grants. ”


Note on the Presentation of Data

The amounts of financial aid provided to stu-dents often vary significantly from year toyear as a result of federal or provincial policychanges. Sometimes those policy changes havelong-lasting effects; in other cases, they canproduce short-term anomalies. Anomalies also arise when provinces change the way inwhich they account for financial aid. This hashappened in at least two significant cases. Thefirst, in Ontario, occurred at the end of thelast decade, when the province switched froma post-graduation to an annual loan remissionprogram. This change required the provinceto pay multiple years’ worth of loan remissionover a very short period of time, artificiallyinflating their expenditures. The secondoccurred more recently, in Quebec, when a change in the 12-month period used in financial aid reports meant that figures for2003–04 actually cover a 16-month period.Because of these and other occurrences, itcan be unwise to compare spending betweentwo single points in time (perhaps separatedby a five- or ten-year interval) because of therisk that in at least one province, one of theyears in question will be anomalous. For this

reason, the report often compares figures thatrepresent annual averages from two- or three-year periods. Specifically, for the purpose oftracking changes over time, the report com-pares annual averages for three distinct periods:

• the late 1990s (1996–97 to 1998–99), after major changes in both federal andprovincial programs occurred in the earlyto mid-1990s but before the accountingissue in Ontario arose and before the creation of the Canada MillenniumScholarship Foundation;

• the early part of this decade (2001–02 to2003–04), after the creation of the Foun-dation but before the most recent system-wide changes took effect in 2005–06; and

• the most recent period (2005–06 to2006–07).

Readers who wish to review the data from all individual years can refer to the tables used to construct this report, which are posted on the Foundation’s website athttp://www.millenniumscholarships.ca/images/Publications/Ten_Things_Excel_EN.pdf.

Part One: Need-Based FinancialAssistance (Student Loans and Grants)

1. Students are now receiving more than $4 billion in need-based studentfinancial assistance—more than ever before.

In 2006–07, Canada’s provincial and federalgovernments provided more than $4 billionin need-based student loans and grants to post-

secondary students—more than ever before.After falling in the late 1990s, the value of loansand grants has been steadily increasing since2001–02. The average over the last two yearsis 18 percent higher than it was in the firstfew years of this decade (see Table 1).

The increase is more modest once figures areadjusted for inflation: students are receivingten percent more in real terms than they wereat the beginning of the decade.


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“ After falling inthe late 1990s,the value of loansand grants hasbeen steadilyincreasing since2001–02. ”

http://www.millenniumscholarships.ca/images/Publications/Ten_Things_Excel_EN.pdf


Two main factors are driving this increase:

a. The number of student aid recipients has beenincreasing, most notably in Ontario. Afterfalling significantly between the mid-1990sand the early part of this decade, the totalnumber of student loan recipients inCanada began to increase after 2001. It roseby seven percent between 2001–02 and2004–05 (see Table 2). Nationally, numbershave stabilized since then, although thestable national average masks considerablemovement at the regional level. In Ontarioalone, the number of student aid recipientsincreased by a further nine percent in thethree years between 2004–05 and 2006–07,while it has dropped significantly in thefour Western provinces and remainedmore or less unchanged in Quebec and the Maritimes.

b. Student loan programs have become more generous. In 2005–06, the federal governmentand many provincial governments increasedthe maximum amount of assistance pro-vided to students. They also reduced theamount of the financial contribution stu-dents are expected to receive from theirparents. As a result, more students becameeligible for financial aid and those with highlevels of financial need became eligible toreceive larger amounts of aid. The value offinancial assistance provided to studentsjumped seven percent in real termsbetween 2004–05 and 2005–06 alone.


5

$4,000,000,000

$3,500,000,000

$3,000,000,000

$5,000,000,000

$4,500,000,000

$2,500,000,000

$2,000,000,000

$1,500,000,000

$1,000,000,000

$500,000,000

Figure 1 Total Need-Based Student Aid: Canada

Nominal Dollars Real Dollars (2007 $)

$0

1993–94

1994–95

1995–96

1996–97

1997–98

1998–99

1999–00

2000–01

2001–02

2002–03

2003–04

2004–05

2005–06

2006–07



6

Table 1 Total Amount of Need-Based Aid Received (Selected Periods)

