our bright future Canadian Federation of Students Ontario December 2009 student financial assistance

Transcription

1 our bright future Canadian Federation of Students Ontario December 2009 student financial assistance

2 General inquiries regarding this document should be directed to: Canadian Federation of Students Ontario 180 Bloor Street West, Suite 900 Toronto, Ontario M5S 2V6 Tel Fax WWW cfsontario.ca Ce document est disponible en français Local Section 1281

3 Canadian Federation of Students Ontario With more than 300,000 members at 37 students unions and in all regions of the province, the Canadian Federation of Students is the voice of post-secondary students in Ontario. Founded in 1981, the Federation represents students at the college, undergraduate and graduate levels, including full and part-time students. Algoma University Students Union Brock University Graduate Students Association Carleton University Students Association Carleton University Graduate Students Association Association étudiante de La Cité collégiale Student Association of George Brown College Glendon College Student Union University of Guelph Central Student Association University of Guelph Graduate Students Association Lakehead University Student Union Laurentian Association of Mature and Part-time Students Laurentian University Graduate Students Association Laurentian University Students General Association Association des étudiantes et étudiants francophones de l Université Laurentienne McMaster University Graduate Students Association Nipissing University Student Union Ontario College of Art and Design Student Union Student Federation of the University of Ottawa Graduate Students Association des étudiant(e)s diplômé(e)s de l Université d Ottawa Queen s University Society of Graduate and Professional Students Ryerson Students Union Continuing Education Students Association of Ryerson Saint Paul University Students Association University of Toronto at Scarborough Campus Students Union University of Toronto Graduate Students Union University of Toronto Students Union University of Toronto at Mississauga Students Union Association of Part-Time Undergraduate Students of the University of Toronto Trent Central Student Association Trent University Graduate Student Association University of Western Ontario Society of Graduate Students Wilfrid Laurier University Graduate Students Association University of Windsor Students Alliance University of Windsor Graduate Students Society University of Windsor Organization of Part-time University Students York Federation of Students York University Graduate Students Association Our Bright Future 1

4 introduction Tuition fees are the most significant barrier to accessing a post-secondary education. Under the Reaching Higher framework, fees climbed from fourth highest to the highest in the country. As a result, students have increasingly turned to student financial assistance and the deferral of education costs through student debt as a means to access higher learning. Access to post-secondary education is central to finding meaningful employment, strengthening the province s economy and creating a more equitable society. This has led more students to turn to government-assisted loans programmes to fund their education. Recent government data shows that, in the Greater Toronto Area alone, the number of students accessing the Ontario Student Assistance Program (OSAP) increased in the past year by more than 10 percent. 1 The high upfront cost of post-secondary education has long been a barrier for students in this province. Even with the re-introduction of targeted need-based grants in Ontario, improvements to student financial assistance that are intended to ease the financial burden for low and middle-income students are undermined as long as fees are high and allowed to increase. For example, improvements made to student financial assistance through Reaching Higher resulted in $1.30 being clawed back from students through tuition fee increases for every new dollar made available to students through enhancements to student grants and loan policies. 2 Rising fees have put upwards pressure on student debt for graduates and over the past fifteen years, average student debt for a four-year degree has increased by 350 percent from $8,000 to over $22,000. Those students who do not qualify for OSAP or who don t receive enough assistance to cover their expenses are often forced to turn to lines of credit, credit cards and private loans to cover their expenses. This results in many of today s graduates entering the workforce with significant financial obligations that limit their choices in relation to their future career, family and educational options. Strapping students with heavy debt loads and long repayment periods prevents their full participation in the economy. It penalises students with financial need by making them pay more for their education than students who do not. This system of student financial assistance discriminates against low- and middleincome students by making them pay more for the same education, saddling them with debt loads that will take years to pay off. Students who access post-secondary education to better their socio-economic position find their economic marginalisation perpetuated by this regressive system of debt-biased student financial assistance. Students have long recommended that the government of Ontario use a two-pronged approach to improve access to post-secondary education: reduce tuition fees and provide student financial assistance that is primarily premised on a system of upfront, needs-based grants rather than relying on high user fees that are financed through loans. 1 Government of Ontario. < 2 Investing in Ontario s Future Submission to the Standing Committee on Finance and Economic Affairs. Canadian Federation of Students-Ontario, January Canadian Federation of Students Ontario

