Last week, Minister of Education Leona Dombrowsky announced that the government plans to improve the financial literacy curriculum in Ontario’s schools by fall 2011. This is welcome news to OUSA, as it is an important step forward to improve the state of financial aid literacy among Ontario’s post-secondary students.
Before buying a car or a house, getting married or starting a family, most young Ontarians will first complete some form of post-secondary education, and many will take on significant debt loads to do it. While instruction in financial literacy should cover everything from obtaining a mortgage to saving for the future, the first major financial barrier most Ontarians must overcome is financing higher education.
The Premier has recently set an ambitious target of 70% participation in post-secondary education. Unfortunately, many prospective students do not understand the financial assistance that is available and turn away from further education because of the perceived cost. Children from high-income families are two-and-a-half times more likely to attend university as children from low-income families. Studies from the Canada Millennium Scholarship Foundation and Statistics Canada have shown that a broad range of factors contribute to this gap, including debt aversion and whether the student has discussed and planned for higher education. As a result, CMSF stated repeatedly that early access to information regarding financial aid is a primary and necessary component of financial aid modernization.
OUSA’s recent work on financial aid literacy has uncovered just how pervasive this problem has become. On June 3rd of this year, OUSA and its partner student alliances from across Canada released a report on the severe lack of financial aid literacy among Canadian undergraduates. The report, based on a survey of over 20,000 students, found that three-quarters failed a short financial aid literacy test covering some of the very basic facets of the Canada Student Loan Program.
Some of the more distressing results include:
- Roughly one in five students who identified as debt-averse were unaware that it was possible to receive a grant without taking out a loan.
- Of fifth-year students who thought they would not quality for a loan, 71% were unaware that their parental income would not be taken into account.
- 57% of government loan recipients risk paying hundreds of dollars in additional interest because they did not know that interest on their Canada Student Loan begins to accrue immediately upon graduation.
To address these issues, OUSA made a submission to the government’s Working Group on Financial Literacy, stressing the information barriers that are preventing many low-income students from accessing financial aid and a successful post-secondary experience. OUSA was pleased to see that the Working Group has recommended curricular changes to assist students in “planning for life after high school”, and is hopeful that the government will soon clarify exactly what role financial aid literacy will play.
We strongly recommend that any financial literacy curriculum include an understanding of the repayable and non-repayable aid available when pursuing a higher education, as well as the tremendous financial benefits that are associated with it. Furthermore, this information should be presented to students at or before Grade 9 to influence student choices around which course streams to select. The Council of Ontario Universities has shown that 35% of university applicants decide to attend university before they reach the age of 9, and 73% before the age of 15.
In sum, the government should be applauded for moving forward with necessary improvement to the financial literacy curriculum, but students await clarification of the role that information about financial aid will play. Something as simple as adding a mock OSAP application to the Career Studies curriculum could be the difference for thousands of Ontario students who turn away from financial assistance.
-Alexi White
OUSA Executive Director