BC

AB

SK

MB

ON

QC

NB

NS

PE

NL

Canada

$416,095,380

$263,918,201

$108,976,376

$62,592,971

$1,587,113,212

$762,150,489

$122,206,038

$124,354,148

$18,834,649

$150,810,181

$3,617,051,646

3-YearAverage

1996–97 to1998–99

$593,727,633

$359,855,456

$144,512,363

$69,830,122

$1,199,287,285

$662,807,442

$133,866,672

$139,131,572

$26,085,027

$97,204,794

$3,426,308,367

3-YearAverage

2001–02 to2003–04

$627,952,704

$365,989,155

$137,082,058

$76,623,394

$1,516,904,730

$884,066,330

$160,042,258

$163,711,942

$26,001,487

$87,193,874

$4,045,567,931

2-YearAverage

2005–06 to2006–07

$626,417,234

$370,026,729

$128,222,955

$77,466,357

$1,547,470,490

$897,989,660

$158,268,662

$162,701,583

$26,288,597

$85,897,614

$4,080,749,880

Most Recent Year

2006–07

$507,026,795

$321,630,109

$132,702,345

$76,270,455

$1,936,181,252

$930,246,408

$149,003,196

$151,457,611

$22,944,814

$183,833,749

$4,411,296,734

3-YearAverage

1996-97 to1998-99

$644,820,024

$390,744,376

$157,067,067

$75,870,679

$1,302,334,986

$719,212,786

$145,359,259

$151,152,291

$28,336,450

$105,758,471

$3,720,656,389

3-YearAverage

2001–02 to2003–04

$635,734,838

$370,463,831

$138,886,275

$77,560,240

$1,535,279,799

$894,823,593

$162,042,729

$165,748,343

$26,319,385

$88,287,846

$4,095,146,879

2-YearAverage

2005–06 to2006–07

$626,417,234

$370,026,729

$128,222,955

$77,466,357

$1,547,470,490

$897,989,660

$158,268,662

$162,701,583

$26,288,597

$85,897,614

$4,080,749,880

Most Recent Year

2006–07

Nominal Dollars Real 2007 Dollars

Table 2 Number of Student Loan Recipients

BC

AB

SK

MB

ON

QC

NB

NS

PE

NL

Canada

54,256

39,548

14,186

9,648

188,892

158,416

14,766

18,142

2,528

20,435

520,818

3-Year Average1996–97 to 1998–99

65,889

42,518

16,128

9,949

151,055

129,704

15,652

16,959

3,319

12,754

463,926


56,661

37,884

14,442

9,343

182,016

131,809

15,987

16,275

3,239

9,750

477,405


56,306

37,884

13,828

9,305

182,016

131,809

15,683

16,110

3,239

9,640

475,820

Most Recent Year2006–07


2. There has been a significant increase inthe amount of financial aid that studentsare receiving on a per-recipient basis.

In 2006–07, the average Canadian student aidrecipient received $8,576 in loans and grantsfrom federal and provincial governments and the Canada Millennium ScholarshipFoundation—more than ever before.

The most recent expansion to the student aidsystem (described above), which took effectin the 2005–06 academic year, produced anine percent increase in the amount of aid per recipient. This marked the first significantreal increase in the amount of aid provided ona per-recipient basis in a decade. On average,in the most recent two-year period, studentsreceived 15 percent more on a per-recipientbasis than they did at the beginning of thisdecade (seven percent after adjusting forinflation). This translates into an increase ofmore than $1,000 in assistance each year,compared with students who studied at the

beginning of the decade (or over $500 morein real terms). These figures show that recentincreases in the total amounts of loans andgrants provided to students, as noted above,have more than compensated for increases inthe number of aid recipients.

Other points of note include:

a. The amount of money provided on a per-recipient basis varies considerably byprovince. These variations are caused bydifferences in levels of financial need(which are driven by differences in tuitionand other costs and in student and familyincome and savings) and in program regu-lations. Student aid recipients in Quebec,where university tuition fees are less thanhalf the national average and college isfree, received an average of $6,813 in2006–07. Those in B.C., where tuitionincreased substantially during the earlypart of this decade, received an average of$11,125 the same year (see Table 3).


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1993–94

1994–95

1995–96

1996–97

1997–98

1998–99

1999–00

2000–01

2001–02

2002–03

2003–04

2004–05

2005–06

2006–07

$8,000

$7,000

$6,000

$9,000

$5,000

$4,000

$3,000

$2,000

$1,000

Figure 2 Total Student Aid: Canada in Nominal and Real 2007 $ per Student Aid Recipient

Nominal Dollars Real Dollars

$0


b. Despite the recent increase, students receiveabout the same amount of aid in real terms asthose who studied in the mid-1990s before aidlevels (particularly in Ontario) were cut.

c. There is significant provincial variation inthe way aid levels have changed. In sixprovinces—B.C., Alberta, Saskatchewan,Manitoba, Quebec and Nova Scotia—aidlevels per recipient are significantly higherin real terms today than they were in thelate 1990s (see Table 3). In Ontario, theyare significantly lower. Thus, while aid perrecipient nationally on average is about thesame today in real terms as it was at theend of the last decade, it is in fact 18 per-cent lower in Ontario but 16 percent to 22 percent higher in BC, Alberta, Quebecand Nova Scotia.

d. It is particularly noteworthy that the 18 percent real increase in annual total aid pro-vided by Ontario between the most recentperiod and the early part of this decade

was not enough to match the 20 percentincrease in the number of student aid reci-pients in that province, resulting in a two per-cent decrease in aid on a per-recipient basis.

e. Finally, it is important to note that recentimprovements to the need-based system of student loans and grants have not necessarily improved the financial situationof students. These improvements may havesimply prevented students’ financial situa-tion from deteriorating further in the face ofrising costs. Indeed, one of the reasons whymaximum loan amounts were increased in2005–06 was the recognition that aid levelsneeded to be adjusted upwards to allow stu-dents to cover cost increases. It is difficult tocontextualize changes in government sup-port for students without access to compre-hensive, up-to-date information on thecosts students face (including but not limit-ed to tuition and living expenses) and onthe resources they have access to, includingemployment.


