The End of Need-Based Student Financial Aid in Canada?
Author: Junor, Sean
Date: 2007-08-00
Type: Reports - Descriptive
Subjects: Foreign Countries,Federal Government,Student Financial Aid,Tuition,Textbooks,Tax Credits,Scholarships,Educational Policy,Policy Analysis,Paying for College,Educational Principles,Need Analysis (Student Financial Aid),Eligibility,Student Costs,Legislation,Federal Programs,State Programs,Educational History,Policy Formation,Access to Education,Economically Disadvantaged,Grants,Budgets,Program Costs

There was a major change in Canadian student aid in the late 1990s, due largely to a package of measures adopted by the Government Canada as part of its &quot;Canada Opportunities Strategy&quot;. At the time, what aroused the most comment was the creation in 1998 of the $2.5 billion Canada Millennium Scholarship Foundation (Foundation). But while the Foundation was certainly a welcome--if controversial--addition to the country's stock of need-based aid, its creation did not herald the start of a new focus on need-based aid. Quite the contrary, in fact: the creation of the Foundation was actually the last major investment in need-based aid made by any Canadian government for nearly seven years. In retrospect, the most significant measure of the late 1990s was contained not the flashy 1998 federal budget, but rather in the almost unheralded budget of 1996. In that budget, the monthly education tax credit amount for full-time students was increased from $60 per month to $80 per month. Though it hardly set the world on fire, this measure fundamentally altered the nature of student aid in Canada. The next year the monthly amount was increased--in stages--from $80 per month to $200 per month and part-time students became eligible for a $60 per month credit. These amounts were later doubled in the federal Liberals' pre-election mini-budget of October 2000, and then hiked again in 2006 when the new Conservative government created a $60 per month tax credit for &quot;textbooks&quot; which was an addition to the existing monthly amount in all but name. Ancillary fees were added to the tuition fee tax credit. Student loan interest became subject to a tax credit as well. Provinces not to be outdone got into the tax credit act, too. Most matched the increases in federal tax credits--some (notably Alberta) increased them way beyond anything the federal government did. Some have-not provinces even began trying to use education tax credits as a way to stem the loss of their youth population. What all of this signaled was a decreased desire on the part of governments to use need-based student assistance to distribute aid to those who need it the most. Instead, governments began finding non-need-based methods of providing supports: tax credits, tuition freezes--anything which did not use need as a criterion--became the preferred method of distributing money. Indeed, governments went so far as to begin actively seeking to distribute money to people who--so far from being needy--were actually well enough off to save substantial sums of money for their children's education. The Canada Education Savings Grant (CESG), begun in 1998, almost immediately became a $400-million per year program. Recently, provinces have begun copying this, too--most notably, Quebec, which has begun matching federal contributions to the program on a 1:2 basis. The metamorphosis from a need-based system of aid to a predominantly non-need-based system of aid in Canada did not happen instantly. It has been the slow, inexorable result of an accretion of government decisions at both the federal and provincial levels. Ideology has not played a part--governments of both the left and right alike have plunged with abandon into non-need-based projects. The purpose of this report is to shed light on the how this situation evolved, on a province-by-province basis. In Chapter 2, the paper takes data from 1993-94 to 2003-04 (the last year for which good data is available) to show how the mix of available aid changed in each province over that decade, and how these changes helped to offset the rises in tuition which occurred over that time. Though there are some broad themes which emerge from this examination, the situation was not the same in all provinces and the individual sections of this chapter should help the reader understand the nuances in situations across the country. Although good data on student assistance is not available past 2004, it is possible to track the broad outline changes in student aid just by examining various budget documents and tracking government announcements dealing with student financial assistance. This paper does this in Chapter 3. In the final chapter, the paper examines the cumulative effect of these changes on student assistance and outlines who has benefited the most from the recent changes. Targeted Need-Based Student Assistance is appended. A bibliography is included. (Contains 16 tables, 21 figures and 22 footnotes.)