5 summary of recommendations Introduce a plan to shift the Ontario Student Assistance Program (OSAP) from a debt-based to a grant-based system of student financial assistance. Reallocate provincial tax credits and expand existing back-end grants to form a comprehensive system of upfront needs-based grants. Convert the Student Access Guarantee from an institutionally-funded programme into a comprehensive, government-funded needs-based grant programme administered through the Ontario Student Assistance Program (OSAP). Transform the First Generation Bursary into a government administered upfront grant. Ensure that funds from the Canada Student Grants programme that displace provincial money earmarked for student financial assistance are reinvested to directly reach students. In order to ensure that student financial assistance is accessible and sufficient and that student debt is reduced, OSAP provisions should be reformed in the following ways: Expand eligibility to include part-time students; Reduce the time threshold from secondary school to be considered independent; Prevent the displacement of money received through other forms of social assistance; Lower parental contribution levels; Raise pre-study and study-period income exemptions; Increase allowable assets; Lower debt forgiveness thresholds and apply debt forgiveness funds to low-income students upfront; Extend the period of non-repayment to one year and stop interest from accruing during this period; and Immediately reduce student loan interest rates to below prime, with the intention of eliminating interest on student loans completely in four years. Double the number of Ontario Graduate Scholarships and expand access to OGS. Our Bright Future 3

6 recommendation one Introduce a plan to shift the Ontario Student Assistance Program (OSAP) from a debt-based to a grantbased system of student financial assistance. 4 Canadian Federation of Students Ontario

7 The principle of a debt-based system of student financial assistance is that the upfront cost of tuition fees should be shifted to the after-study period and increased due to interest accrual. This system is more costly and less efficient to administer than a comprehensive system of upfront, needs-based grants. A complicated system of loans-based student financial assistance requires cumbersome federal, provincial and institutional bureaucracy to monitor students and graduates through years of borrowing and repayment. Interest subsidies absorbed by government also result in additional costs. In alone, the Government of Ontario spent more than $25 million to pay the instudy interest on student loans and $11 million in Interest Relief. As tuition fees increase, so too will the costs of maintaining the loan system. 3 Existing grants must be improved to be sufficient and accessible to students. The average value of the Ontario Access Grant in was just 3 Government of Ontario, Estimates Committee 2008, response to question. $1,400. During that same time, the total number of grant recipients was about 54,000, or less than 10 percent of the student population. Students not in their first or second year, and students pursuing more costly second entry programmes like dentistry, law, and medicine remain ineligible for the grants, despite the fact that they often pay much higher fees. Expanding access to grants as a means to reduce students reliance upon loans is a positive and essential feature of a new framework. Replacing the debt-biased system of student financial assistance with a system of upfront, needsbased grants would eliminate the cost of monitoring students through repayment and streamline the system required to administer that assistance. Such grants could be administered through the existing framework. As a result, more public funds would directly reach students, increasing access for those students who either cannot access assistance or are forced to borrow money and to pay back the principal plus interest after graduation. Our Bright Future 5

8 recommendation two Reallocate provincial tax credits and expand existing back-end grants to form a comprehensive system of upfront needs-based grants. 6 Canadian Federation of Students Ontario