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Table 3 Total Annual Need-Based Assistance per Student Loan Recipient (Selected Periods)

BC

AB

SK

MB

ON

QC

NB

NS

PE

NL

Canada

$7,672

$6,677

$7,677

$6,487

$8,404

$4,803

$8,319

$6,871

$7,544

$7,384

$6,945

3-YearAverage

1996–97 to1998–99

$9,010

$8,466

$8,961

$7,026

$7,938

$5,104

$8,549

$8,207

$7,871

$7,625

$7,382

3-YearAverage

2001–02 to2003–04

$11,083

$9,661

$9,483

$8,202

$8,334

$6,707

$10,013

$10,060

$8,028

$8,943

$8,474

2-YearAverage

2005–06 to2006–07

$11,125

$9,767

$9,273

$8,325

$8,502

$6,813

$10,092

$10,099

$8,116

$8,911

$8,576

Most Recent Year

2006–07

$9,355

$8,137

$9,350

$7,907

$10,245

$5,859

$10,153

$8,366

$9,208

$9,000

$8,467

3-YearAverage

1996-97 to1998-99

$9,787

$9,192

$9,740

$7,630

$8,626

$5,540

$9,284

$8,915

$8,558

$8,285

$8,018

3-YearAverage

2001–02 to2003–04

$11,219

$9,779

$9,603

$8,302

$8,435

$6,789

$10,135

$10,183

$8,126

$9,054

$8,578

2-YearAverage

2005–06 to2006–07

$11,125

$9,767

$9,273

$8,325

$8,502

$6,813

$10,092

$10,099

$8,116

$8,911

$8,576

Most Recent Year

2006–07

Nominal Dollars Real 2007 Dollars


3. The proportion of need-based financialassistance that is non-repayable is twiceas high today as it was 15 years ago.

Beyond the recent increases in the quantity ofaid received (noted above), the quality of aidreceived by students has also improved: stu-dents receive more of their aid in the form ofnon-repayable grants and less in the form ofloans. In 2006–07, 30 percent of need-basedstudent aid was provided in the form of non-repayable grants or loan remission. Theremaining 70 percent was provided as loans.The proportion of financial aid that is non-repayable is twice as high as it was 15 yearsago and, for all intents and purposes, thehighest in the 14-year period covered by thisreport.2 This represents an important shift in the way student financial aid is delivered in Canada.

This change is explained by two waves ofprogram improvement:

a. The first and most important is the introduction of the Canada MillenniumScholarship Foundation’s millennium bursariesin 1999–2000. This injected $285 millionin new federally funded grants into the system and led, through side agreementsbetween the Foundation and its provincial

partners, to the simultaneous expansion ofa number of provincial grant programs.3

The result was a dramatic 44 percentincrease in the value of non-repayable aidreceived by students between the late 1990sand the early 2000s (28 percent whenadjusted for inflation) and an increase in the proportion of total aid that is non-repayable from 19 percent to 28 percent(see Table 4).

b. The second was the creation of the millenniumaccess bursaries and the Canada and OntarioAccess Grants in 2005–06.4 This resulted inapproximately $125 million in additionalgrants. The change is clearly visible inOntario, where the proportion of aid thatis non-repayable jumped from 22 percentto 32 percent between 2004–05 and2006–07. The effect of the introduction ofthese access grants, however, is not as visible at the national level, because it wasoffset by significant reductions in existinggrant programs in B.C. and Quebec in the preceding year (2004–05).5 In fact, theaddition of the access grants simply servedto return the national proportion of aidthat is non-repayable to the level that it had reached before the cuts in B.C. andQuebec took effect.


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2. The share of non-repayable aid was technically higher in 1999–2000 and 2000–01, although this is a result of an accounting change in Ontario. Prior to 1999–2000, the Ontario Student Assistance Program made its loan remission payments at the end of astudent’s program of study. That year, the province began making payments at the end of each year of study. As a result, it wasrequired to make several years’ worth of payments to all those who had completed their programs, as well as payments to all thosewho had completed a year of study en route to finishing their program. Ontario loan remission figures for these two years thereforeare artificially inflated as the province adjusted to this “double cohort.”

3. According to a comparison of the five-year average value of financial aid distributed before and after the introduction of the Canada Millennium Scholarship Foundation in 1999–2000 conducted by Human Resources and Social Development Canada(2007), the value of grants provided by the Canada Student Loans Program almost doubled. This also contributed to the overallincrease in non-repayable assistance.

4. Millennium access grants were introduced in most provinces in 2005–06 and in Alberta and PEI in 2006–07. Eligibility for OntarioAccess Grants was significantly expanded in 2006–07. In effect, the phasing in of access grants occurred over a two-year period,from 2005–06 to 2006–07.

5. A significant portion of the reduction in Quebec was short-lived, as a new agreement between the provincial government, studentgroups and the Canada Millennium Scholarship Foundation in 2005 resulted in a reinjection of provincial grant funds beginning in 2005–06.

“ The quality of aid receivedby students has also improved:students receivemore of their aid in the formof non-repayablegrants and less in the form of loans. ”


It should be noted that as both costs andoverall assistance levels increase, the only wayto avoid escalations in student debt is to atleast maintain, if not increase, the proportionof assistance that is provided in the form ofgrants rather than loans. In the mid- and late1990s, costs and assistance level increaseswere passed on to students in the form ofloans which, on average, doubled studentdebt levels for university undergraduates. Incontrast, the two waves of program improve-ment just noted—and particularly the creationof the Foundation—have served to stabilizeand, in some provinces, reduce overall levelsof student debt since 2000, leaving studentsmuch better off. Other noteworthy pointsinclude:

c. The proportion of aid that is non-repayablevaries significantly from province to province,from a low of 12 percent in B.C. to a highof 48 percent in Manitoba (see Table 4).

d. The variation in the proportion of aid thatis non-repayable combined with the differ-ences in total aid discussed above producedifferences in the amount of repayable aid (loan) that students are left with ineach province. For instance, while studentaid recipients in B.C., New Brunswick andNova Scotia each receive an average ofmore than $10,000 in aid per year, theproportion of aid that is non-repayable is currently much higher in Nova Scotia(22 percent) than it is in the other twoprovinces, resulting in a loan amount thatis much lower. This is illustrated in Table 5.

e. In several provinces, the share of non-repayable aid has increased in recent years:Nova Scotia, Newfoundland, Manitobaand Ontario all attained record highs in2006–07.6 On the other hand, the pro -portion has been decreasing in NewBrunswick and B.C., with the latter at arecord low in 2006–07.


6. See note 2.

10

$4,000,000,000

$3,500,000,000

$3,000,000,000

$5,000,000,000

$4,500,000,000

$2,500,000,000

$2,000,000,000

$1,500,000,000

$1,000,000,000

$500,000,000

Figure 3 Total Need-Based Student Aid (By Type): Canada in Real 2007 $

Net Loans Non-Repayable Aid

$0

1993–94

1994–95

1995–96

1996–97

1997–98

1998–99

1999–00

2000–01

2001–02

2002–03

2003–04

2004–05

2005–06

2006–07

Total Aid

“ As both costsand overall assistance levelsincrease, the onlyway to avoidescalations instudent debt is to at leastmaintain, if notincrease, the proportion ofassistance that is provided in the form ofgrants ratherthan loans. ”



11

Table 4 Proportion of Student Aid That Is Non-Repayable by Province, 2006–07

BC

AB

SK

MB

ON

QC

NB

NS

PE

NL

Canada

19%

16%

16%

3%

17%

31%

10%

8%

6%

1%

19%

3-Year Average1996-97 to

1998-99

27%

31%

27%

29%

24%

48%

14%

10%

15%

12%

28%

3-Year Average2001–02 to

2003–04

12%

32%

28%

46%

29%

43%

12%

21%

16%

24%

29%

2-Year Average2005–06 to

2006–07

12%

32%

30%

48%

32%

43%

13%

22%

16%

25%

30%

Most Recent Year

2006–07

Table 5 Total Aid, Non-Repayable Aid and Net Loan per Student Loan Recipient, 2006–07

BC

AB

SK

MB

ON

QC

NB

NS

PE

NL

Canada

$11,125

$9,767

$9,273

$8,325

$8,502

$6,813

$10,092

$10,099

$8,116

$8,911

$8,576

$Total Aid

12%

32%

30%

48%

32%

43%

13%

22%

16%

25%

30%

%Non-Repayable

$1,328

$3,079

$2,746

$4,015

$2,705

$2,962

$1,290

$2,215

$1,327

$2,241

$2,588

$Non-Repayable

$9,797

$6,688

$6,526

$4,310

$5,797

$3,851

$8,802

$7,884

$6,789

$6,670

$5,989

$Net Loan


Part Two: Education Tax Credits and Savings Grants

4. Non-need-based aid continues to growat a faster rate than need-based aid.

In 2006–07, the federal and provincial gov-ernments provided $2.5 billion worth of taxcredits for students and their families andeducation savings grants for prospective stu-dents. The value of tax credits and savingsgrants has continued to expand rapidly sincethe early 1990s, in stark contrast to theincreases in the value of need-based loans andgrants, which are recent and relatively modestby comparison.

a. The value of education tax credits, whichcan be claimed by students with taxableincome or either carried forward to futureyears or transferred to family members,reached $1.9 billion in 2006–07. Theirvalue more than doubled in real termsbetween the late 1990s and today (in com-parison, the total value of need-basedloans and grants fell by seven percent inreal terms over the same period).