9 Existing back-end grants and provincial tax credit programmes have been established for students to fund their education, but both options are insufficient and often only accessible after fees have been paid. This patchwork system fails to address the basic upfront financial barriers caused by high tuition fees, and requires costly administration and oversight infrastructure that make it an inefficient and ineffective use of public funds. The Ontario Access Grant and the Ontario Access Grant for Crown Wards are currently released to students through their institutions at the beginning of their second term and are only worth 25 to 50 percent of the cost of tuition fees, apart from living and other expenses. For students who struggle to pay high tuition fees, a grant or tax credit received months after institutional payment deadlines have passed does little to improve access, especially if the value of the grant does not approach the total cost of tuition fees and living expenses. Provincial tuition, education and textbook tax credits and existing grants applied at the back-end should be reallocated into a comprehensive system of upfront, needs-based grants. These grants should be applied through the OSAP framework as a means to assess eligibility and should constitute a majority of the assessed cost of tuition fees and living expenses. Such a system would be a more effective and efficient use of public dollars and method of ensuring post-secondary education is accessible to all Ontario students. Our Bright Future 7

10 recommendation three Convert the Student Access Guarantee from an institutionallyfunded programme into a comprehensive, governmentfunded needs-based grant programme administered through the Ontario Student Assistance Program (OSAP). 8 Canadian Federation of Students Ontario

11 As fees increased under the Reaching Higher framework, part of the burden of ensuring access to post-secondary education was placed on institutions through the Student Access Guarantee. The Guarantee was introduced by the government to ensure that no qualified student was denied access to post-secondary education because of high tuition fees. The amount available through the Guarantee can range anywhere from a few hundred to a few thousand dollars, and the onus to find money and asses individual need for this programme was left to individual institutions. The value of these grants varies widely between institutions and programmes, with the average universities amount at $2,086 and the average colleges amount at $ For example, students at Trent and Nipissing Universities received less than $1,000 per grant, while students at Queen s University and the University of Toronto received $3,675 and $3,331, respectively. 5 The number of students who received funding through the Guarantee for (as of July 2009) was 75,600, only 16 percent of students enrolled in an Ontario college or university. 6 Concerns have also been raised about the lack of operational clarity and enforcement mechanisms of the Guarantee. Given the programme s decentralised administration, the Guarantee is vulnerable to financial or budgetary changes at the institutional level. This has been acutely felt by the loss of endowment funds that are often used to pay for student grants as a result of the economic recession. The current system of institutionally-funding the Guarantee is not an effective or equitable method of ensuring the accessibility of post-secondary education. A new framework must ensure that money intended to guarantee access must be equitably distributed across institutions. The Ontario government should assume costs that have been paid by colleges and universities to fund the Guarantee and should regulate its equitable distribution across institutions. 4 Multi-year Accountability Agreement Report-backs, 2007/ Ibid. 6 Ministry of Training, Colleges and Universities, September 23, Average amount ($) per student receiving Student Access Guarantee funding by college or university Institutional enrollment data, 2009 Confederation La Cité Sheridan St. Clair Niagara Humber Conestoga Centennial Seneca Colleges Average Sault Canadore St. Lawrence Mohawk Nipissing Trent Loyalist George Brown Carleton Georgian Boréal UOIT Brock Guelph Cambrian Lakehead OCAD Durham Fanshawe Ryerson Wilfred Laurier McMaster Windsor Laurentian York Universities Average Ottawa Waterloo Western Ontario Toronto Queen's $0 $1,000 $2,000 $3,000 Our Bright Future 9

12 recommendation four Transform the First Generation Bursary into a government administered upfront grant. 10 Canadian Federation of Students Ontario