b. Education savings grants were valued at$559 million in 2006–07 and have tripledin value in real terms during the past nineyears. These grants include the CanadaEducation Savings Grants (CESG), whichare matching contributions made by thefederal government to funds invested in aRegistered Education Savings Program(RESP). The contribution is equivalent to20 percent of the annual contribution, to amaximum of $400. Similar programs existat the provincial level. Additionally, theCanada Learning Bond is provided as agrant to low-income families who haveestablished an RESP, without requiringtheir own contribution. This is the only

truly needs-based component of educationtax credit and savings grant expenditures,yet the amount spent on Canada LearningBonds in 2006 comprised less than twopercent of the total.

c. In 1996–97, for every dollar provided inneed-based loans and grants, governmentsspent 21 cents on education tax creditsand savings grants. By 2006–07, theyspent 61 cents on tax measures for everydollar they provided of need-based finan-cial aid. This demonstrates the growingimportance of tax credits and savingsgrants within the overall system of finan-cial support for students and their families.

d. Despite the steady increases in the value ofeducation tax credits and savings grants,there is substantial room for more growth.According to the December 2007 quarterlyprogram report,7 37 percent of Canadianchildren participated in the federal CESGprogram in 2007. As this program continuesto expand, the amount of money providedin the form of non-need-based support forstudents will continue to grow.

e. In terms of improving access, educationtax credits and savings grants have threeimportant limitations. First, not only dotax measures not target those in financialneed, they actually tend to disproportion-ately benefit affluent families and students.After all, many of these tax supports cannotbe fully used unless the student (or a familymember) owes income taxes. Those whocannot use the tax credits can only carrythem forward to future years. Second, tax credits do not help students pay fortheir tuition, books or housing when thesecosts become due. Even those that are notcarried forward can only be claimed in the spring following the calendar year in


7. Human Resources and Social Development Canada, Canada Education Savings Grant Program (2008) Quarterly Statistical Review:December 31, 2007.

12

“ Despite thesteady increasesin the value ofeducation taxcredits and savings grants,there is substan-tial room formore growth. ”


which the student earned them. Third, asmentioned, the take-up rate for educationsavings grant programs is quite low. It isespecially low in the case of the CanadaLearning Bond that is targeted to low-income families. Fewer than 12 percent oflow-income Canadian families eligible forthe Learning Bond have received one. It istelling that the one element of the edu -cation tax credit and savings grant systemthat specifically targets families in financialdifficulty is the least used.

5. Many governments continue to favourinvestments in non-need-based studentaid.

An assessment of student support plansannounced in the 2007 and 2008 provincialbudgets reveals that many governments continue to focus on measures designed tobenefit all students rather than ones thatfocus on students with financial need.

a. A number of provinces, including NovaScotia, Saskatchewan and Manitoba, haveintroduced or expanded post-graduationstudent support measures in the last twoyears, typically in the form of tax rebatesfor recent graduates related to the tuition

fees they paid while studying. A similarprogram was previously introduced in NewBrunswick. These tax rebates are expensive.For example, their announced cost in theprovinces concerned is greater than theentire budget for the federal access grantprogram serving low-income students andstudents with disabilities.

b. The goal of these programs is mainly to entice graduates to remain in or relocateto the province offering the rebate, althoughthey have occasionally also been promotedas a measure to improve access. A literaturesearch conducted for the Canada MillenniumScholarship Foundation, however, found nopublished research indicating that themobility of post-secondary graduates isinfluenced by such tax measures.

c. Governments in Alberta, Saskatchewan,Manitoba, New Brunswick, Newfoundlandand Nova Scotia have all announced plansto maintain or introduce tuition freezes intheir 2007 and 2008 budgets. In some cases,such as New Brunswick, the tuition freeze isrelatively inexpensive ($12 million per year).In Nova Scotia, by contrast, the freeze isexpected to cost $180 million through itsthree-year duration, ending in 2011.


13

$7,000,000,000

$6,000,000,000

$5,000,000,000

$4,000,000,000

$3,000,000,000

$2,000,000,000

$1,000,000,000

Figure 4 Selected Student Support (by Type): Canada in Real 2007 $

Education Tax CreditsNeed-Based Student Aid Education Savings Grants

$0

1993–94

1994–95

1995–96

1996–97

1997–98

1998–99

1999–00

2000–01

2001–02

2002–03

2003–04

2004–05

2005–06

2006–07

“ It is telling that the one element ofthe education taxcredit and savingsgrant system thatspecifically targetsfamilies in finan-cial difficulty is the least used. ”


d. At the same time, almost all provinces have announced important investments inneed-based aid, including more money forbursaries and improvements to studentloans programs. Once again, however, thecost of these measures is significantly lessthan the cost of the post-graduation taxrebate programs mentioned above (in thoseprovinces in which such tax measures arebeing introduced). In New Brunswick, forinstance, the expanded eligibility for stu-dent loans announced in 2007 was expectedto cost $7 million per year, compared with $32 million per year for the NewBrunswick Tuition Rebate.8

e. In the case of the federal government, the2008 budget announced the creation ofthe Canada Student Grant Program,beginning in the 2009–10 year, that willconsolidate funds currently spent on thefederal grants (including Canada StudyGrants and Canada Access Grants) and by the Canada Millennium ScholarshipFoundation (the Foundation’s mandateexpires at the end of 2009). The new fed-eral grant program is expected to provide$350 million in grants in 2009–10, anamount that will increase to $430 millionby 2012–13.

Part Three: Other Government Assistance

6. Federal support for Aboriginal studentsis almost ten percent lower in real termsthan it was ten years ago.

Most financial assistance for Aboriginal students is provided through two programsoperated by the federal department of Indianand Northern Affairs Canada (INAC). The

Post-Secondary Student Support Program(PSSSP) offers Aboriginal students non-repayable funding to support their tuition,books, travel and living costs. The UniversityCollege Entrance Preparation Program(UCEP) is available to Aboriginal Peoplesseeking to upgrade their skills prior to begin-ning their studies. The federal governmentdoes not make payments to Aboriginal studentsdirectly; instead, it provides non-repayablefunding to bands, which in turn fund students.This makes it rather difficult to determinehow many students benefit from the PSSSPand UCEP programs. Best estimates suggestthat the $305 million INAC provides annuallythrough its two programs supports approxi-mately 26,000 students.

a. A recent study9 showed that PSSSP fundingincreased by 13 percent between 1994–95and 2002–03. The following year, it jumpedby 5.6 percent to $305 million per year (innominal terms), where it has remained. Inreal terms, the amount of money providedto Aboriginal bands for student supporthas decreased, despite a growing Aboriginalyouth population, particularly in WesternCanada, and consensus about the impor-tance of increasing Aboriginal participationin post-secondary education. Federalfunding for Aboriginal students was 8.5 per-cent lower in real terms in 2006–07 than itwas ten years earlier.

b. At the provincial level, governments inAlberta, Saskatchewan and Manitoba pro-vide funding specific to Aboriginal stu-dents, although data are only available forthe last few years. In 2006–2007, thesethree provinces together provided justunder $4 million in financial assistanceearmarked for Aboriginal students. Once


8. When the Tuition Rebate was first announced in 2005, it was expected to cost $32 million per year after five years, $55 million afterten years and $63 million once fully mature after 15 years.

9. R. A. Malatest & Associates Ltd. and Blair Stonechild, Factors Affecting the Use of Student Financial Assistance by First Nations Youth(Montreal: Canada Millennium Scholarship Foundation, 2008).

14

“ In real terms, the amount ofmoney provided to Aboriginalbands for student support has de-creased, despite agrowing Aboriginalyouth population, particularly inWestern Canada. ”


provincial aid for Aboriginal students iscombined with federal aid, total supportfor Aboriginal students is five percentlower than ten years ago.

c. Additionally, the Canada MillenniumScholarship Foundation introduced accessbursaries specifically for Aboriginal stu-dents in Saskatchewan and Manitoba,beginning in 2005–06.10

7. Total annual government financialsupport for students is now more than$7 billion.

Once Aboriginal assistance, tax credits, savingsgrants and merit scholarships (the latter repre-senting about $300 million per year) areadded to the need-based system of studentloans and grants, the total amount of financialsupport provided to Canadian studentsamounts to $7.1 billion, as demonstrated in Figure 6. This total does not include measures such as tuition freezes or post-graduation tax rebates (discussed in Section 5)or the institutional aid discussed below.

a. Since the late 1990s, financial support forpost-secondary students has increased by52 percent (27 percent in real terms).

b. As discussed above, non-need-based aidhas increased at a much faster rate thanneed-based aid. As a result, need-based aid(in this case, need-based loans and grants,as well as support for Aboriginal students)now comprises only 66 percent of the $7.1 billion national total financial supportfor students. A decade ago, it comprisedover 80 percent.

c. While students received $7.1 billion infinancial support, governments spent lessthan this amount because loans cost lessthan their value to issue. Because studentloans are repaid, governments only assumethe cost of the interest subsidy (interestdoes not accumulate on the loan while thestudent is in school) and costs related todefaulted loans and bad debt. While it isdifficult to determine exactly how muchgovernments spend on each dollar of stu-dent loan issued, it is estimated that the


10. Note that the value of these millennium access bursaries for Aboriginal students (approximately $3.5 million to date) is included inthe totals for need-based grants discussed above in Section 3.

15

200,000

250,000

150,000

100,000

0

$325

$320

$315

$335

$330

$310

$305

$300

$295

Figure 5 Aboriginal Youth Population Growth and Funding for Aboriginal Students, 1996 to 2006

Aboriginal Population, aged 15–24 Funding for Aboriginal Students

Fund

ing

for

Abor

igin

al S

tude

nts

(Mill

ions

of

Real

200

7$)

50,000

Abor

igin

al P

opul

atio

n, 1

5–24

1996 2001 2006

$1,477 $1,421$1,534

“ Non-need-basedaid has increasedat a much fasterrate than need-based aid. ”


cost is approximately 30 to 40 per cent ofthe value of the loan. Although 66 percentof the value of support for students isneed-based, approximately 40 percent ofthe cost is need-based.