13 Percentage of self-indentified first-generation students who access bursary (NSSE, 2008, and Institutional enrollment data, 2009) Self-indentifi ed fi rst-generation students who did not receive the bursary (MYAA Reportbacks, ) Self-indentifi ed fi rst-generation students who do access the bursary (MTCU, 2009) The First Generation Bursary (FGB) is meant to encourage access to post-secondary education among students who are the first in their families to attend college or university. This group has had statistically low participation rates in higher education. The Bursary provides assistance to and enhanced access for students whose parents have not participated in post-secondary studies in Canada. However, in , of the nearly 60,000 students identified as being first generation by college and university administrators 7, only 800 students received this funding. 8 Students must apply through their institution s financial aid office and each institution has a separate application process to determine what constitutes financial need. The effectiveness of this bursary is compromised by this inconsistent and unclear application procedure. Increasing access to postsecondary education for under-represented groups, including first-generation students, must be a priority for government in a new funding framework. However, existing measures to achieve this goal need to reach the students that the grant is intended to help. In order to function as an effective incentive for eligible students, the First Generation Bursary should be assessed and applied automatically through OSAP as an upfront grant. In order to expand enrollment among statistically underrepresented groups, a new framework must improve the uptake and efficacy of the First Generation Bursary. 7 Multi-year Accountability Agreement Report-backs, 2007/ Ministry of Training, Colleges and Universities, September 23, Our Bright Future 11

14 recommendation five Ensure that funds from the Canada Student Grants programme that displace provincial money earmarked for student financial assistance are reinvested to directly reach students. 12 Canadian Federation of Students Ontario

15 In 2009, the Canada Student Grants (CSG) programme disbursed money to students as part of Canada s first-ever national system of needs-based grants. This programme replaced the Millennium Scholarship Foundation (MSF) and despite a somewhat similar mandate to disburse nonrepayable grants, the new grants will see a reduction in bureaucracy and allow for better integration with provincial financial aid programmes. However, concerns remain about how the Ontario government will address OSAP funds displaced by federal money. One of students criticisms of the Millennium Scholarship Fund was that provincial money displaced through this federal programme was not reinvested to help students. If any money allocated by the Ontario government for student financial assistance is displaced by the new grants, this money must be re-invested in new assistance for students and not simply absorbed by the province. A new framework should ensure that all funds displaced through the new national system of needs-based grants are reinvested in a complementary system of upfront provincial needs-based grants that directly reach students. Our Bright Future 13

16 recommendation six In order to ensure that student financial assistance is accessible and sufficient and that student debt is reduced, OSAP provisions should be reformed in the following ways: Expand eligibility to include part-time students With the increasing cost of post-secondary education, students are working more than ever before to be able to pay for their post-secondary education. In many cases, students are forced to drop down to part-time status in order to reduce immediate educational expenses and increase their work-related earnings. In some cases, students with dependents, family or personal obligations must switch to part-time status because of the demands of their circumstances. Despite financial need, parttime students are unfairly excluded from eligibility for OSAP solely on the basis of course load. In addition, students who have received OSAP during periods of previous full-time studies are forced into repayment on their loans if they switch to part-time status, as they are considered to be finished their studies. There is currently no provision for parttime students who have accumulated debt to be shielded from repayment and interest accrual while continuing their studies. Part-time students should have the same access to financial assistance as full-time students and eligibility should be based on financial need, not course load. A new postsecondary education framework should rectify this by extending eligibility to part-time students. 14 Canadian Federation of Students Ontario

17 Reduce the time threshold from secondary school to be considered independent Currently, students applying to OSAP within four years of completing secondary school must include their parents income with their application as one of the determinants of eligibility and amount of assistance. This is based on an assumption that parents continue to subsidise their children for the length of time of an average undergraduate degree. As a result, many young people who do not receive parental or guardian contributions have no way to afford the upfront cost of post-secondary education. Current regulations require a person to have completed secondary school at least four years prior to application to a post-secondary institution before being assessed independently. This practice assumes parental support for four years of school and unfairly discriminates against those who don t receive it. A new framework should reduce the number of years from four to two that are required for a student to be considered independent in order to minimise the exclusion that occurs with such provisions. In addition, a review should be conducted of the OSAP appeal procedures for students who do not receive parental support, in order to ensure that those students who do not conform to their parents social and cultural expectations have avenues to obtain financial aid. Prevent the displacement of money received through other forms of social assistance As a result of conflicts between government support programmes, many people who access other forms of social assistance risk having that support clawed back if they receive OSAP. This can create a disincentive for many people on social assistance or disability support from seeking higher education. Given that rates of social assistance are already below the Low Income Cut Off, clawbacks as a result of accessing OSAP threaten the recipient s ability to maintain access to basic necessities such housing and food. It is counter-intuitive to diminish the capacity of people facing economic hardship to meet the cost of living due to their attempt to receive a post-secondary education. A new framework should seek to eliminate social assistance reductions as a result of OSAP borrowing that serve as disincentive from pursuing higher learning. Our Bright Future 15