Part Four: Institutional Aid

8. Less than one in five undergraduatesenrolled in Canada’s major universitiesreceived need-based support from theirinstitution.

In addition to government student financialassistance, students can receive need-based ormerit-based support from their post-secondaryinstitution. A recent survey of 31 universitiesand 11 colleges whose enrolment coversroughly 73 percent of Canada’s undergraduatestudent population shows that colleges anduniversities spend at least $144 million eachyear on merit scholarships and more than$114 million on need-based financial aid for undergraduates (more is provided in

graduate student assistance but this is not covered here). While institutional financial aid is not formally bundled with government aid, it is an increasingly important source of student support.

a. Among the “G-13”11—Canada’s group ofmajor universities—19 percent of under-graduates received a need-based bursaryin 2006–07; the average value was $2,000.Non-G-13 universities provided lessfinancial aid. Eleven percent of students atthese institutions received need-based bursaries, whose average value was $1,200.

b. Universities are more likely to provide students with merit scholarships than withneed-based awards. G-13 institutions pro-vided scholarships to 23 percent of theundergraduate student population, whilenon-G-13 universities did so for 20 percentof their undergraduates. The average valueof these scholarships at G-13 universities,however, was lower ($1,750) than the


11. The 13 universities are University of British Columbia, University of Alberta, University of Calgary, McGill University, McMasterUniversity, University of Ottawa, Queen’s University, University of Toronto, University of Waterloo, University of Western Ontario,Dalhousie University, Université Laval and Université de Montréal (the latter two did not participate in the survey).

16

$7,000,000,000

$6,000,000,000

$5,000,000,000

$4,000,000,000

$3,000,000,000

$2,000,000,000

$1,000,000,000

$8,000,000,000

Figure 6 Total Student Aid in Canada by Type, 1993–94 to 2006–07 in Real 2007$

MeritNeed-Based Student Aid Aboriginal Support Education Tax Credits Education Savings Grants

$0

1993–94

1994–95

1995–96

1996–97

1997–98

1998–99

1999–00

2000–01

2001–02

2002–03

2003–04

2004–05

2005–06

2006–07


average value of the need-based bursariesthey provided. At non-G-13 institutions,the average value of undergraduate meritscholarships ($1,375) was higher than theaverage need-based award.

c. Canada’s community colleges lack the re -sources to provide similar levels of financialaid. Only eight percent of college studentsat those institutions that took part in thesurvey received a need-based bursary. The average bursary was worth $800. Sixpercent received a merit scholarship; theaverage value was $911. (It should benoted that college students have substan-tially lower costs than university students).

d. A comparison of the recent survey of insti-tutional financial assistance with a similarsurvey conducted at the beginning of thisdecade reveals an increase in the numberof in-course scholarships, which areoffered to a student partway through his orher program of study. In the recent survey,as many students received an in-coursescholarship as did an entrance scholarship.

9. Need-based institutional aid has beensignificantly influenced by Ontariogovernment policy.

As noted earlier, post-secondary institutionsprovide more than $100 million in the formof need-based financial aid to their students.Ontario universities comprise five of the 13insti tutions known as the G-13. These fiveuniversities are subject to recent provincialpolicies designed to increase institutionalfinancial aid. The first, known as tuition set-asides, requires institutions to take a portionof funds raised through tuition increases and provide them to students on the basis offinancial need, often to make up for need thatis recognized but not funded by governmentstudent aid programs. Second, the OntarioStudent Opportunities Trust Fund matchesfunds used to create need-based awards, acting as an incentive to increase need-basedinsti tutional funding. As a result of these poli-cies, Ontario institutions are more generousthan institutions outside the province,although it should be noted that tuition at G-13insti tutions in the province, at an average of$5,470, was 28 percent higher than tuition at


17

$2,000

$2,500

$1,500

$1,000

$0

12%10%8%

18%20%

14%16%

6%4%2%0%

$500

G-13 Universities Non-G-13 Universities

Figure 7 Need-Based Institutional Financial Aid in Canada

Average Need-Based Award Percentage of the student population receiving a need-based award

$1,221

$1,953

19%

11%

“ Ontario universitiescomprise five of the 13 institutionsknown as the G-13.These fiveuniversities are subject to recentprovincial policiesdesigned to in-crease institutionalfinancial aid. ”


G-13 institutions outside Ontario. The OntarioG-13 universities provided need-based awardsto 22 percent of their undergraduates, com-pared to 13 percent at the G-13 institutionslocated outside the province. Moreover, they provided an average award that was$225 higher than the non-Ontario G-13 uni-versities. In the case of universities that arenot part of the G-13, Ontario institutionsprovided need-based awards to 14 percent,compared to ten percent for institutions outside of Ontario, although the value of thebursaries in Ontario is only $50 greater.