18 Lower parental contribution levels Student financial assistance must be sufficient to meet the upfront cost of post-secondary education and the cost of living. Often students are denied financial assistance because OSAP eligibility criteria are based on unrealistic expectations for parental contributions. There are a variety of reasons why standard contribution calculations do not apply, including in cases where parents are self-employed and profits are re-invested into their business. Lowering parental contribution levels will help to mitigate unmet financial need and increase assistance eligibility for many students from middle-class families. A new framework should reduce the required parental contributions should be reduced to below the formula used by the federal government. This will ensure that students in need will receive assistance and that the levels of assistance are sufficient. Raise pre-study and studyperiod income exemptions Many students are forced to live at or below the poverty line during their studies because the assistance provided through OSAP is insufficient and income exemptions are too low. In order to ensure that student financial assistance enables students to meet the cost of living during their studies, OSAP provisions should allow students to be able to earn more income before reducing assistance. Study-period income exemptions should be raised from $1,700 to $3,500, the amount allowed for merit-based scholarships. This would enable students to earn more money without having that amount clawed back from available grants. With this adjustment, students would have a higher standard of living and more opportunity to augment their assistance with employment income. Increase allowable assets Students eligibility and amount of assistance should not be negatively affected by assets that help students access post-secondary education. Students could hold assets for a variety of reasons, including mature students returning to school for retraining. Students who own cars, for example, often use them to commute to school to avoid residence fees. A person should not be required to liquidate all assets to meet eligibility requirements just to be able to qualify for student financial assistance in meeting the substantial upfront cost of post-secondary education. A new framework should increase students allowances for ownership of items such as vehicles. Lower debt forgiveness thresholds and apply debt forgiveness funds to lowincome students upfront In January 2009, national public student debt surpassed $13 billion. As large as it is, this amount doesn t include the almost $2 billion more owed as public provincial debt by Ontario students, nor does it include private lines of credit, credit card debt or debt owed to family members. Students graduating with mortgage-sized debt loads that can take nearly 15 years to pay off are less able to participate in the economy upon graduation. In order to mitigate the debt burden students are forced to bear, OSAP forgiveness thresholds are fixed and applied through the Ontario Student Opportunity Grant (OSOG) to create a maximum allowable debt load. To target high levels of student debt, this threshold should be lowered, starting with an immediate $1,000 reduction, and progressive reductions thereafter. This would reduce the maximum debt limit for one year from $7000 to $6000, allowing students to receive more assistance from government without increasing student debt averages. Further, the Ontario Student Opportunity Grant should be disbursed upfront when OSAP assistance is calculated. Extend the period of nonrepayment to one year and stop interest from accruing during this period When a student graduates, they do not have to start paying their student loan for six months after they graduate. This is meant to provide a period of time for recent graduates to find meaningful employment. However, with youth unemployment at a record high, 16 Canadian Federation of Students Ontario

19 finding a job within that six-month period is often not enough time. Despite existing provisions through which students can apply for repayment relief, it is unrealistic for the standard repayment period to be six months following graduation and punitive for interest to accrue during that time. A new framework should make the period of non-repayment interest-free and extended from six months to at least one year. This will allow students additional time to find meaningful employment before repayment begins. Where interest continues to be charged on student loans it should, at minimum, not accrue until a student starts to make payments on their student loan. Immediately reduce student loan interest rates to below prime, with the intention of eliminating interest on student loans completely in four years The practice of collecting interest on student loans ensures that students who finance their education through loans pay more than students can afford to pay up front. In an era when the government should be trying to increase participation from lowincome and under-represented groups, collecting interest on student loans is unfair and inequitable. During repayment when interest accrues, people who face other forms of socio-economic inequity, including racialised people, people with disabilities and women, experience structural barriers and discrimination in the labour market that can affect earning potential upon graduation, extending repayment and driving up the overall cost. Given that average incomes can be due to social and structural discrimination, charging interest on student loans deepens the social inequity and should be eliminated. For all low-income earners with student debt, expanding that debt load through charging interest extends repayment, negatively impacting their career, family and educational choices and preventing their full participation in the economy. A new framework should immediately reduce interest rates on the provincial portion of student to below prime with the intention of eliminating interest altogether within four years. Our Bright Future 17

20 recommendation seven Double the number of Ontario Graduate Scholarships and expand access to OGS. 18 Canadian Federation of Students Ontario

21 The Ontario government has recognised the need to expand graduate studies as a way to allow the increased number of students to engage in meaningful research and teaching opportunities. In anticipation of this, graduate enrollment has been aggressively increased in universities across the province. Unfortunately, funding mechanisms that exist to help students dedicate their time to research were not increased. The Ontario Graduate Scholarship (OGS) is funded two-thirds by the province and one-third by institutions and is one of very few provincial forms of financial relief for graduate students who pay the highest fees in Canada. With the current number of scholarships, only around five percent of full-time graduate students receive an OGS including only 60 or so international graduate students. 9 Number of full-time enrolled graduate students compared to the number who receive an Ontario Graduate Scholarship (CAUT Almanac, 2009; Ministry of Colleges, Training and Universities, 2009) Full-time graduate students in Ontario 60,000 50,000 Number who received OGS 59,596 High tuition fees, the lack of funding opportunities and debt servicing issues contribute to the problem of attrition, especially at the PhD level. Unacceptably high rates of attrition amongst graduate students mean a lost investment by the system and students as well as loss of skilled innovators for the labour market. In order to address these issues, it is recommended that a new framework fund OGS entirely through the provincial government and that the number of scholarships be doubled and made available to part-time graduate students. The number of scholarships available for international students should also be increased. This will ensure that funding increases will meet enrollment increases and that graduate studies remain accessible to qualified students. In addition, OGS funding should be drawn from both the Ministry of Research and Innovation and the Ministry of Training, Colleges and Universities, rather than drawing the final third of the cost from institutional budgets. 40,000 30,000 20,000 10,000 44,596 9 Ontario Graduate Scholarship Program website, Number of Scholarships Awarded < htm#eligibility%20and%20conditions> 0 2,000 2, (projected) Our Bright Future 19

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23 costing Introduce a plan to shift the Ontario Student Assistance Program (OSAP) from a debt-based to a grant-based system of student financial assistance. policy dependent Reallocate provincial tax credits and expand existing back-end grants to form a comprehensive system of upfront needs-based grants. No additional cost Convert the Student Access Guarantee from an institutionally-funded programme into a comprehensive, government-funded needs-based grant programme administered through the Ontario Student Assistance Program (OSAP). $127.7 million per year Transform the First Generation Bursary into a government administered upfront grant. $0 Ensure that funds from the Canada Student Grants programme that displace provincial money earmarked for student financial assistance are reinvested to directly reach students. $0 Reforms to OSAP eligibility, administration and distribution. policy dependent Double the number of Ontario Graduate Scholarships and expand access to OGS. $35 million Our Bright Future 21

24 Canadian Federation of Students Ontario printed on recycled paper