10. The financial aid data portrait isincomplete.

As noted earlier, the survey of institutionalfinancial aid only covers about three-quartersof Canada’s undergraduate population.Clearly, there are missing elements of thisportrait. While most institutions reacted positively to the survey, many lacked thecapacity to produce comprehensive figuresabout institutional spending on student support. In many cases, the data only exist ata very general level, making an analysis ofwhich types of students are receiving which

forms of aid difficult, if not impossible.Although institutions receive the majority oftheir funds from public sources (or from stu-dents themselves), they are under no obligationto report their own support for students in amore comprehensive manner. It is impossi-ble, therefore, to report with certainty thetotal amount spent on institutional financialaid. A full picture of who gets what in termsof college- and university-based financial aid will not emerge until a culture of report-ing is more widespread among Canadianpost-secondary institutions.

a. We face a number of other challenges. Forinstance, there is a lack of good, timely dataabout the socio-economic profile of thepost-secondary population. While we havedeveloped a portrait of what governmentsprovide, we know very little about whatindividual students receive, particularly ifwe seek information about specific types ofstudent (such as those from low-income or Aboriginal backgrounds). We cannot,for example, easily document how the $7.1 billion in total financial support notedin this report is shared out across studentsfrom different income groups.


18

$800$1,000

$600$400

$0

$1,200$1,400$1,600$1,800$2,000

$200

G-13 Universities Non-G-13 Universities

Figure 8 Merit-Based Institutional Financial Aid in Canada

Average Merit-Based Award Percentage of the student population receiving a merit-based award

$1,372

$1,757

10%

6%

18%20%

14%

2%

8%

4%

16%

24%22%

12%

0%

23%

20%

“ A full picture ofwho gets what interms of college-and university-based financial aid will not emergeuntil a culture of reporting ismore widespreadamong Canadianpost-secondaryinstitutions. ”


b. Unlike the United States, Canada does notcollect data on a regular basis from a largenational sample of post-secondary stu-dents that would allow policy-makers tounderstand their financial circumstancesand the effectiveness of student aid programs. The National PostsecondaryStudent Aid Survey (NPSAS) in the UnitedStates tracks information on students attwo-year, four-year and less-than-two-yearpublic, private, for-profit, not-for-profitand community colleges. The survey provides information about the cost of attendance (tuition fees, books, livingcosts, etc.), the distribution of financial aidand the characteristics of students (aid recipients and non-recipients). AlthoughStatistics Canada’s longitudinal Youth inTransition Survey and the Foundation’sMeasuring the Effectiveness of Student Aidor MESA project is offering new avenuesfor research in the Canadian context, wesorely lack a comprehensive equivalent ofthe NPSAS.

c. The future of research on access to post-secondary education, student finances and student aid policy is uncertain. Whilethe Canada Millennium ScholarshipFoundation has made these themes thefocal point of its research program, theupcoming expiry of its mandate meansthere will soon be no home for the study ofthese issues. This is not to say that researchin these areas will cease; to the contrary,interest in and engagement with these issues has grown exponentially since theFoundation was created in 1998. Certainly,the network of researchers that is now in existence will carry on after theFoundation closes. However, as theMillennium Research Program ceases toexist, so will much of the infrastructuresupporting this research in Canada.

Conclusion

Are Canadian post-secondary students re -ceiving enough financial support? Certainly,students are receiving more financial supportin total today than in previous years. Theanswer to the question of whether studentsare receiving enough support, however,depends in part on what one considers theobjective to be. If the objective is moderatingthe accumulation of student debt, then it isclear that overall students are in a better posi-tion today than they were a decade ago. Amuch greater portion of need-based financialaid is provided in the form of non-repayablegrants rather than loans. Despite this, it is notalways enough. In provinces such as B.C.,New Brunswick and Nova Scotia, studentswith financial need are still contracting loansin excess of $7,500 per year. If the objectiveis to improve access by helping studentsstruggling to meet the costs of a higher edu-cation, it is clear that government spending isnot as effective as it could be. Recent increas-es in need-based aid are welcome. In the faceof rising costs, however, this aid has not somuch improved the financial situation of students as simply kept it from deterioratingfurther. But governments clearly have moremoney to spend. For example, spending oneducation tax credits has doubled in ten yearsand has reached almost $2 billion. These bene-fits are available to all students and, as a result,go mainly to those who have the means to payfor their education rather than those withfinancial need. They are also not particularlyhelpful in covering the costs of tuition, booksand student housing when they are due. Inrecent years, several provincial governmentshave turned even further away from need-based aid by adopting universal tax rebateprograms for post-secondary graduates in the hopes of enticing them to reside in theirjurisdiction, despite the lack of evidence that


19

“ In terms of facili-tating access bytargeting supportto students with financial need, there is much room for improvement. ”


the mobility of young graduates is influencedby such policies. For these reasons, in terms offacilitating access by targeting support to stu-dents with financial need, there is much roomfor improvement. If, however, the objective is

to distribute benefits widely to all studentsand their families, regardless of financial needand without necessarily improving access,then governments are doing better than ever.


20

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Ten Things You Need to Know About Financial Support for ......2008/10/22 · Millennium Research Note #7 Written by: Joseph Berger and Andrew Parkin Ten Things You Need to Know